Machine Tool Makers Upbeat On Post-War Business Opportunity

Taiwan's machine-tool manufacturers estimate that increased need in the aftermath of the expected war between the U.S. and Iraq will help them boost monthly exports by 20~30% from the present level. This is because full-scale military activity will consume huge amounts of weaponry and ammunitions that will have to be quickly replenished, and precision machine tools are required for their manufacture.

Some domestic machine-tool manufacturers say they have seen growth in the volume of orders from the Middle East since U.S.-Iraq relations deteriorated further in the fourth quarter of last year. For instance, Leadwell CNC Machines Mfg. Corp., one of Taiwan's leading manufacturers of machining centers and other CNC (computerized numerically controlled) machine tools, received an unanticipated clutch of orders from Turkey for CNC machine tools worth NT$12 million (US$350,000 at US$1:NT$34.6) in January this year. A company spokesman says that prior to this it had experienced frustration in its attempts to penetrate the market of the Muslim nation.

Roundtop Machinery Industries Co., Ltd., which specializes in the production of CNC lathes and vertical-spindle and double-column machining centers, sold six machine tools to Iran in January alone. The company's sales of precision machine tools to the Middle East nation has drawn the attention of the American Institute in Taiwan (AIT), the U.S.'s representative office in Taiwan. The AIT requests domestic manufacturers of precision machine tools to voluntarily restrict exports to those nations constituting U.S. President Bush's "axis of evil," Iran, Iraq, and North Korea. The U.S. expresses concern that Iraq and North Korea will use imported precision machine tools--possibly by way of Iran--to fabricate weapons of mass destruction.

In response to these concerns, Roundtop stresses that the Iranian orders it has filled have been placed by manufacturers of automobile parts, and that there is no potential for re-export to Iraq. In addition, senior executives declare, it has supplied all requisite export-data forms to the U.S. side for inspection.

Leadwell's vice president, Sung Hsien-te, also denies that his company's exports of CNC machine tools to Turkey have any connection with the manufacture of weapons.

In contrast to the unbridled optimism of other local players in the industry, C.C. Wang, vice president of the Taiwan Association of Machinery Industry (TAMI), is of the opinion that the impact of war on the domestic machine-tool industry will be mixed. "Although the U.S. will step up production of weapons and ammunition to make up wartime consumption, I believe the U.S. will give priority to the procurement of U.S.-made precision machine tools," Wang says. "Nevertheless, Taiwan's manufacturers of machine tools will surely benefit--but to a limited extent."

Wang estimates the overall export value of domestically made machine tools will grow 10% this year from last year's tally. Some domestic manufacturers of machine tools even boldly anticipate their annual exports will grow between 20% and 30% this year.

Although domestic aerospace-parts manufacturers have not been receiving orders from the Middle East, some believe that if the U.S.'s military goals cannot be accomplished quickly they will benefit from a surge of orders for certain aerospace parts and accessories.


On the Medical Front


The medical-equipment unit of Taiwan's Aerospace Industrial Development Corp. (AIDC), under the authority of the Ministry of Economic Affairs (MOEA), anticipates foreign demand for its specially designed wheelchairs will substantially increase in the wake of any conflict.

The unit reports that it has recently received orders for special wheelchairs for military use from a Kuwait buyer--but was obliged to reject it because its production lines cannot make products with the specifications desired.

Nevertheless, AIDC stresses it will rev up its production of specially designed wheelchairs to meet anticipated demand should the U.S.-Iraq conflict break out.