Despite recent reports of the EU debt crisis, high unemployment in Spain and the U.S., Taiwan’s fastener industry is bucking the uncertain recovery to show a turnaround from the crippling recession last year, driven by rising production this year, as well as busily enhancing its global competitiveness in cooperation with the MIRDC (Metal Industries Research & Development Centre), aiming to sustain development.

Taiwanese fastener suppliers experienced one of their biggest setbacks of all time in 2009, when the industry suffered a 31% decline in overall output totaling US$2.36 billion from US$3.44 billion of 2008, according to statistics compiled by ITIS (Industry Technology & Intelligence Service).

The industry’s exports shrank to around 900,000 metric tons in 2009 from 1.25 million metric tons in 2008, with export value plunging 31% year-to-year to US$2.10 billion from US$3.07 billion. Import value also shrank 30% year-on-year to only US$101.53 million from US$144.61 million, according to the ITRI report.

Resilient
However, the industry is showing resilience this year: its output is well on its way back to pre-global-meltdown levels.

The International Monetary Fund’s (IMF’s) latest update of the World Economic Outlook this April shows the global economy is estimated to rebound by 4.2% this year from last year, higher than the original projection of 3.9% for a significant improvement from the 0.6% decline in 2009, the worst performance since World War II. Also, the report shows that the GDP growth rates of Taiwan’s top five fastener buyers, namely the U.S., Germany, Japan, the Netherlands and China, will reach 3.1%, 1.2%, 1.9%, 1.3% and 10%, respectively, this year.

With worldwide market demand for fasteners fueled by recovering global economy and likely driven by restocking after the global crash, Taiwan’s fastener exports have already recovered to 290,000 metric tons in the first quarter, with export value rising over 30% year-on-year to reach US$667.69 million. Import value also surged to US$24.6 million in the quarter.

ITIS’s latest report released this June shows the U.S. imported 110,000 metric tons of fasteners from Taiwan in the first quarter, Europe 95,000 metric tons, ASEAN member states 16,000 metric tons, Japan 13,000 metric tons and China 5,500 metric tons. Also exports to Europe have significantly increased this year, mainly due to EU’s imposition of punitive anti-dumping duties on fasteners from China, hence driving buyers to import instead from Taiwan; while the recently signed ECFA (Economic Cooperation Framework Agreement) between Taiwan and China is likely to help Taiwanese fastener makers to tap the Chinese market more effectively, at least in terms of being on a more level field against ASEAN rivals.

Hopefully, the ITIS said, the fastener industry’s exports will rise to over 1.2 million metric tons this year, pushing up overall production value to US$3.13 billion, up around 30% from that in 2009.

R&D Paying Off
“In fact, reality is more promising than anticipated,” says Matt Yang, project manager of MIRDC’s Office to Revitalize Traditional Industries. “In addition to positive market factors like distributors’ restocking and recovery of the auto and construction industries, Taiwanese makers’ years of efforts to upgrade production are also paying off to speed the recovery this year.”

Yang says that China Steel Corp., Taiwan’s largest steelmaker, teamed up with the MIRDC and fastener makers in Kaohsiung, southern Taiwan, to develop auto fasteners from 2006 through 2008, whose synergy has pumped positive momentum into the industry.

“To stay ahead of emerging overseas rivals as the BaoSteel Group, China Steel has been working on new business models in recent years. China Steel initiated the R&D alliance to assist local companies to develop world-caliber auto fasteners, aiming to provide value-added solutions to its numerous downstream clients to carve out new niches, as well as leverage Taiwan’s fastener and related metal product industries,” says Yang.

In other words, China Steel helped local fastener suppliers with development of special, value-added materials to upgrade product characteristics, performance and manufacturing efficiency, with MIRDC setting up an R&D lab, according to Yang. Also China Steel’s technical support has helped the alliance to achieve enhanced model development, surface treatment and quality inspection, all of which have raised overall industrial competitiveness.

Sulfurized Steel
For example, to boost production efficiency and keep structural strength of automotive parts, the alliance added sulfur to 1010-grade mild steel to improve metallurgical composition. The result is that fasteners made of the sulfurized steel are less prone to filing contamination, effectively raising lathing efficiency of thread etc.

Besides, Yang says the alliance also succeeded in applying automation to speed molding and polishing; galvanization to improve auto fasteners’ resistance to dust; and developing Taiwan’s first locally-made automatic non-destructive tester based on the eddy current inspection technology. After three years of development and improvement, Yang says the industry is capable of turning out auto fasteners fully meeting any global standard at major carmakers.

“Meanwhile, an alliance member is also volume producing the automatic eddy current tester to fill orders from domestic and overseas buyers. The alliance is also providing CAE (computer aided engineering) equipment to help members develop molds more efficiently and meet various small orders,” says Yang.

Going Upmarket
Encouraged by the success of cross-industry alliance, China Steel will start another partnership to tap the segment of higher-end fasteners and related technologies, by working with the MIRDC and seven sizable fastener and equipment makers, namely Chun Zu Machinery, Chong Cheng Fastener, Ho Hong Works, Fong Perng Industrial, Jinn Her Enterprise, Te Hung En Enterprise and MetCoat Technology.

China Steel president Y.C. Chen, MIRDC chairman C.C. Huang and TIFI (Taiwan Industrial Fasteners Institute) chairman Joe Chen inaugurated this alliance on December 15, 2009 in Kaohsiung, during which the China Steel president confirmed the positive result achieved by the first alliance-- increasingly more members turning to make fasteners for automotives and machinery to build bigger shares in the global market. China Steel is ready to help the new alliance tap new segments with more efficient business models, according to the firm’s president.

Heading a roundtable discussion attended by the alliance members, Yang expressed optimism toward the future of Taiwan’s fastener industry, saying, “The industry’s overall revenue in the first half has almost topped that in 2009 and will likely total US$3.69 billion for the whole year.”

Heading in Right Direction
Yang said an alliance member is focused on developing bigger fasteners as M48 for wind turbines. “Such fasteners require advanced heat treatment technologies to achieve higher hardness, which will help generate higher margins than traditional fasteners. With growing eco-concerns of renewable, green energy, the alliance is heading toward the right direction to bring about an evolution to the traditional manufacturing industry.”

Yang also praised TIFI for organizing Taiwan’s first specialized trade fair for fasteners and equipment: the Taiwan International Fastener Show to be held October 19-20 in Kaohsiung, in cooperation with TAITRA and Bureau of Foreign Trade.

The most practical feature of the inaugural show is the “buy-and-see” business model—buyers will be able to source products as well as personally visit shortlisted OEMs right away. Such preferable strategy is realistic for over 80% of Taiwanese fastener makers cluster in the southernmost city. Inaugurating such a specialized trade event will also help boost the industry’s growth in the coming years, and, above all, put Kaohsiung’s fastener-making sector on the global map.

Taiwan’s Fastener Exports in 2009
Month	Volume (Kg)			Value (US dollar)			Average Price (US dollar)
	Weight	Contribution Ratio	Annual Growth Rate	Total	Contribution Ratio	Annual Growth Rate
Jan.	68.2 m.	7.62%	-12.15%	190.0 m.	9.17%	-22.76%	2.786
Feb.	50.2 m.	5.62%	-26.34%	133.2 m.	6.42%	-30.36%	2.649
Mar.	64.3 m.	7.19%	27.97%	164.0 m.	7.91%	-37.89%	2.550
Apr.	58.6 m.	6.55%	-8.90%	140.4 m.	6.77%	-45.42%	2.396
May	67.5 m.	7.54%	15.18%	157.7 m.	7.60%	-41.91%	2.336
Jun.	68.2 m.	7.62%	1.06%	148.4 m.	7.16%	-48.36%	2.175
Jul.	76.2 m.	8.51%	11.65%	162.2 m.	7.82%	-44.46%	2.130
Aug.	78.1 m.	8.72%	2.54%	168.9 m.	8.15%	-44.04%	2.163
Sep.	85.1 m.	9.62%	10.29%	187.0 m.	9.02%	-38.54%	2.171
Oct.	92.9 m.	10.38%	7.89%	201.2 m.	9.70%	-31.91%	2.165
Nov.	87.8 m.	9.81%	-5.49%	196.2 m.	9.46%	-15.21%	2.234
Dec.	96.8 m.	10.82%	10.23%	224.0 m.	10.80%	-1.29%	2.314
Sum	895.1 m.	100%	-26.33%	2.073 b.	100%	-34.47%	2.316

Source: TIFI

Top-13 Importers of Taiwan-made Fasteners in 2009
Country	Volume (Kg)			Value (US dollar)			Average Price (US dollar)
	Weight	Contribution Ratio	Annual Growth Rate	Total	Contribution Ratio	Annual Growth Rate
The U.S.	378.67 m.	42.30%	-34.25%	787.80 m.	38.00%	-40.79%	2.786
Germany	69.48 m.	7.76%	-21.53%	162.10 m.	7.82%	-31.26%	2.649
Japan	42.38 m.	4.73%	-24.82%	113.57 m.	5.48%	-30.34%	2.550
The Netherlands	36.48 m.	4.07%	-26.07%	90.01 m.	4.35%	-32.03%	2.396
The U.K.	29.85 m.	3.33%	-4.26%	69.65 m.	3.36%	-23.40%	2.336
Canada	23.27 m.	2.60%	-43.23%	52.33 m.	2.52%	-43.10%	2.175
Italy	20.06 m.	2.24%	-34.89%	42.85 m.	2.07%	-41.54%	2.130
Poland	19.23m.	2.16%	38.72%	29.60 m.	1.43%	3.96%	2.163
Australia	17.83 m.	1.99%	-23.02%	50.09 m.	2.45%	-29.18%	2.171
Belgium	17.41 m.	1.95%	9.59%	39.51 m.	1.91%	-12.98%	2.165
China	15.53 m.	1.73%	-22.64%	79.08 m.	3.81%	-21.45%	2.234
Sweden	14.25 m.	1.59%	-31.52%	37.57 m.	1.81%	-39.87%	2.314
Russia	13.52 m.	1.51%	-34.35%	21.40 m.	1.03%	-45.00%	2.316

Source TIFI

(by Steve Chuang)