Taiwan has clearly moved into the top ranks of machine tool building countries. It ranks fifth in the world in the dollar value of machine tools produced and fourth in the world in the dollar value of machine tools it exports.
Collectively and individually, Taipei builders are preparing for a leadership role in metalworking technology. This expectation was quite apparent at the most recent Taiwan International Machine Tool Show (TIMTOS) in Taipei. TIMTOS is Taiwan's premier biennial machine tool exhibition (see the box on the next page). The machines on display there would be hard to distinguish in performance or appearance from the best models coming from anywhere in the world.
The only thing lagging a bit is innovative homegrown technology. That is likely to change, however. In a few more years, TIMTOS may well be the show where the world gets its first glimpses of technology developed in Taiwan that is not available anywhere else. The country's current effort to coordinate and enhance R&D initiatives is definitely moving in that direction.
In the meantime, Taiwan builders are working together to change their image. For years, Taiwan presented itself as the source of low-cost machine tools. Today, the country wants the world to see it as the prime source of quality machines at a reasonable price.
Taiwan is especially eager to establish a firm foothold in emerging industrial countries such as Turkey, Russia, Brazil, India and mainland China. These markets are expected to grow rapidly in the short term. Moreover, these markets are not yet dominated by long-entrenched machine tool builders from Japan, Europe or the United States.
A number of Taiwan builders have a strong presence in the U.S. market, but it has taken these companies many years and a relatively large investment to get established. These companies remain deeply committed to the United States, but other builders are showing less patience and resolve in following this path. Their machines are more likely to reach the United States as privately labeled models marketed by U.S.-based importers who understand the U.S. buyer.
Machine tool builders in Taiwan tend to be relatively small, family-owned enterprises. However, all of the builders are well-supported by the national government in the sense that machine tool building is recognized as a key industry essential to the growth and development of high-tech Taiwanese industries. Thus, it is not surprising that the president of Taiwan, Chen Shui-bian, paid a personal visit to TIMTOS, speaking at a press conference and touring the exhibit areas. In his remarks, Mr. Chen characterized machine tools as "the mother of all industries," and reiterated his administration's support for building up central Taiwan as the hub of R&D facilities to promote machine tool building and related activities.
The results of this ongoing national support were evident at the show, especially in two area--the adoption of linear motors and the development of reliable, low-vibration high speed spindles. Compared to leading builders around the world, many Taiwan builders were not able to keep pace with implementing these technologies. With national sponsorship, builders were invited to work together to facilitate the transition to linear motors and advanced spindles. These initiatives made it possible for builders who otherwise lacked the engineering resources to make the transition on their own to do so in a timely and cost-effective manner.
Builders in Taiwan are remarkably realistic and candid about their strengths and about the challenges they face. They see strength in the relatively low wages that prevail on the island. Taiwan is located close to mainland China and India, two of the markets that Taiwan builders have targeted. Finally, Taiwan enjoys a well-developed social infrastructure and strong skills base, making "people power" a key asset.
Challenges are imposing, too. For labor-intensive activities, there is a shortage of job seekers. Companies are restricted from hiring quest workers from overseas above a certain percentage of their workforce. Land for industrial development is limited and facing growing demand. Proponents are seeking a government-backed "machinery industrial park" to be constructed in the central region of the country to solve this problem.
As effective as government funding for shared R&D efforts has been recently, this funding is threatened by spending cutbacks. The cost of steel and iron, the basic raw" materials for building machines, has risen markedly in the last 2 years and is expected to keep rising. On the mainland, the central government has enacted policies to protect and favor state-owned machinery builders, making it more difficult for Taiwan to achieve its goals there. Finally, fluctuations in currency exchange rates are not trending favorably for machine builders.
Machine tool buyers in the United States will do well to keep an eye on machine tool technology from Taiwan. U.S. plants have many options for filling their needs for low- and high-end machine tools. But between these extremes, Taiwan machines will be very well represented and are likely to offer reliable and capable machines at attractive prices.
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