Woodworking Machinery Expected Mainland Slowdown Not a Big Concern: TWMA Chairman

Bill Hung, chairman of the Taiwan Woodworking Machinery Association (TWMA), expects Taiwan's woodworking-machinery industry will weather an anticipated economic slowdown in mainland China, saying Taiwan's operators will most likely emerge from any troubles relatively unscathed.

One reason, the chairman notes, is that many Taiwanese woodworking-piece manufacturers-as well as some mainland China outfits--have moved production to Vietnam since late last year, when the U.S. government preliminarily decided to slap anti-dumping tariffs on some wood furniture imported from mainland China and the mainland authorities began tightening tax inspections on both Taiwanese and mainland Chinese manufacturers. Consequently, a growing share of Taiwan's woodworking-machinery exports is heading to Vietnam.

Helped by the surge in shipments to Vietnam, Taiwan exported NT$27 billion (US$820 million at US$1:NT$33) worth of woodworking machinery last year, up 15% from 2002, according to Hung.

Taking the Route Less Followed

Hung's company, Boarke Machine Co., Ltd., has diversified into the production of computerized-numerically-controlled (CNC) routers from the production of sanding machines. CNC routers, he states, command higher margins than sanding machines due to their higher technological threshold.

The shift to routers has also enabled Hung's company to diversify away from the overly crowded sanding-machine market. In the CNC-router market, Hung's winning strategy has been to build popular models and keep sufficient inventory to shorten delivery times. He notes that existing suppliers usually build machines only upon receiving orders, which results in long delivery times and, he says, higher production costs. "We expect the strategy to keep our costs 20% lower than our rivals, " Hung estimates.

Boarke debuted its automatic routers in September last year and began shipping the machines in the first quarter this year. The company expects to ship 12 such machines in the first year, with volume rising 30% or more in each of the following years. CNC routers are expected to account for 15% of the company's sales by value this year.

Hung says that CNC woodworking machines are gaining acceptance among Taiwanese woodworking manufacturers because of their impressive production efficiency and falling prices. "A typical CNC router, for instance, is today priced around 10% less than it was five years ago, now going for about NT$2 million (US$60, 600), " he states. "Mature technology is allowing more new entrants into the competition, bringing down the prices of such machines. Also, the number of engineers working on control units and software has expanded greatly, making it easier to access such items, " Hung says.

Boarke has also had several achievements in the polishing-equipment area. Each model in the company's 52GM series comes with a gauge to precisely indicate the tension of the sanding belts and ensure sanding accuracy. The 52GM units also feature a control system with two circuit loops, enabling them to continue working even when one loop burns out.

Hung's company has recently introduced polishing machines that can be used for the processing of electronic devices, shoes and kitchen counter tops and a sanding machine that reportedly is 15% to 20% faster than older types and can work on irregular surfaces with polishing tools moving along X and Y axes.

Around 90% of Boarke's machines are used by woodworking factories and the remaining 10% are sold to plants in other industries. Mainland China and Southeast Asia absorb over half of Boarke's output.

Established in 1988, Hung's company is Taiwan's largest supplier of wood-surface polishing machines, generating average annual revenue of NT$150 million (US$4.5 million) on sales of about 600 such machines a year.

Hung expects his company's revenue to rise 30% this year from last year's NT$230 million (US$7 million) thanks to the introduction of its CNC router line. In 2002, the company's revenue advanced 20% from the previous year to reach NT$200 million (US$6 million) due chiefly to a flood of orders from Taiwanese furniture manufacturers in mainland China.

Turning Heads

Coyer Machinery Industrial Co., Ltd. Specializes in wood lathes, spiral-groove turning lathes, turning sanders, drills, and tapping machines.

The company's CP-1250A back-knife turning lathe is equipped with an automatic hydraulic-feeding system, enabling it to put out three one-meter-long pieces a minute. Equipped with a programmable logic control-based (PLC-based) control unit, the machine can carve several different types of woodworking pieces. According to company chairman Chu Ko-hsung, this type of machine is designed mainly for wood-product suppliers in mainland China and South America.

Coyer's CP-48AN automatic turning sander is a highly efficient model that can be used in conjunction with the CP1250A. The sander is able to turn out eight workpieces processed by the CP1250A each minute.

The company's CP350D and CP-350S hydraulic straight-and-spiral-groove turning lathes are two other high-performance models, both of which are installed with CNC systems. The major difference between the two machines is that the former comes with two lathes while the latter is equipped with a single lathe. Both models are well suited for making Roman-type ladder-arm columns and artistic patterns on doors.

For budget buyers, the company supplies the less automatic CP-1300SA hydraulic copying lathe. This machine does not have an automatic feeding system and can process one to two one-meter-long workpieces a minute. Chu notes this type of machine is aimed at the Indian market, which he says is just starting to take off.

The company equips its hydraulic machines with Italian-made hydraulic units and Japanese relay units to ensure quality.

Compared with his industry peers, Chu is less optimistic about the market potential for automated machines so long as unit prices stay high. "How can you expect woodworking-piece manufacturers to spend money on the pricier automatic machines when their American buyers are pressing them to cut prices?" he asks.

His company is tapping the Indian market, where wood product manufacturers mostly use low-priced manual machines, to diversify its markets from mainland China and Vietnam.

Rising Star

Founded in 1988, Ply Star Machinery Industry Co., Ltd. Specializes in providing turnkey equipment for plywood-board production. The company offers a number of advanced features on its machines, including inverter-duty motors for adjusting production speed.

Such adjustability, says company president Frank Lin, is increasingly sought after by the many international manufacturers that produce several kinds of plywood board product. Processing speeds range from 35 meters per minute to 50 meters per minute, and precision demands are rising. "The error tolerance on this type of machine has been improved to within 1/20 millimeters to 1/30 mm from 10 mm with the help of auxiliary detection equipment, " Lin notes.

Ply Star's product line includes peeling lathes, reeling systems, dryers, air clippers, veneering machines, core builders, glue spreaders, cold-pressing machines, hot-pressing machines, cutting machines and sanding machines.

Lin says that Taiwanese manufacturers are good at making all types of woodworking machinery, except for peeling lathes, which still come mainly from Japanese suppliers. "The lathes depend heavily on automatic control systems and Japanese controller suppliers dominate in this area, " Lin explains.

Still, Taiwan has rapidly caught up with Japan in many areas of the woodworking machinery business, Lin says, particularly in the turnkey equipment segment. "In the past, Taiwan-made machines could operate at only 60% to 70% the speeds of Japanese machines. Now they can run faster than rival Japanese models, " he says. Automatic moisture detectors come standard on most Taiwan-made dryers, largely boosting production efficiency he adds.

Lin holds an optimistic view on the outlook of his company's business, estimating revenue to rise 50% this year. He bases his bright forecast on rising demand for plywood boards in many Southeast Asian nations, such as Malaysia and Indonesia.

Lin is less roseate about the prospects in his company's home market, especially due to the fierce price competition from suppliers of single machines.

Cutting Edge

Pom Machinery Industrial Co., Ltd. Focuses on slicing machines for making wood tiles and four-side moulders for making furniture pieces.

The company recently introduced a slicing machine with a unique cooling system that extends blade life by keeping frictional temperatures low, says company chairman, Mountain Liu. The cooling system has been patented in Taiwan and mainland China.

A major change in slicing machines, Liu notes, is seen in the number of cutters. In the past, such machines generally had only one cutter. Now, they have multiple cutters. POM's standard slicing machines have five cutters. "The move to more cutting blades is a result of the growing scarcity of wood, " Liu explains. "Tile makers now have to slice solid wood in thinner pieces and then affix this to a plywood base to make up the thickness deficiency, " he says.

The company's slicing machines cut wood boards into five pieces in standard thickness of three millimeters. Its minimum cutting thickness is 2.4 mm.

Liu points out that new types of slicing machines will gain more acceptance as long as wood materials remain scarce.

POM's four-side moulders are equipped with an automatic feeding system, which transmits workpiece at maximum speed of 36 meters a minute with its five-horse-power inverter motor. The moulders are able to process workpieces in widths of six, eight, nine and 12 inches, thicknesses ranging from eight millimeters to 127mm, and a minimum length of 235mm. Its four-side moulders have 12 spindles that can work on four sides at same time.

Taiwan, mainland China, Vietnam and Indonesia are the company's major export destinations. Liu is worried about intensifying competition and expects profit margins to erode. He also worries that mainland China's attempts to rein in economic growth and the possible U.S. anti-dumping measure against mainland-made furniture will have a negative impact on his company's operations. "In the face of such hindrances, wood processors generally move production to markets free of such hurdles, and it is in those markets that the demand is still strong, " he says. (May 2004)

Contact information on companies covered by the article:

Boark Machine Co., Ltd.

President: Bill Hung

Add: No. 279 Tung Chou Rd., Shen Kang Hsiang, Taichung, Taiwan; Tel: 886-4-25221792; Fax: 886-4-25282932; E-mail: bkm@ms22.hinet.net ; http:www.boarke.com.tw

Coyer Machinery Industrial Co., Ltd.

Chairman: Chu Ko-hsung

Add: No. 118, Minsheng Rd. Shenan, Shenkang, Taichung, Taiwan

Tel:886-4-25625888; Fax:886-4-2562-8881

E-mail:coyer@ms31.hinet.net; Web site:http://www.woodlathe.com.tw

Ply Star Machinery Industry Co., Ltd

CEO: Frank Lin

Add: No. 165-1, Fong Ren Road, Renwu Township, Kaohsiung County 814, Taiwan.

Tel: 886-7-3725337; Fax: 886-7-3741215

E-mail: plystar@ms27.hinet .net; Web site:www.taiwantrade.com.tw/plystar

Pom Machinery Industrial Co., Ltd.

Chairman: Mountain Liu

Add: No. 86, Dachou Rd., Shenkang Hsiang, Taichung Hsien, Taiwan

Tel:886-42524-1166; Fax: 886-4-25244559

E-mail:pommc@ms36.hinet.net

Web site:www.pommc.com.tw