Taiwan's Falcon ties up with Japan's SKE on vertical-lathe business

Taipei, Feb. 17, 2005 (CENS)--Taiwan's Falcon Machine Tools Co., Ltd. (Chevalier-branded machine tools) announced that it would set up a strategic alliance with SKE Corp. of Japan to locally assemble vertical-type lathes with technical support from the partner.

Falcon chairman Chang Bao-yuan said that he has signed a pact with SKE to get technical authorization for three vertical-lathe models scheduled to be assembled in Taiwan. Falcon also got the right to sell the three models in other markets outside Japan without paying extra authorization fees, but the firm is required to help SKE locally outsource parts and components to cut costs by 30%.

Falcon's cooperation project with SKE is triggered by increasing demand for vertical-type lathes in Taiwan, which, in turn, was fueled by increasing production of large-sized aluminum wheel rims for sport utility vehicle (SUV), multi-purpose van (MPV) and light truck models.

Targeting the same segment, Tong-Tai Machine and Tool Co., Ltd., currently the No. 1 maker of such equipment in Taiwan and mainland China, acquired a 52% stake in local Long-Ten Enterprise Co. in a bid to access the core technology for vertical-type lathes. Tong-Tai plans to launch a heavy-duty vertical lathe model in March this year.

Falcon's Chang claimed that he is very confident about his company's future sales of vertical-type lathes to Taiwan-based companies in mainland China, where Falcon has set up about 20 sales points, though strong rival Tong-Tai is also zeroing in on the sector.

Chang also claimed that Falcon's cooperation ties with SKE would make his company become the only manufacturer in Taiwan that can simultaneously turn out vertical lathes, machining centers, and precision grinding machines.

Tong-Tai president Yen Jui-hsiung pointed out that his company has supplied wheel-rim production equipment for over 10 years and expects to sell 30 such machines this year. Another senior Tong-Tai official estimated the annual global demand for wheel-rim processing machines at about 1,000 units, with the Asian market absorbing about 200 units.

Tong-Tai sold over 20 vertical-type lathes last year, and some 80 wheel-rim production/processing machines if plus horizontal-type processing machines for smaller-sized rims. The firm commanded a 40% share of the wheel-production equipment market in Asia last year, making it Taiwan's No. 1 supplier in the field.