Taiwan’s Hand Tool Industry Outlook in 2020

Taiwan’s hand tool industry rose from the growing demand during the Vietnam War in 1960 and its exports were ranked first in the world 5 years in a row from 1998 to 2002. The exports of hand tools were first surpassed by China in 2003 and later by German in 2008. Today, it ranks third globally in the export value.

Having a complete supply chain from downstream to upstream in Taiwan’s hand tool industrial cluster allows manufacturers to rely on each other and maintain its competitiveness simultaneously, striving for quality products, which have also garnered great attention in the world by its quality products and the state-of-art technique. Hand tool industry created over NTD$100 billion annually, earning Taiwan the moniker of “The Hand Tools Kingdom.”

Amid the fierce competition in international markets, the Taiwanese manufacturing industry was generally confronted with challenges that put them in a hard place. Markets like Europe, the US, and Japan, which had advantages like being closer to the industry market, and boasting Industry 4.0 technology. On the other hand, Taiwanese suppliers also had to deal with emerging countries like China and India, which could use their low-cost advantages to undercut Taiwan.

Clusters Synergize Industry’s Capacity

The hand tool manufacturers are mainly centered in Taichung and Changhua, mostly small-sized enterprises with 90 percent factories that boast under 50 employees

The industry supporting peripheral systems are comprehensive, including molding, heat treatment, forging, electroplating, and assembly. The manufacturing process is fast and flexible, highlighting the characteristics of industrial clustering.

The industry benefits from clustering, as hand tools manufacturing processes involve equipment from forging to surface treatment. Also, the production and manufacturing are based on traditional machinery and involved with different techniques of secondary processing for metals. Another factor is the vast diversity of products, thus most manufacturers are not able to offer a full manufacturing process. Many manufacturing parts need to be outsourced to professional manufacturers, making production schedule flexible and fulfill the need for high-mix low-volume production or even one-piece delivery.

Anticipating Future Trends for Next Peak of Economic Growth

Trend One: Opening International Channels

Due to the small domestic demand in Taiwan, the only way to expand exports is to receive orders from international markets. Notably, Brighton-Best International (Taiwan) Inc., which owns the largest online ordering website for socket screw products in the U.S., has provided a distribution channel for countless Taiwan hand tool manufacturers to jointly promote their branding projects and increase their market shares.

Trend Two: Fulfill Customer Demands

Reducing costs was a hallmark of the traditional industry mindset; now industry members must move to anticipate and fulfill consumers’ needs from manufacturing perspectives. It is high time for suppliers to prioritize product diversity and uniqueness. If hand tools are made more user-friendly, consumers would be more inclined to purchase the products, rather than feel intimidated. Hand tools made in Taiwan are produced with excellent material and designed for performance, but can be improved in terms of appearance and ease of use. Manufacturers should integrate information and communications technology, design aesthetics, and eco-friendly elements into the product to increase the added value of hand tool products.

Trend Three: High-Valued Innovation Moves Towards a Niche Market

Finally, as hand tool manufacturing ability has reached a mature level, room for improvement is limited. Before suppliers can consider incorporating Industry 4.0 into their DNA or developing high-end products, manufacturers must strengthen their fundamentals to move forward into professional niche markets.

With the advent of globalized competition and low-profit era approaching, the shortened product life cycle and increasing demand for customization paints a pessimistic picture for enterprises. As such, combining hardware expertise with ICT-know how has become the primary choice for many manufacturers when it comes to their transformation.

In response to marketing specialization, Taiwanese enterprises are anticipating a future where it transforms hand tools to high-end products in highly added-value industries like medical equipment, aerospace, digital, 3C, gardening, vehicle, and construction tools.

By Metal Industries Research & Development Centre