TAITRA Helps Taiwanese Hand Tool Makers to Tap Indian Market
2012/11/20 | By Steve ChuangLarge number of used-cars stateside to also help drive hand tool sales
Amid widespread slowdowns and export declines in other industries in Taiwan, the hand tool sector remained in comparatively good shape to produce NT$16.29 billion of products in the second quarter, up 4% year on year (YoY) or 13.2% quarter on quarter (QoQ), according to the latest report by the Metal Industries Research & Development Center (MIRDC), an R&D body and industry researcher in Taiwan.
The report shows the sector's exports amounted to NT$15.08 billion, up 6.8% QoQ or 1% YoY, with imports of NT$1.21 billion, surging 33.3% from the first quarter but down 6.3% YoY. Meanwhile domestic demand for hand tools reached NT$2.42 billion, half of which being imports and 93% bought for re-exporting.
Huge Potential in India
With the first-half economy in Taiwan generally rated as struggling amid a barely recovering local stock market and a tech sector, critical to Taiwan's economic vibrancy, that is trudging along but reportedly to peak in the fourth quarter, MIRDC analysts predict the hand tool industry's outlook in the remaining months of 2012 is supposed to improve, partly due to Taiwan External Trade Development Council's (TAITRA), a semi-official trade promoter, efforts to help Taiwanese manufacturers to build footholds in India.
MIRDC analysts agree with the practical sense of TAITRA's move to focus on the emerging market with the second largest population. Trade between Taiwan and India has grown steadily over the years, with Taiwan's exports to the latter reaching US$4.42 billion in 2011, up 22% YoY, indicative of huge potential in India for Taiwanese companies.
The analysts says that India's manufacturing, mining and agricultural industries have grown briskly, with car-making and construction the mainstay to sustain economic growth, which, in turn, have created strong demand for hardware and hand tools. While India has generally been uncharted territory for most Taiwanese hand tool suppliers compared to the U.S. and Europe, the analysts suggest Taiwanese hand tool suppliers should take advantage of the assistance of TAITRA, which will organize delegations to Mumbai, Chennai and Kolkata to meet personally local buyers during the second half.
Digital Tools
MIRDC analysts also highlight digital hand tools, seen by the Ministry of Economic Affairs as one of 10 potential-filled items to help speed upgrading Taiwan's traditional manufacturing industries, a category that can very well be the new growth engine for hand tool manufacturers.
The analysts say a high-precision, high-performance digital tool has value-added functions, including digital torque reading, data storage, wireless data transmission and auxiliary driving power, which are achieved with a combination of traditional manufacturing capability and extensive knowledge of electronics, information technology, sensors, industrial design and innovative metallurgy. Such advanced tools are widely used in aerospace, car, construction and wind turbine industries for safety considerations, and, above all, command several times more margins than conventional hand tools.
Therefore, the analysts believe that, bolstered by the government, development of digital tools is expected to accelerate among Taiwanese hand tool manufacturers to boost image and capabilities of the industry globally.
NHS 2012
Taiwanese hand tool manufacturers' participation in the National Hardware Show (NHS) 2012, held May 1-3 in Las Vegas, is deemed by MIRDC analysts helpful to pump growth momentum in the industry in the short term.
Despite a slowly recovering global economy still lingering with the EU debt issue, demand for hand tools for home improvements and car repair remains strong in Europe, America and Asia. A weak economy saps spending power to force consumers to take on DIY jobs that typically would go to professionals amid robust times. The MIRDC says the U.S. market for home improvement products, for example, is estimated to steadily grow to US$336.8 billion by 2016, not to mention that a large number of used cars stateside also fuels sales of hand tools.
NHS 2012 attracted over 2,300 exhibitors from home and 41 countries, as well as over 25,000 professional buyers. The MIRDC says 56 Taiwanese companies, mostly hand tool manufacturers, took part in the show, who exhibited digital tools, torque wrenches, adjustable wrenches, hex-key wrenches, pliers, screwdrivers, power tools, garden tools, tool sets, tool cabinets, and car repair and maintenance tools.
Improvement in Q3
While the above trends and events do not necessarily point to positive signs of growth, the MIRDC forecasts Taiwan's hand tool industry to have more output in the third quarter, with production and exports to total NT$16.55 billion and NT$15.5 billion, respectively, though admitting to uncertain outlook for the whole year, partly due to economic slowdown in China and anemic American recovery, and partly to the Italian, Spanish, Portuguese economies that are mired in debt and bleak prospects, with many insiders being cautious toward business climate. ((SC, Sept. 2012)
Output by Taiwan's Hand Tool Industry | |||||||
Period | 2011 | Q2, 2012 | Q3, 2012 | 2012 | |||
Value | YoY Growth | Value | QoQ Growth | YoY Growth | Value | Value | |
Output | 61.80 | 5.15% | 16.29 | 13.2% | 4.0% | 16.55 | 59.05 |
Imports | 4.76 | 4.20% | 1.21 | 33.3% | -6.3% | 1.15 | 4.05 |
Exports | 59.36 | 9.97% | 15.08 | 6.8% | 1.0% | 15.50 | 56.05 |