Taiwan is World's Fourth-largest Machine Tool Exporter in 2007

Taiwan came in fourth place globally in terms of the volume of machine tools exported in 2007, which were valued at US$3.41 billion, representing a 15% year-on-year growth and contributing to about 8.7% of the world's total exports of such equipment valued at US$39.2 billion, according to the statistics compiled by the Taiwan Association of Machinery Industry (TAMI).

The TAMI's tallies show that the exporters of machine tools worldwide recorded a record-setting performance: rolling out some US$70.9 billion worth of machine tools in 2007, up 18% or an increase of US$10.7 billion from the year earlier. Such rise in the production of machine tools may indicate sound health in the global manufacturing sector, a reasonable prognosis considering that there must have been considerable demand downstream to justify the manufacturing sector to buy more of the most critical capital good-machine tools.

Machine tools may be considered the second wave of industrialization since man began turning out by hand various products with crude hammers and pliers, for machine tools make possible automation that realizes speedier, more precise fabrication, especially when volume production is necessary. Today machine tools of various caliber, degree of precision and complexity are used throughout manufacturing industries, with robotic machine tools being likely the cutting-edge in such equipment.

Most observers would agree that sectors such as automobile, aerospace, national defense, machinery, mold-making, and electronics all cannot achieve their state of advancement without adopting machine tools of various specifications; while it would not be an understatement to say that the IT and electronics sectors today could not exist without the sophisticated robotic machine tools that can implant miniscule chips on circuit boards with surgical precision at a mile-a-minute. Although Taiwan may not yet be a force to be reckoned with in supplying robotic machine tools for the IT and electronic sectors, but the island is nevertheless a world leader in various machining centers.

Taiwan Dominates Machining Center Export

A survey by the U.S.-based "Gardner" magazine says that Taiwan was the globe's dominant exporter of either vertical and double-column machining centers in 2007. In fact, the island is among the who's who worldwide in exporting other machine tools: Taiwan was also among the top-five exporting nations of machine tools, in 2007, of horizontal machining centers, lathes, grinding machines, and wire-cut electric discharge machine.

C.C. Wang, vice president of the TAMI, says exports of machine tools worldwide grew 18% year-on-year and contributed 55% to the world's total production value of the products in 2007; while machine tool suppliers in Europe and Asia helped to generate the highest growth in exports of such items from those regions in 2007.

Over the past three or four years especially and mainly due to officially-sponsored help-with research institutions on the island offering expertise to improve the caliber of manufacturing skills-Taiwan's machine-tool sector has been able to significantly strengthen its basis upon which to further develop better products. Also and equally important is that the authorities in Taiwan have also been helping the local machine tool sector to make the most of the obvious advantage of the "clustering effect" or simply being within easy access to one's peers and support suppliers-where the government has been designating or developing specially zoned sites to facilitate new establishment, relocation, expansion by domestic machine tool manufacturers.

High-Value-Added Works

Wang says domestic manufacturers of machine tools have seen their long-term dedication to developing high-value-added products pay off, one sign of which is that Taiwan-based suppliers are often warmly received at various world-class machine-tool trade shows.

The land of BMWs, Mercedes and top-caliber precision machinery was also the single-biggest exporter of machine tools in 2007, shipping abroad some US$9.16 billion of the items, registering an annual growth of 22% and accounting for 23.4% of worldwide exports. The home of Lexus, the luxury car that forces Bimmers and Mercedes to look over their shoulders, or Japan was the second-ranking exporter that delivered overseas some US$7.61 billion in machine tools, up 17% year-on-year and commanding 19.4% of the global total; while Italy came in third at US$4.2 billion, up 27% and contributing 10.7% to the world's total.

Outdoing Switzerland

Taiwan, in 2007, came in fourth worldwide in terms of machine tools exported, shipping overseas some US$3.41 billion of such equipment, followed by Switzerland with US$2.45 billion, South Korea (US$1.8 billion), the U.S. (US$1.66 billion), mainland China (US$1.6 billion), United Kingdom (US$920 million), and Brazil (US$870 million).

In terms of annual growth among the world's top-10 export nations of machine tools last year, mainland China led the pack at 34%, followed by Italy (27%), Germany (22%), and Brazil (21%).

Wang says that several leading machine-tool producing nations are looking overseas to offset the limited growth potential at home. For examples, Japan and South Korea both used to focus only on domestic sales, but have been turning their efforts to exploring export opportunities-the Land of the Rising Sun as a result achieved 17% in annual export growth in 2007 and South Korea 24%. Moreover, both nations have been exporting increasingly more machine tools as proportions of their overall output value: Japan's ratio hit a record high of 53% and South Korea also set a record of 40%.

Japan Leads in Production Value

Despite not being the biggest machine tool exporter, Japan, however, led the world in terms of the total value of such equipment fabricated in 2007: rolling out some US$14.4 billion, up 7% year-on-year and accounting for 20.3% of the global total. The biggest machine tool exporter Germany came in second in terms of product value at US$12.7 billion, up 26% and commanding 17.9% of the world's total. Mainland China was third at US$10 billion, up 43% and contributing 14.2% to the global total.

The fourth place went to Italy with US$7.27 billion. South Korea stood at the fifth place with US$4.55 billion. Although Taiwan was the world's sixth-largest producing nation of machine tools with production value reaching US$4.38 billion last year, it stood at No.2 globally in terms of average production value per-capita. Taiwan generated US$200 average in machine tool value per-capita in 2007, trailing the US$400 posted by Switzerland.

Tops in Double-column Machining Centers

Thanks to persistent R&D and the efforts to cut production costs, Taiwan replaced Japan to become the world's largest producing nation of double-column machining centers last year, according statistics compiled by the TAMI.

TAMI says domestic manufacturers in this line are targeting such emerging markets as mainland China, India, Brazil and Russia.

The TAMI's tallies indicate that the average unit selling price for Taiwan-made double-column machining center was US$185,000 last year, reaching 57% of the world's average of US$326,000 and only 9% and 28% of those made in Germany and Japan, respectively. The TAMI says that the average selling price for Taiwan-made double-column machining center is relatively low and domestic manufacturers in this line should concentrate on building products with higher added-value.

At present, mainland China is the world's largest market for double-column machining centers, which are mainly used in the mold-making, large-sized workpiece processing and automotive sectors.

Over the past few years, domestic manufacturers of machine tools have been busy developing large-sized double-column machining centers. Major domestic manufacturers in this line are Awea Mechantronic Corp., Roundtop Machinery Industries Co., Kao Ming Machinery Industrial Co., She Hong Industrial Co., Dah Lih Machinery Industry Co., Asia Pacific Elite Co., Vision Wide Tech Co., Victor Taichung Machinery Works Co., and Yeong Chin Machinery Industries Co.

TAMI vice president C.C. Wang states that domestic manufacturers of double-column machining centers have made significant progress in developing five-face and five-axis models over the past several years.

The TAMI's tallies show mainland China imported 558 units of double-column machining centers valued at US$182 million, with average price reaching US$326,000 last year. Taiwan was the mainland's largest supplier by selling 417 units of the machines worth US$77.37 million, marking an average value of US$185,000, accounting for 42.5% of the mainland's total imports. Japan stood at the second place with 111 units valued at US$74.41 million, translating into an average value of US$673,000 and accounting for 41%. The third place went to Germany, which shipped eight units of the machines worth US$17.1 million, for an average price of US$2.138 million and commanding 9.4%.

Biggest Vertical Machining Center Maker

Taiwan has become the world's largest production base for vertical machining centers with annual output reaching over 25,000 units last year, up 20% year-on-year, according to statistics compiled by the TAMI.

Over the past several years, domestic manufacturers of vertical machining centers have made considerable progress, one indication of which is that Taiwan makers have succeeded to narrow the lead commanded by Japan in terms of unit selling price.

An analysis by the TAMI shows that, since mainland China has eliminated tax exemptions on imported goods, Taiwan machinery manufacturers have gradually been reducing their exports of low-tier products to the mainland while keeping exports of high-value-added models, aiming to both cut production costs and minimize the impact of the mainland's imposition of import tariffs.

The world's leading producing nations of machine tools shipped 11,040 units of vertical machining centers worth some US$843 million to mainland China in 2007, with China having imported more vertical machining centers than any other kind of machine tools last year.

Japan was the mainland China's largest supplier of vertical machining centers: shipping 5,306 units of such machines worth US$405 million in 2007, accounting for 48% of mainland's total imports of the equipment and at an average price of US$76,400.

Taiwan trailed Japan in second place by selling 3,611 units of the vertical machining centers worth US$247 million to mainland China last year, commanding 29.4% of China's total import and at an average selling price of US$68,500.

S. Korea Comes in Third

South Korea followed Taiwan in third place to have exported 976 units of vertical machining centers worth US$70.25 million to mainland China, accounting for 8.3% of the total import. The average selling price of the products shipped from South Korea to China was US$71,900. Other major supplier nations of vertical machining centers to China last year, in descending order, included Germany, the U.S., Switzerland and Italy.

European quality seems to be more than a positive stereotype unproven in reality: German, Swiss and Italian suppliers of vertical machining centers quoted average selling prices at double or even quadruple those offered by their Asian counterparts in general; while Taiwan was 10% more price-competitive than Japan, with South Korea being 6% more so on quotations for vertical machining centers bound for China. Unsurprisingly, the relatively cruder American automotive technology also carries over into its machine tool sector: The U.S. quoted average selling prices as low as 68% of those offered by Japan.