Taiwan's Machinery Exports Amounted to NT$139.1 Billion in The First Quarter of This Year

Taiwan’s machinery exports amounted to NT$139.1 billion in the first quarter of this year, a marginal improvement of l.4% from the year before, according to the latest statistics compiled by the Taiwan Association of Machinery Industry (TAMI). The rate of growth was depressed by declines in China and India. On a U.S. dollar basis exports for the quarter totaled US$4.68 billion, almost unchanged from a year earlier. This performance raises concerns that the industry may be losing its growth momentum. TAMI explained that some of the export sluggishness was due to fluctuations in steel and die-casting prices, along with the weakening of the NT dollar against the greenback. Another cause was slow progress in follow-up ECFA (Economic Cooperation Framework Agreement) negotiations on further trade facilitation between Taiwan and China. To date, over 100 types of machinery, machine tools, and related parts exported from Taiwan enjoy priority tariff cuts in China. Yet another reason for lagging export growth, TAMI said, is rivalry from Korean competitors in the global market, especially since Korea signed free trade agreements with the EU and the U.S. The FTAs came into effect in July 2011 and March 2012, respectively, giving Korean-made machinery a price advantage over Taiwanese products. Sales of Machine Tools Still Hot As usual, machine tools accounted for the largest share of Taiwan’s overall machinery exports in the first quarter, growing 14.2% to US$998 million. Machine-tool exports to Germany, the Netherlands, and the U.S. shot up 31%, 21%, and 85%, respectively. Demand from Japan was also unexpectedly strong, with Japanese firms increasingly placing orders with Taiwanese suppliers following damage to their facilities in Taiwan caused by the months-long flooding there in the second half of last year. The rising value of the yen has given an extra boost to this trend by weakening Japan’s own export competitiveness. Waning Presence in China Taiwan’s machinery industry has been shocked, however, by its shrinking share of the China market, dashing expectations that exports to that country would surge because of ECFA and strong domestic demand. TAMI noted that China imported about US$2 billion worth of machine tools in the first two months of this year, up 13% on an annual basis. Japan supplied US$780 million of the total, up 16.3%, commanding a 39.9% share of the Chinese market. Germany accounted for US$480 million, up 14.6%, for a 24.3% market share; and Italy sold US$130 million worth of machinery to China, up 65.7%, capturing 6.7% of the market. Taiwan ranked No. 3 in the Chinese market with a 9.6% share, but its exports to that country were down 8.4%. 2012 Outlook Despite its lackluster performance in the first quarter, TAMI believes that Taiwan’s machinery industry is likely to enjoy robust export growth this year thanks to the expected growth in major overseas markets. China’s economy, for example, is expected to grow by 8.2%; growth is projected to be 2.1% in the U.S., 1.4% in Japan, 5.1% in Thailand, 6.2% in Indonesia, 0.7% in Germany, 7.2% in India, 5.8% in Vietnam, 3.7% in Malaysia, and 2.7% in Korea. The industry’s confidence is bolstered by the fact that the production lines of many machine-tool makers are fully booked through the second quarter of the year, and delivery schedules are already arranged through September. Tongtai Machine & Tool Co., for example, reports NT$1.9 billion worth of orders on hand, and AWEA Mechantronic Co. has an order backlog of NT$1.6-1.7 billion. TAMI hopes that the industry’s exports will grow 5-8% for the year as a whole, reaching a total of US$23 billion. (SC, May 2012) Source: cens