TWMA Chairman C.L. Tu Sees Turnkey Plants as Key to Survival

Posted in Taiwan on Monday, 27 June 2011. Print

Taiwan sorely lacks know-how to develop woodworking turnkey plants

TWMA Chairman C.L. Tu Sees Turnkey Plants as Key to Survival

C.L. Tu, chairman of the Taiwan Woodworking Machinery Association (TWMA) and Cheng Kuang Wood Machinery Works Co., Ltd., gazes a video clip on his laptop of a German-made woodworking equipment that makes futuristic robotic machinery a reality, with the intelligent tool humming effortlessly to turn green logs into finished pieces without significant manpower. The woodworking machinery executive received an inquiry from a Russian customer asking if Cheng Kuang can deliver a totally integrated system as shown in the video, and one can safely assume Tu was too preoccupied nor even knew where to begin responding to such request.

To survive, Taiwan's woodworking equipment manufacturers must develop turnkey plants, muses Tu, implying the state of progress of the TWMA membership in the emerging segment.

Such admission is no idle talk, for TWMA data show China has been successful with underselling and duplicating tactics, unseating Taiwan as the world's No.3 woodworking equipment exporter for the first time by selling cheaper machine tools similar to Taiwan's, in stark contrast to some 20 years ago, when Taiwan-made machine tools dominated the China market.

Before being exceeded by China, Taiwan exported on average US$700 million of woodworking machines worldwide yearly to trail Germany and Italy.

China is now not only a bigger exporter of woodworking machinery, but is also Taiwan's major buyer of such machine tools, replacing the United States.

No wonder China has become Taiwan's major buyer of woodworking machinery and replaced Taiwan as the world's No.3 exporter of such tools, for the nation is home to the world's most vibrant housing market, which demand truckloads of woodworking machinery to process construction materials and furnishings, Tu notes.

Euphoric Reliance
The chairman blames Taiwan's makers for euphorically relying on the same strategy that has resulted in the current scenario. A few years ago woodworking tool makers in Taiwan took over the individual machine tool segment from Germany by churning out mostly thin-margin, mass-market products, CNC models of which Taiwan's industry insiders typically tout as being better than German rivals but available at half the prices.

But German ingenuity continues to stay ahead of Taiwan's to the chagrin of the island's makers. Losing the individual machine tool segment to Taiwan galvanized German rivals to develop more profitable turnkey plants. "Now we must emulate German manufacturers to evade the hopeless underselling battle against Chinese rivals," Tu stresses, who believes Taiwan's machinery suppliers stand very good chance to deliver turnkey plants, adding that Japan's woodworking-equipment industry has almost vanished as most of manufacturers have switched to other trades for greener pastures, while the Italian sector is mired in economic problems.

Truth hurts and even more painful to reveal the same. As is in many other sectors, Taiwan sorely lacks know-how to develop woodworking turnkey plants. "The sector in Taiwan simply does not have engineers capable of designing turnkey production processes although having specialists in electrical, mechanical and processing engineering. Designing turnkey plants demands higher standards of computerized automation, operation safety and man-machine interface than do individual machines," stresses Tu.

Admitting realities of culture that is molded by age-old prejudices and high cost of living, Tu says local college graduates look down on work in machinery shops that generally don't pay as well as tech companies, not to mention the noisy, exhausting and greasy environments as well as the stigma attached to blue-collar jobs.

With ever more Taiwanese woodworking machinery makers in China sourcing turnkey plants from Taiwan, Tu thinks China can be the testing ground for such machine tools from Taiwan. Taiwanese makers of woodworking machinery in China are forced to look at turnkey plants in the face of increased labor costs, reduced wood supplies and stricter restrictions, he notes.


Whole-plant equipment is expected to reinvigorate Taiwan's woodworking equipment industry.
Progress Made
Progress is being made regardless of the long road ahead. Many Taiwanese machinery suppliers have pieced together individual tools to build semi-turnkey plants that have been shipped to Europe, says Tu. He adds the next breakthrough will be for a maverick in Taiwan to tweak the semi-turnkey plants, laying the next step towards full-turnkey systems, if the European buyers find the semi-turnkey tool serviceable.

The chairman believes teamwork will eventually lead to success. "I am optimistic about the cooperation among the members, who are willing to work on shared issues, and know many of them are trying to develop turnkey plants by integrating individual tools," says Tu.

Also the TWMA is tapping governmental resources to build on-job training for turnkey plant know-how. "We've invited as lecturers system-integration specialists from colleges and government-backed technology institutes as well as trade professionals from government-backed organizations. In addition, we have produced videos of manufacturing operations on social networking sites," Tu notes.

The chairman lauds the manufacturing capability of the island's woodworking equipment suppliers: "We can make machines to process almost all woods such as solid wood, rattan, bamboo, plywood, synthetic wood, composite board, and particle board."

Taiwan now makes mostly machinery to fabricate synthetic wood panels due to the global ban on deforestation, which has also pushed to unreasonable levels prices of solid wood furniture. "China makers sell wooden furniture by the kilogram and use mostly CNC routers to cut the intricate patterns. Bamboo is a natural wood that is not banned due to its relatively short life and Taiwan's makers of bamboo-processing machinery are mostly in Lukang Township, Changhua County of central Taiwan; while rattan-processing machinery is still mostly manually operated due to the inherent need to bend such wood at irregular angles," he says.

Woeful Truth
Revealing another woeful truth without involving politicking, Tu says the 300-odd TWMA membership finds highly counter-productive to hold the triennial woodworking equipment show in Taipei and not central Taiwan, where 80% of the island's woodworking-equipment manufacturers are based, for the mere logistics tax the exhibitors to ineffable degree of suffering and expenses.

The TWMA has been urging the central government to quickly construct a trade fair complex at a mothballed Taichung airport, which is designated the trade zone to foster the central Taiwan economy with temporary tarpaulin shelters set up as trade show venue. "The Taiwan industry needs a presentable venue, not makeshift shelters, for being a world-leading supplier of woodworking equipment. I believe a woodworking-equipment fair in a proper venue would attract more visitors to Taiwan than one in Taipei," says Tu. In 2010, a machinery show in the designated zone attracted "an enormous number" of visitors, mostly from China who visited the show, factories and local attractions, generating considerable revenue for central Taiwan, he says.

(by Ken Liu)

TWMA Chairman C.L. Tu.
Whole-plant equipment is expected to reinvigorate Taiwan's woodworking equipment industry.



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