Taiwan's Machinery Industry Suffers 38.1% Decline in Exports in H1, 2009

Taiwan exported US$5.297 billion of machinery in the first half of 2009, down 38.1% year-on-year, according to the customs-cleared statistics compiled by the Taiwan Association of Machinery Industry (TAMI). Despite sliding exports for eight months in a row since November last year, the TAMI believes the downtrend in machinery exports will recover sometime in the third quarter of this year at the earliest.

In terms of major exports and values, Taiwan exported machine tools valued at US$869.91 million in the first half of this year, down 54.7% from a year earlier but still the leading category. The special-purpose machines stood at the second place valued at US$344.6 million, down 49.3%. The third place went to the category of plastics and rubber processing machines at US$325.29 million, down 39.9%. The category of valves and parts ranked fourth at US$317.18 million, down 33.8%. The category of pumps, compressors and fans stood at the fifth place at US$307.23 million, down 35%. The sixth place went to the category of bearings, gears and ball screws with US$223.3 million, down 37.9%. The seventh place was the category of molds and dies with US$202.9 million, down 24.8%.

Other major export items, in descending order, are shown in the Table I.

China the Major Buyer

The TAMI notes China was still the largest outlet for Taiwan-made machinery in the first half of this year, having absorbed US$1.42 billion of such machinery, down 42.5% year-on-year and accounting for 26.8% of the total export value. The second place went to the U.S. at US$950.32 million, down 24.9% and commanding 17.9%. The third place went to Japan with US$391.64 million, down 21.2% and accounting for 7.4%.

The fourth place went to Thailand with US$195.4 million, down 26.7%. Vietnam ranked fifth with US$173.97 million, down 49%. Germany stood at the sixth place with US$162.55 million, down 49.3%. The seventh place went to Indonesia with US$133.53 million, down 40.8%. India stood at the eighth place with US$125.67 million, down 40.2%.

The TAMI's tallies also showed Taiwan imported US$6.113 billion of machinery in the first half of 2009, down 38.9% year-on-year.

Special-purpose Machinery Lead

The largest import category was special-purpose machines valued at US$655.27 million in the first half of this year, down 77.9% from a year earlier and accounting for 10.7% of the total imports. TAMI president C.C. Wang notes that such imported special-purpose machines are mainly employed by high-tech industries as semiconductor manufacturing and 3C (consumer electronics, communications and communications) products.

The second-biggest import category was engines and parts at US$328.01 million, down 23.1% and commanding 5.4% of the total. The category of pumps, compressors and fans ranked third with US$316.36 million, down 40.6% and accounting for 5.2%. The fourth place was the category of valves and parts with US$178.78 million, down 43.5% and commanding 2.9%. The category of machine tools ranked fifth with US$158.08 million, down 83.5% and accounting for 2.6%. The sixth place went to the category of plastics and rubber processing machines with US$79.79 million, down 45.6% and commanding 1.3%. The seventh place was the category of textile machines with US$76.06 million, down 55.6% and accounting for 1.2%. (See Table II)

Taiwan still relies mainly on Japan, the U.S., mainland China and Germany for its supply of imported machines. Japan was the island's largest supplier by selling US$2.803 billion of machines in the first half of this year, down 33.5% year-on-year and accounting for 45.9% of the total imports.

The USA was the second-biggest supplier to Taiwan at US$1.005 billion, down 56.6% and commanding 16.5% of the total. The third place was mainland China at US$625.94 million, down 34.4% and accounting for 10.2%. Germany ranked fourth at US$484.98 million, down 44.4%. Other major suppliers, in descending order, included South Korea, Italy, Switzerland, and France.

Reduced Bank Financing

"The biggest difficulty facing Taiwan-based machinery manufacturers is reduced bank financing, which has been a way to minimize lenders' risk in the wake of the global financial tsunami, hence forcing operators to downsize or cancel investment in production equipment as machinery," says Wang. "But many believe the slowdown in procurement willingness will decelerate and even halt sometime in the third quarter of this year. Personally I believe the domestic machinery industry will recover sometime in the fourth quarter of this year."

(Table I)

Exports of Taiwan-made Machinery (First Half of 2009) by Product Category Unit: US$1,000
Rank	Product Category	Jan.-June 2008	Jan.-June 2009	Annual Change (%)
1	Machine Tools	1,921,672	869,918	-54.7
2	Special-purpose Machinery	679,939	344,602	-49.3
3	Plastics & Rubber Machinery	541,092	325,292	-39.9
4	Valves & Parts	479,221	317,182	-33.8
5	Pumps, Compressors, Fans	472,661	307,234	-35
6	Bearings, Gears, Ball Screws	359,751	223,303	-37.9
7	Molds & Dies	269,722	202,906	-24.8
8	Textile Machinery	273,667	171,188	-37.4
9	Machine-tool Parts & Components	361,546	166,642	-53.9
10	Woodworking Machinery	324,755	155,555	-52.1
11	Sewing Machines	188,952	114,557	-39.4
12	Paper Making, Printing Machinery	128,461	81,863	-36.3
13	Leather & Shoes Making Machines	44,234	20,676	-53.3
	Others	2,510,844	1,996,128	-20.5
	Total	8,556,517	5,297,046	-38.1
Source: Taiwan Association of Machinery Industry

(Table II)

Imports of Machinery by Taiwan (First Half of 2009) by Product Category Unit: US$1,000
Rank	Product Category	Jan.-June 2008	Jan.-June 2009	Annual Change (%)
1	Special-purpose Machinery	2,966,919	655,271	-77.9
2	Engines & Parts	426,517	328,016	-23.1
3	Pumps, Compressors, Fans	532,438	316,364	-40.6
4	Valves & Parts	316,467	178,782	-43.5
5	Machine Tools	957,117	158,081	-83.5
6	Plastics & Rubber Machinery	146,669	79,799	-45.6
7	Textile Machinery	171,243	76,069	-55.6
	Others	4,491,585	4,321,171	-3.8
	Total	10,008,955	6,113,553	-38.9
Source: Taiwan Association of Machinery Industry