Booming sales in mainland China will keep Taiwan's machinery industry growing this year, according to a recent survey conducted by the Industrial Technology Information Services (IT IS) office under the Industrial Technology Department (ITB), Ministry of Economic Affairs (MOEA).

Local makers of do-it-yourself (DIY) machine tools and power tools anticipate growth this year also because some American manufacturers are shutting down their own production lines and looking for Taiwanese suppliers to contract on an original equipment manufacturer (OEM) basis.

Among the Taiwanese companies that will benefit from the shift of orders to Taiwan are the Jenn Feng Industrial Co. and Chang Tyre Industrial Co.

Jenn Feng, which specializes in handheld power tools, garden tools, and automatic screwdrivers, saw its sales hit a record high in the first two months of 2003 and expects the total for the first quarter to reach NT$1 billion (US$29 million at NT$34.6:US$1), amounting to a third of the total for all of 2002. The company recently acquired an American firm for its advanced power-tool production technologies and precision molds.

Chang Tyre, which focuses on band saws, scroll saws, and miter saws, claims that it supplies 40% of the world's total output of electric circular saws. "Over the past two years," comments Chang Ching-chin, the company's president, "many U.S. makers of circular saws have been sending orders to manufacturers in the Asia-Pacific region, because they have lost their own competitive advantage in the production of such saws."


IT IS reports that Taiwan's machinery industry began recovering from the global economic downturn of the past few years in the second quarter of last year. Preliminary statistics indicate that for the year as a whole, the production value of the island's machinery industry rose 6.11% over 2001, to NT$402.1 billion (US$11.6 billion).

The biggest portion of overall production in 2002 was taken by plastic- and rubber-processing machines, with a value of NT$42.9 billion (US$1.2 billion). This category was followed by textile- and garment-making machinery with NT$34 billion (US$982.7 million), metal-cutting machine tools with NT$32.2 billion (US$960.6 million), and metal-forming machine tools with NT$15.9 billion (US$459.5 million).

A number of categories enjoyed double-digit growth rates last year: metal-cutting and -forming machine tools, plastic- and rubber-processing machines, woodworking machines, DIY machine tools, and textile- and garment-making machines.

Liu Hsin-hung, an IT IS analyst, notes that Taiwan's machinery industry chalked up its first trade surplus in five years in 2002. He notes that the industry's exports for the year amounted to NT$343 billion (US$9.9 billion), up 10.1% over 2001, but nevertheless sees this performance as unsatisfactory. "Sluggish world demand hampered the expected strong recovery of the domestic machinery industry last year," he comments. "The growth in exports was due mainly to mainland China, which had strong demand last year; this strength will most likely continue throughout 2003."

In some machinery categories, the analyst reports, the mainland absorbed more than half of Taiwan's machinery exports last year: metal-cutting and -forming machine tools, textile- and garment-making machines, plastic- and rubber-processing machines, and woodworking machines.

The biggest overseas markets for the industry last year were mainland China (including Hong Kong), the U.S., and Japan. Liu expects the weighting of the mainland's market to continue growing: "As the mainland market is fast expanding, we estimate that it will take over 35% of all exports of Taiwan-made machinery this year, up from about 32% in 2002."