Playing Global Chess

I recently returned from a visit to the Taiwan machine tool show, TIMTOS. Besides the usual booth visits, I was able to see several machine tool builders in the country’s manufacturing center in Taichung, about two hours south of Taipei. In this column I’ll briefly summarize the trip. I plan a more detailed report for our July issue.

Taiwan is an exporting nation. Some 80 percent of the machines, tooling and accessories it produces are built for purchase by other countries. As most of us involved in metalworking know, Taiwan has been fairly successful at penetrating the United States and, as I found out, Europe and Mainland China too. The United States is Taiwan’s No. 2 machine tool export market behind the PRC.

But Taiwan is also an importing nation. Here again, the United States is the No. 2 machine tool supplier to Taiwan. Moreover, according to import/export statistics provided by Taiwan customs, from 1998 through November 2000 Taiwan ran a positive trade surplus with the United States of nearly $65 million. Demand for high value-added, automated equipment for Taiwan’s high technology and semi-conductor industries accounts for the high volume of imported U.S.-made machine tools. This was not the perception I had before visiting Taiwan.

As an exporter with so much riding on the United States’ market, needless to say Taiwan is watching the current economic slowdown closely. But this is a tenacious manufacturing economy. Experienced as exporters, the Taiwanese machine tool builders look globally for viable markets to offset slowdowns. The concept is that if the U.S. economy slows, Europe or Mainland China picks up the slack. However, some see this flexibility as both a strength and a weakness.

Most machine tool buyers ask that their supplier be available long term for training and service of the installed machine tool base. There is a perception that Taiwan’s picking and choosing of markets has led to a general reputation of being less than reliable in this regard. However, there are many Taiwanese companies that understand the necessity of being invested in a market, not just a vendor to it. Participation on this level involves facilities and personnel commitments that are factory-backed along with a good selection of distribution. For the more successful companies, this understanding has been implemented. Some have been in the U.S. market for more than 20 years. They too bemoan the reputation that a few bad actors have created.