Taiwan could become the third-largest machine tool exporter by year-end amid the global economic recovery and the positive effects brought with the signing of economic cooperation framework agreement (ECFA) with China, said the Taiwan Association of Machinery Industry (TAMI) yesterday.

According to estimates made by the TAMI, the total output value of Taiwan-made machine tools could reach US$4 billion by the end of 2011, topping Italy to make the country the No. 3 exporter of the machine tools in the world.

After the financial meltdown of 2008, the global machine tool sector suffered a major setback, according to the Industrial Development Bureau (IDB) under the Ministry of Economic Affairs.

The total output value of the industry dropped to NT$82 billion in 2009. But with the gradual recovery of the world economy and the signing of the ECFA, the number increased to NT$117 billion last year.

The booming business, however, has caused new problems for the sector in Taiwan. The industry is now suffering from a lack of manpower and a shortage of components, according to the TAMI.

The March 11 earthquake in Japan worsened the situation, as Japan is the largest supplier of bearings, linear guides and ball screws.

The IDB invited component manufacturers, and machine tools and steel material providers, to two meetings in June to jointly come up with a solution to the problems being faced by the industry.

The bureau also successfully persuaded foreign companies to set up operations in the country.

Japan's Fanuc, the world's largest digital control system and robot manufacturer, has already set up assembly lines for CNC lathe controllers in Taichung Industrial Park, said the bureau.