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Nearly 70% of Taiwan forging industry produces automotive and motorcycle parts. As a result, Fastener World arranged an interview with Mr. Mu-Shan Chiang, Vice Chairman of Taiwan Forging Association; meanwhile he is the Chairman of Chian Hsing Forging Industrial Co., Ltd., the largest automotive forging plant. He will talk about his opinions and prospects of Taiwan forging industry (including automotive and motorcycle parts and accessories), the following is interview record:

 

 

A: There are about 500 forging manufacturers in Taiwan, among which 85% is SME that has less than 100 personnel. Main products include automotive, motorcycle and bicycle parts, hand tools, etc. The manufactures have more than 3,000 sets of forging machine. Taiwan forging industry is classified as labor and technology intensive industry. Taiwan forging industry is equipped with unique forging technology, excellent collaboration system and abundant production experience. Additionally, produced automotive and motorcycle parts are possessed of low quantity large variety and flexible manufacturing advantages. China Steel Corp. is also able to supply excellent quality and steady material for automotive and motorcycle parts, facilitating that Taiwan made parts maintain a certain level. Main export market is therefore focused on Europe, America, and Japan.

 

Affected by deterioration of investment environment in Taiwan, domestic supply market reaches a bottleneck and demand industry continuously relocates abroad, Taiwan forging industry faces an unprecedented pressure of transformation, upgrading and new market exploration. Many forging manufacturers are gradually dedicated to precision forging, special forging and automation, meanwhile enhance the development of new forging to break through dilemma.

 

A: Though Taiwan AM manufacturers are very competitive, yet technical threshold is not high. Additionally, low-priced strategy competition usually causes the decrease of gross profit that market is easily threatened. China and Korea have prosperous automotive industries that both countries list as priority industry. In China and Korea, the automotive industry technical thus experiences a rapid growth of technical upgrading. In my viewpoint, production technology and management in China exhibits a significant upgrading due to the backup by foreign investment. China automotive industry will catch up with Taiwan technical level in 5 years. As a result, Taiwan should have crisis consciousness and proactively develop value-added heightening product of market differentiation. Furthermore, Taiwan should make use of current international enterprise to conduct global division of labor system, enhance foreign procurement opportunity, and enter the supply chain of the largest global automakers. However, the forging industry is classified as hard working, dirty, and dangerous “3K industry” (in Japanese), most of forging manufactures is small scale, image is not like technology industry and has no incentive of stock dividend so that it is difficult for return of talents from young men and professionals. As such, gap of talents is occurred in Taiwan forging industry. Gap of talents poses a challenge for Taiwan to enter OEM of auto supply chain. Taiwan must excel in the price, production speed, and quality to retain our advantages in facing competition of China and Korea.

 

In addition, I hope that government could give the forging industry more preferential measures that grant technology industry. Heavy investment in equipment is a prerequisite to develop value-added heightening products. If government could give forging manufacturers more tax avoidance measures, the forging manufactures could have more working capital that will certainly benefit the overall industrial development.

 

 

A: I believe that ECFA inking will increase the export ratio of Taiwan automotive and motorcycle parts to China. Since China’s 12^th Five Year Plan will list the automotive industry as a priority to develop. In 2010, new car production in China has exceeded 18 million and estimates to reach 25 million in 5 years so that the market is considerably big. Increase of wage and implementation of power rationing will certainly increase the production cost and reduce the profit of manufacturers in China. Above factors indicate a favorable news to Taiwan manufacturers. In addition, Taiwan manufacturers could take advantage of tariff-free from ECFA to compete with foreign manufactures in terms of product price and gradually enter the supply chain of automotive parts of automakers in China setup by international auto CBU makers.

 

A: Following demand of precision, lightweight and high strength is increasing, aluminum magnesium alloy and titanium alloy will be widely applied. Taiwan forging manufacturers should change the concept that quantity dominates all, strengthen quality improvement, increase forging forming technology, and enhance the planning ability. Through proactive investment in foreign country or implementation of technology transfer to foreign enterprises, Taiwan forging manufacturers should increase the international marketing to establish a solid position in the supply, collaboration system of worldwide automotive parts. Except automotive and motorcycle parts market, railway vehicle, electric vehicle, and aerospace field are emerging products market in the future. Taking Chian Hsing Forging Industrial Co., Ltd. as an example, we proactively develop the export market of railroad shoe and thus generate favorable business. The other forging manufacturers could pay attention to market dynamics of railroad shoe.

 

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