Taiwan's aerospace industry is expected to generate NT$40 billion (US$1.19 billion at US$1:NT$33.7) in revenue next year, up at least 30% from this year, due to a surge in foreign contract orders and military aircraft repair and maintenance business, according to the Taiwan Aerospace Industry Association (TAIA).

Statistics compiled by the Committee For Aviation and Space Industry Development (CASID) of the Ministry of Economic Affairs indicates that the output value of Taiwan's aerospace industry reached only about NT$26 billion (US$771.5 million) last year due to sluggish overseas demand. However, CASID expects the figure to hit about NT$28 billion to NT$30 billion (US$830.86 million to US$890.21 million) this year and top NT$30 billion (US$890.21 million) next year.



The biggest factor in this year's growth, according to CASID, is the government's decision to outsource military aircraft repair and maintenance services to the private sector. Several upgrading projects for military aircraft, including the ROC Army's UH-1H utility helicopter, have added demand for locally made aerospace parts and components.

Most of the local aerospace parts makers saw an uptick in business this year, the committee says, including Aerospace Industrial Development Corp. (AIDC, the largest aircraft maker in Taiwan), National Aerospace Fastener Corporation (NAFCO, aerospace fastener maker), Interpoint Taiwan Corp. (avionics), Chenfeng Machinery & Enterprise Co. Ltd. (precision machining parts), Jui Li Enterprise Co. (landing gear/structural components), Topkey Corp. (composite material parts), and Drewloong Precision Inc. (structural parts, sheet-metal parts).

Mike Lan, TAIA secretary general, predicts an even better year for the local aerospace component industry in 2004 as cost-cutting first-tier aerospace component suppliers abroad turn to Taiwan partners, especially since the September 11 terrorist attack, which created a paralyzing impact on the global aerospace market. Lan claims that Taiwan aerospace makers have developed market niches and are expected to win more foreign orders with their strong competitive edge in manufacturing and cost control.

Lan notes that the formation of a mutual-recognition aerospace certification system between Taiwan and the United States is expected to greatly reduce the cost and time of certifying Taiwan-made aerospace components.

Lan also urges local aerospace makers to more actively develop the rising mainland China market. The secretary general says that the mainland is developing new airplanes in cooperation with international aircraft makers, which could open a new market for Taiwan-made aerospace parts and components in the future.

More Business

CASID also sees a number of new business opportunities on the horizon for Taiwan's aerospace firms, the most lucrative of which include aircraft development and upgrade projects for the military.

Some major aerospace companies in Taiwan also expect to win subcontracting orders for components used in Boeing Co.'s new 7E7 wide-body jetliner by the end of the year.

A CASID official says that while there were no Taiwanese companies among the over 20 international system suppliers selected by Boeing to date, local makers have a chance to win orders through first-tier suppliers.

The official explains that Boeing engineers are considering many innovative designs for the 7E7, including a refined nose shape, new wing tip design and a sculpted vertical tail structure. The plane is being designed as a super-efficient, twin-aisle airplane capable of carrying 200-250 passengers on long-range routes.

Leading international aerospace partners in the 7E7 project are ECE Zodiac of France, Diehl and Liebben-Aerospace Lindenberg of Germany, Matsushita Avionics of Japan, Smith Aerospace and BAE Systems of the U.K., and Connexion, GE and Rockwell Collins of the U.S., most of which have direct or indirect ties with Taiwanese companies.

Another big opportunity for local aerospace makers will be the ROC Army's helicopter upgrade project, for which Bell Helicopter of the United States, the world's No.1 helicopter maker, is planning to set up a helicopter upgrading and renovation center in Taiwan.

Industry sources say that the center will help the company expand cooperative ties with local aerospace firms. In addition, Bell plans to contract Taiwan suppliers for a growing range of helicopter parts and components.

The sources says that a Taiwan delegation consisting of 15 local aerospace suppliers secured several cooperation projects with Bell at the third Sino-America aerospace supplier conference, which was held in late August in Dallas, Texas.

According to the sources, AIDC will be responsible for integrating local aerospace suppliers to provide helicopter renovation, upgrading and overhaul services. It will also seek qualified suppliers of forged and composite-material aircraft structural parts. Some of the parts, the sources say, can be exported to the U.S or other nations.

By extending cooperative ties with local aerospace industry, Bell aims to cut its production costs, the sources add. Such cost-cutting measures can position the U.S. company to compete more effectively with strong rivals in Europe, including Eurocopter.

Upgrading

Bell also hopes to win more business opportunities from the ROC Army, which originally planned to procure several dozens of new utility helicopters to replace its aging UH-1H choppers, as well as AH-64 Apache attack helicopters. The ROC Army's new helicopter procurement projects, however, have been canceled or delayed due to budget shortfalls. The army will instead upgrade its current helicopters, they say.

Bell, which has been in talks with the ROC Army about helicopter renovation projects, recently claimed that such upgrading work could save the army a lot of money without compromising its combat ability.

The said sources say that Bell's proposed projects include the upgrading of the army's AH-1W Cobra attack helicopters into AH-1Z versions and the UH-1H into UH-1Y versions. The U.S. Marine Corps has adopted the same upgrade solutions to renovate its current models to reduce spending, the sources say.

According to Bell, AIDC, which has extensive experience in manufacturing and assembling helicopters, is qualified to handle future helicopter upgrading and renovation work. The state-run aircraft maker can also help Bell manufacture and supply high quality and reasonably priced helicopter parts and components, the U.S. company says.