Taiwan Reaches for World No. 3 in Machine Tool Exports

Taiwan's machine tool industry has followed up a growth of more than 30% in production and export value in 2004 by posting a further increase of 25% in production value in the first seven months of this year, according to statistics compiled by the Taiwan Association of Machinery Industry (TAMI). This is far ahead of the expansion registered in the United States in Italy, which managed growth rates of only 14% and 3%, respectively, during the same period.

Based on the rapid growth of the January-July period, TAMI predicts that Taiwan's machine tool industry will rack up a production value of US$3.4 billion this year and edge out the U.S. to become the world's fifth-largest machine-tool manufacturer. TAMI also predicts that the island's machine-tool exports will reach US$2.7 billion for the year, overtaking Italy to become the world's third-largest exporter.

TAMI vice president Wang Cheng-ching notes that the production and export projections were released at a production/sales convention convened by the European Committee for Cooperation of Machine Tool Industries (CECIMO) during the 2005 EMO machine-tool show, which was held in Hanover, Germany on Sept. 17-21. The CECIMO is a union made up of 15 EU nations (including such big machine-tool suppliers as Germany, Italy, France, and the United Kingdom); representatives of other countries, including the U.S., Japan, China, Taiwan, and South Korea, along with others from Eastern Europe and Latin America, also attended the meeting.

The meeting participants gave projections of their machine-tool production, imports, exports, and domestic consumption for this year. Most of them, Wang reports, expressed optimistic views on the development of their own machine-tool industries for the year. Taiwan is no exception, and Wang is predicting that the island's production and exports will each expand by 20% in 2005.

Wang expects Taiwan to become the world's third-largest exporter of machine tools this year, after Germany and Japan, and the world's fifth-largest producer, behind Japan, Germany, Italy, and China.

In terms of production value per worker, Wang believes, Taiwan's industry, at US$170,000, will trail Japan's at US$393,999, Switzerland's at US$227,000, and Spain's at US$183,000 this year to rank fourth in the world.

Record World Production

According to statistics released by the CECIMO, the world's 29 major machine-tool-producing nations posted a combined production and consumption value of US$45.2 billion and US$44.7 billion, respectively, last year. Both figures were all-time highs.

Thanks largely to Asia's growing purchasing power, worldwide production of machine tools is expected to grow by 5-10% this year to reach US$48-50 billion, and consumption is forecast to increase by 10% to US$49 billion.

In general, prospects for the machine-tool industry are closely related to the development of the auto industry. Japan, backed by its strong auto industry, will experience a continued growth in machine-tool production, while Germany's machine-tool makers will face weakened competitiveness due to the hard times encountered by that country's big carmakers, including Mercedes Benz, BMW, and Volkswagen.

The auto industry has helped Taiwan's machine-tool makers establish a firm footing in the world market. They have also been helped by their high production efficiency, as well as the adoption of a flexible production mode made possible by support from their strong central-satellite plant system.

Wang estimates that the production value of the island's machine-tool industry will reach NT$200 billion (US$5.95 billion) in 2008, especially since the government is encouraging semiconductor and flat-panel manufacturers to use machine tools and other production equipment that is made in Taiwan.

To help keep up the growth momentum, the CECIMO is promoting a new classification standard for machine tools and is helping member producers to develop highly competitive models that feature combination machining functions. The organization is also considering expanding the EMO show to Asia in order to make its members more competitive in relation to those of Japan, Taiwan, and South Korea, the region's three biggest machine-tool producers.

Edward Yang, chairman of Taiwan's Precision Machinery Research and Development Center (PMC) and president of the Awea Mechantronic Co., confirms that European machine-tool makers have expressed a strong interest in organizing a machine-tool show in Asia with the CECIMO's help. One manifestation of this eagerness is talks that are going on between Hanover Messe AG and the Shanghai Municipal People's Government for the lease of two exhibition halls under a build-operate-transfer (BOT) project in order to hold regular exhibitions there. Hanover Messe is also negotiating with PMC about sponsoring a large machine-tool show in Taiwan. (Oct. 2005)

Projected 2005 Performance of Major Machine-tool Producing Countries

Country	Production Value (US$ million)	Export Value (US$ million)	No. Employed	Production Value per Worker (US$1,000)
Japan	11,500	6,170	29,000	393
Germany	9,576	6,250	65,000	147
Italy	4,620	2,586	36,000	163
China	4,600	600	20,000	12.8
Taiwan	3,400	2,700	39,000	170
United States	3,362	1,216	19,000	86
Switzerland	2,544	2,188	11,200	227
Spain	1,035	530	5,600	183

Source: Taiwan Association of Machinery Industry