Decreased customer inventories and depreciating Japanese yen and South Korean won against U.S. dollar are motivating Taiwan's machine-tool makers to accelerate expansions at home and overseas.
Tongtai Machine & Tool Co., Ltd. will begin building a factory on 66,100-square-meter land right across its headquarters in Taichung, central Taiwan, to cost around NT$1.2 billion (US$41 million) and scheduled to start construction in 2014.
The company will also open a subsidiary in Malaysia and factory-office in Brazil this year to tap Southeast Asian and South American markets.
The company's subsidiary, Asia Pacific Elite Corp., is also busy expanding, scheduled to begin production at an NT$220 million (US$7.5 million) factory next month to put out double-column machining centers driven by linear servo motors and five-axis double-column machining centers.
Low Inventory
Tongtai chairman J.H. Yen says that customers' inventories are low, hence his company's steady influx of orders. The company, he says, has secured around NT$1.7 billion (US$58 million) in orders as of mid Jan. 2013 and order visibility extends to this April, and that Taiwan's machine-tool industry was hit hard last year by the weak global economy.
This year, Hiwin Technologies Corp. will open its first factory in Japan, continue expansion at its third factory in Yulin County, central Taiwan, and open a subsidiary in Brazil and Italy as part of a “Three Year, NT$6 Billion Investment Project”, which began last year.
Hiwin Chairman Youngcai Zhou says that, due to the depreciating yen, his company has decided to open factory in Japan in hopes of boosting market share there by speeding delivery, with its subsidiary in Japan to handle exports of ball screws and linear guideways to local machine-tool makers.
Also, Hiwin's investments follow expansions by its Japanese customers in Latin Americas and Southeast Asia, by opening a subsidiary in Brazil and expanding operation in Southeast Asia.
In Europe, the company's expansion plan for this year includes vigorously drumming up business among first-tier Italian car parts manufacturers with its Italian affiliate, in which the company will increase ownership through its wholly-owned German subsidiary.
Kao Fong Machinery Co., Ltd. has recently set up its U.S. subsidiary and signed up dealers in South Korea, Japan, Thailand, Malaysia, France, Italy and Russia as part of its plan to increase sales outside China, to where the company ships 85% of its machines. According to company president and chief executive officer (CEO), David Shen, ex-China markets are projected to account for 40% of the company's sales this year.
This year, Goodway Machine Corp. and AWEA Mechantronic Co., Ltd. will together inaugurate an NT$5 billion (US$172 million) plan to build a factory at an industrial park in Jiayi County, southern Taiwan. Goodway, AWEA's parent company, will kick off the construction of the first phase on 9,915 square meters of land in the third quarter this year to make vertical lathes. Production will begin by the end of next year, with targeted annual revenue of NT$1 billion (US$34 million). AWEA will build a plant on 6,610 square meters of land at the park.
Meanwhile the Goodway Group is tooling a factory in Wujiang District, Suzhou city, China, with production scheduled to begin next quarter and output set at 2,000-3,000 CNC lathes, double-column machine tools and machining centers a year, to generate revenue of NT$2 billion (US$68 million).
Recovery Soon
Chairmen of both companies, T.H. Yang, predicts the business cycle to bottom next quarter and pick up in the following quarter, despite the majority of received orders being rush and for short-term delivery. The group targets 2013 revenue of NT$8 billion (US$275 million), compared with last year's NT$6.6 billion (US$227 million).
So far, this group has signed up 80 dealers in 43 nations, with its American subsidiary generating 50% year-on-year growth in revenue last year and predicted to repeat the same this year.
Yang say that the depreciating yen is motivating the company to step up tapping international markets, building customer relations and enhancing competitiveness.
Falcon Machine Tools Co., Ltd. will invest NT$300 million (US$10 million) initially to build a factory on 13,200 square-meters of land recently acquired in Suzhou, which is projected to generate revenue of around NT$600 million (US$20 million) a year. A more aggressive investment will be in Changshu of Suzhou to total around NT$2 billion (US$68 million) to build a plant on a 33,050-square-meter site. The company plans to move production of bigger machines to China.
