With the promised effects of the cross-Taiwan Strait ECFA (economic cooperation framework agreement) becoming reality, the biannual 2011 Taipei International Machine Tool Show (TIMTOS 2011) staged March 1-6 and co-organized by the TAMI and the government-backed Taiwan External Trade Development Council (TAITRA), has exceeded in size the rival JIMTOF (Japan International Machine Tool Fair) held last year as Asia’s No.2 and the world’s No. 3 machine-tool exhibition, trailing the Beijing International Machine Tool Show and the EMO show in Hanover, Germany.

With the eventual duty-reductions from the ECFA and widely reported economic recovery worldwide, the TIMTOS 2011 is expected to generate US$2 billion, or approximately NT$60 billion, in business opportunities, says Hsu Hsiu-tsang, chairman of the Taiwan Association of Machinery Industry (TAMI).

A preliminary survey by the TAMI shows that leading domestic manufacturers of machine tools, including Fair Friend Group, Victor Taichung Machinery Works Co., Kao Fong Machinery Co., Hiwin Technologies Corp., Taiwan Takisawa Technology Co. and Shieh Yih Machinery Industry Co., all landed considerable on-the-spot orders.

On-the-Spot Orders

The Fair Friend Group’s five subsidiaries landed NT$840 million in orders, NT$290 million of which placed by buyers from China on the spot. Kao Fong, Victor Taichung Machinery, Shieh Yieh scored NT$60 million, NT$40 million and NT$20 million in orders on the spot, respectively.

The TAMI says the 2011 TIMTOS attracted 928 exhibitors from 20 nations worldwide, and achieved the double-5,000 goal: 5,151 in booth number and 5,071 in number of international visitors.

The post-show statistics compiled by the TAITRA indicate that most foreign buyers came from Japan, whose visitors sought partnerships for Taiwan-made machine tools are more price competitive especially with the sharply higher Japanese yen against the greenback. Japanese buyers also are attracted by potential business opportunities created by the ECFA between Taiwan and China, which came into effect from the beginning of this year.

Mainland Chinese visitors were the second-largest group to the TIMTOS 2011, the first of its kind held in Taiwan after the signing of the ECFA; while other major buyer groups came from the U.S., South Korea, Malaysia and a few emerging nations.

Prosperous Prospects

“Over the past three decades, the efforts we made with TAMI finally have elevated TIMTOS to Asia’s second-largest machine-tool show, and undoubtedly the largest machine-tool show in Taiwan. Hosting an international-class fair, we care not only about numbers of exhibitors and buyers, but also all-round quality. Pursuing total satisfaction for exhibitors and offering higher quality services to buyers are the unchanging objectives,” says Chao Yuen-chuan, president and CEO of the TAITRA.

Chao says the ECFA will eventually eliminate duties on machine tool products traded between Taiwan and China. “So we are confident that China will demand more Taiwan-made machinery, which is already bringing more visitors to TIMTOS this year.”

TAMI chairman Hsu Hsui-tsang says that in 2010 Taiwan’s exports of machine tools was around US$3 billion, and the production value around US$4 billion. The industry recovered so quickly because Taiwan’s makers are not fully-integrated but rely on each other for parts. So even lower order volumes generate work for all suppliers.

Hsu says that the focus of the show were five-axis and turning/milling machines, high-speed and high-accuracy machines, and super-large machinery.

Follow-up Orders

Compared to the one held two years ago, says Jimmy Chu, chairman of the Fair Friend Group, this year’s event reflects clear recovery, being confident to see more follow-up orders.

Taiwan’s machine-tool firms will enter into a new era with the ECFA: the “fast-tracked early-gainers” list in the agreement stipulates “rule of origin” requiring that Taiwan-made machine tools must contain at least 50% production value sourced in Taiwan and China, with the CNC devices used to be made in Taiwan or China by 2014.

With slowing post-downturn demand in the U.S. and Europe, China and South Korea are Taiwan’s new competitors in the machine-tool field. An industry insider urges Taiwan’s manufacturers to design and develop dedicated products to suit end users, instead of meeting requirement of global sales agents.

R&D Awards

The organizers also presented this year the Machine-tool Awards for Excellence in Research and Innovation, which were given to NC machine tools, NC lathes, and other NC machine tools.

Winners

Supreme Excellence Award: Wele Mechatronic Co. for VTC2500H vertical multi-tasking turning center.

Grand Champion: Ping Jeng Machinery Co. for high-precision machining center. Awards of Eminence: Wele Mechatronic Co., Fair Friend Enterprise Co., Ecoca Industrial Co., Dah-Lih Machinery Industry Co. and Hsin Kang Machinery Works Co.

Grand Champion: Fair Friend Enterprise for CNC Turning Center in the NC-lathe category.

Award of Eminence: Yi-Da Precision Machinery Co. for orthogonal multi-tasking machine.

Grand Champion: Ching Hung Machinery & Electronic Industry Co. for high accuracy, low friction micro feed quantity wire cut EDM in the category of other NC machine tools.

Awards of Eminence: Ocean Technologies Co., Center Line Machine Industry Co., Chin Fong Machine Industrial Co., and Soco Machinery Co.

Ambitious

The Fair Friend Group, as others in the field, rented a sizable booth to build presence and sales.

Showcasing many omni-directional machine tools, the group aims for NT$100 billion in sales by 2018 to lead the world in such criteria. If achieved, the group will be the first Taiwan-headquartered machine-tool manufacturer to see annual sales exceed NT$100 billion. Despite the global financial tsunami in 2008, the group has seen consistent growth in sales over the past three years, with annual sales reaching NT$21.2 billion in 2010, and expects this year’s sales to exceed NT$30 billion.

Jimmy Chu, the chairman, says his group has 57 subsidiaries worldwide and its subsidiary in Hangzhou, Zhejiang province received orders for 621 machine tools in January alone, as well as posting 287 renminbi in sales in January, up 24% year-on-year. Fair Friend is negotiating with a machine-tool manufacturer for possible acquisition, and plans to set up production facilities in India and South Korea or even acquire machine-tool factories there.

Chu notes the group will likely turn out 13,000 units of machine tools globally to lead the sector this year, with the ultimate goal of scoring NT$100 billion in annual sales by 2018 to exceed the top-two rivals: Mazak of Japan and DMG of Germany. The group ranked 11th globally in sales last year.

Chu says his group’s production facilities and distribution networks in China have been running for several years, with that market being the group’s main sales driver over the past few years, and estimates corporate annual sales to reach 11 billion renminbi by 2012, or 65% of total sales.

Besides rapid growth in China operations, Fair Friend aims to achieve at least 30% annual sales growth for its plants in Taiwan, Italy, and the U.S. in the next nine years.

Swiss Pavilion

To draw attention from buyers and brandish sophisticated technologies, 40 Swiss exhibitors attended the event in a national pavilion, which showcased various tooling technologies and industrial grinding, milling, sharpening, turning, jig boring, electrical discharge machining, gear cutting and forming machines. Visitors and buyers found all-round sourcing and the latest metalworking applications at the Swiss Pavilion, which spread across 91 standard booths to set an 18-year TIMTOS record. Another 50 Swiss exhibitors occupied independent booths.

“Taiwan is the fastest growing market for Swiss machine tools in the world. This is already the 10th time TOSI has worked with TAMI and TAITRA to organize the Swiss Pavilion at the TIMTOS,” says Jost Feer, director of the Trade Office of Swiss Industries (TOSI).

Insufficient Space

Reflecting the issue of space availability, Feer says: “We were always overbooked—three times over-booked. This year is the first time that we got the space that we wanted. Now in the pavilion, we have 91 booths, but there are another 50 booths occupied by Swiss companies. So this is basically the biggest foreign participation at TIMTOS. TIMTOS is getting better, especially with the new, column-free venue, and the MRT helps a lot. Too bad the Nangang exhibition hall is still not big enough and won’t be completed fully for a few more years.”

Christoph Blattler, division chief of the Swissmem, the Swiss Association of Mechanical and Electrical Engineering Industries, says that Taiwan responded quickly to meet post-recession demand. Based on recent figures showing a strong sales growth in Swiss machines, they are looking at a strong market.

According to the 2008 data published by the German Engineering Federation, Switzerland ranked fourth and Taiwan fifth as exporters of machine tools.

Based on Swiss statistics, Swiss metalworking machine exported to Taiwan totaled US$71 million last year and Switzerland imported US$190.4 million in machine tools from Taiwan. In addition, Taiwanese entrepreneurs also buy a significant amount of Swiss machine tools for China and overseas factories.

Three Captions:

1. TAMI chairman Hsu Hsui-tsang: “Despite the economic slowdown, Taiwan machine-tool industry has maintained a high level of productivity over the past few years.”

2. Taiwanese machine-tool exhibitors use vividly-colored booths to draw attention.

3. The Swiss Pavilion is the largest ever at the TIMTOS.