Taiwan's machine tool makers enjoying influx of orders

Taipei, March 24, 2004 (CENS)--Thanks to the economic recovery and the fast growth of mainland China's automobile industry, Taiwan's makers of machine tools have seen steady increase in orders and have been involved in the development of special product lines to meet the demand of the automobile industry over the past several months.

Because of the economic recovery, it is expected exports of domestically made machine tools will grow by 20% annually this year.

According to an analysis prepared by the Industrial Technology Information Services (IT IS) Office under the auspices of the Ministry of Economic Affairs, Taiwan's machine-tool manufacturers are increasing capital spending in view of the global economic bottom-out. Taiwan saw exports and imports amounted to US$1.67 billion and US$850 million last year, up 15.9% and 22%, respectively, from 2002.

Firms involved in development of machine tools used in automobile industry include She Hong Industrial Co., Quaser Machine Tools, Inc., Kao Fong Machinery Co., and Falcon Machine Tools Co. The machines they are developing can be applied to process such sophisticated parts as shafts, disks, bearings, engines, cylinders, and gear boxes.

Following the footsteps of Victor Taichung Machinery Works, some large-sized manufacturers, including Tong-Tai Machine & Tool Co., Taiwan Takisawa Machinery Co., and Goodway Machine Corp., are unanimously developing high-value-added inverter lathes which are used in processing automobile brake disks. It is expected Taiwan would be able to sell more than 100 inverter lathes per year in the next few years.

H.M. Meng, industry analyst at the IT IS Office, said domestic machine-tool manufacturers have received orders to keep their production lines busy for four up to six months, compared to two up to three months last year. To digest the increased orders, some manufacturers, including Tong-Tai, Quaser, Awea Mechantronic Co. and Olympic Seiki Co., have mapped out plans to establish new production facilities.

Tong-Tai boasted it will see production lines in full run in April because it has a backlog of over NT$1 billion (US$30.03 million at US$1:NT$33.3) in orders. Awea has an order backlog of NT$800 million, with the orders for double-column machining centers able to keep production lines busy till May. Shieh Yih Machinery Industry Co. has received over NT$800 million (US$24.02 million) worth of orders, which won't be fully filled until May.

Tong-Tai said it would be able to achieve NT$3 billion (US$90.09 million) in annual sales this year. As it is expanding Kaohsiung parent plant and will establish two plants in Southern Taiwan Science Park and Wujiang, Jiangsu Province of mainland China, the company is preparing to challenge NT$6 billion (US$180.18 million) in annual sales in the next five years.

Thanks to its efforts to improve operating nature, Shieh Yih has seen gross profit margin increase to 21.5% at present from last year's 16%. The firm is expected to have a chance to challenge NT$3 billion (US$90.09 million) in sales this year.

Kao Fong Machinery Co. will hire 70 more employees in the beginning of next year to carry out 24-hour operations in three work shifts. The company targets to roll out 1,001 machine tools to create NT$2.1 billion (US$63.06 million) in sales, next year.

According to a survey conducted by the Industrial Economics and Knowledge Center under the government-backed Industrial Technology Research Institute, 2004 will be a harvest year for domestic manufacturers of machine tools and automobile parts because of the fast growth of the automobile industry in mainland China.