Taiwan's Hand Tool Industry Achieved Output of NT$61.3 Billion in 2011

Mainly buoyed by growing exports, Taiwan’s hand tool industry achieved output of NT$61.3 billion in 2011 for an year-on-year (YoY) growth of 5.15%, according to the report by Dr. Arthur Hsu, an industrial analyst at the Industrial Research Section, Planning & Promotion Department of the Metal Industries Research & Development Centre (MIRDC). The report indicates that Taiwan’s hand-tool exports amounted to NT$59.34 billion in 2011, up 9.97% from NT$53.96 billion posted in 2010, and imports came to NT$4.76 billion for a 4.2% YoY growth. However and perhaps undermined by growing worry about the sluggishness of Taiwan’s economy, the scale of the domestic market shrank 24.5% YoY to only NT$6.72 billion from NT$8.904 billion. Considering that both exports and imports grew significantly, but the domestic demand sagged, Hsu says that the industry’s re-exports have actually increased due partly to the growing bilateral trades between Taiwan and China driven by the ECFA (Economic Cooperation Framework Agreement), which allows exports from Taiwan to China at favorable duties. In the fourth quarter of 2011, the industry posted production value and exports of NT$15.11 billion and NT$15.19 billion, respectively, for an YoY growth of 3% and 16%, but imports reached only NT$1.05 billion, down 14% YoY. Hsu says that drilling, tapping and threading tools were the industry’s largest export categories in the fourth quarter, generating turnover of NT$7.993 billion, with wrenches and tool sets also contributing NT$4.47 billion and NT$1.1 billion, respectively, to the total among the three most sought-after products. Meanwhile, about NT$408 million of various saws made up the majority of imports. Sharpening Competitiveness Ever more Taiwanese manufacturers have been adopting different strategies to sharpen competitiveness to fend off growing rivalry from emerging nations in recent years, which has helped to fuel the industry’s sustainable growth. Hsu cites Win Features Industry Co., Ltd. in his report to show the maker’s efforts to strengthen R&D and efficiency. A maker of insert bits, power bits, bit sockets, impact sockets, nut drivers, nut setters, bit holders, magnetic sockets, and power tool accessories, Win Features recently activated its brand new logistics and R&D center in Taichung City, central Taiwan, which took two years to construct and will help the company improve efficiencies from R&D to logistics. With the center coordinating with its plant in Guangdong Province, southeastern China, Hsu says the company, a globally known OEM (original equipment manufacturer) to Stanley and Black & Decker, is expected to further expand market shares in the short term. Amid surging hand tool orders from Chinese customers that are motivating Taiwanese makers to strengthen competitiveness for sustainable growth, Li Yao Industrial Co., Ltd. is a striking example, whose, Hsu confirms, orders for crimping tools and cable cutters from China shot up in 2011. To effectively keep up with demand, Hsu says that the company has recently stepped up installing advanced production machinery and testing instruments, including 400 and 600-metric-ton punching machines imported from Switzerland, high-performance horizontal machining centers and CNC milling machines to better achieve qualitative consistency, enabling the company to build a new overseas foothold in China. US-Korea FTA While working hard to hone competiveness, Taiwanese manufacturers also pay close attention to global market changes and potential threats, one of which is the free trade agreement signed between the U.S. and Korea. The U.S.-Korea FTA, which has come into effect in March 2012, has sent shock waves through Taiwan’s export-driven economy that still sees many sectors relying on the U.S, but Hsu thinks that the hand tool industry will be mostly spared, mainly because Taiwanese makers have built time-tested reputation with proven products following nearly three decades of efforts. In fact, Hsu says the U.S.-Korea FTA will modestly impact Taiwan’s hand tool industry as did the EU-Korea FTA signed earlier. In the lecture on the future development of Taiwan’s hand tool industry given in a forum in mid-2011, Hsu emphasized that the Korean hand tool industry prefers to focus on the domestic market rather than exports due to the country’s fast-growing industrial production, which is shown by another report indicating Korean hand-tool imports surged to about NT$6.791 billion in 2010 at a compound annual growth rate of 8.34% from 2006, while exports sagged to only NT$3.518 billion for a 5.03% drop in the same period. Penetrating Emerging Markets Part of the Taiwan Hand Tool Manufacturers’ Association’s (THTMA) plan is to boost global presence of the industry via greater participation in trade fairs, says Hsu. The association moved closer to realizing such goal by organizing an exhibitor delegation consisting of 18 Taiwanese manufacturers that took part in the Intertool Moscow 2011, which proved successful to venture into the Russian market. Based on delegation members’ feedback, Hsu says many exhibitors impressed buyers from Russia and East European countries with quality Taiwan-made hand tools at reasonable prices, enabling many suppliers to successfully build contacts, which helps to pave the way for the industry to tap the market. In the future, Hsu says that the THTMA and operators will step up cooperation to participate in more international trade fairs in search of new business opportunities in emerging countries. Uncertainty in 2012 Amid global economic uncertainty, exasperated by an economic slowdown in China, rising oil prices due to Mid-East unrest, potentially reignited sovereign debt issue in Spain, slower growth in India, Hsu admits whether the industry sees a bright future in 2012 remains to be seen. Although the U.S. has just reported promising economic growth of 3.0% for the fourth quarter of 2011, Hsu warns that a sagging market in Europe worries suppliers who are comparatively pessimistic about the outlook in 2012, which makes sense based on the industry’s output and exports having significantly slowed in the fourth quarter of 2011, during which the EU debt crisis was widely believed to need years to recover. At a meeting held in mid-February 2012, THTMA chairman Jack Lin alerted that the industry will likely see demand weaken starting in the second quarter after several quarters of stable growths. Focus on Quality Lin urges Taiwanese makers to focus on quality as core skill development, or be quickly routed by underselling, especially amid a gloomy market. For instance, the THTMA encourages members to compete in global innovation and design contests, such as the iF, Red Dot and G Mark. He believes that such competitions to be excellent global promotional platforms to enhance marketability, credibility of Taiwan-made hand tools; while Taiwanese makers’ chances of winning such contests are improved with technological support from local R&D bodies, which help ever more manufacturers to digitize tools, develop higher-end composites to enhance structural durability and lifespan. Source: cens.com