Taiwanese Furniture Hardware Makers Upbeat Toward 2011

One maker attributes steady profit margin to dedication to R&D

After enjoying very rapid growths in the first half of 2010, Taiwan's furniture hardware makers were alarmed by an abrupt slowdown starting in the second half, when the developed economies, especially the U.S. and peripheral European countries excluding Germany and France, widely posted sluggish growths, which, coupled with steadily rising oil and raw material prices, exasperated their hardship during the period. Fortunately some in the industry later reported a mild rebound to finish 2010 with an acceptable happy ending.

Clearly most Taiwanese manufacturers have rallied back along with the global economic recovery last year after the terrible recession in 2009, but now have mixed views about the market outlook in 2011, due mainly to global economic uncertainty caused by the often-reported inflationary fears in China, England etc., China's attempts to cool its property market, the American QEII, and natural disasters as the floods in Queensland, Brazil and Germany, which may actually fuel demand for furniture hardware in repairs and restoration in the aftermath.

A few makers of furniture hardware talk about the reasons behind their optimism toward business this year during an interview with CENS.

Hung Wang
T.W. Wang, founder of Hung Wang Enterprise Co., Ltd., a maker of furniture hardware in Taiwan's central county of Changhua, believes his company, backed by time-tested R&D capability and a new molding factory, will keep growing steadily in 2011.

Established in 1986, Hung Wang started by manufacturing household products as gifts, clocks, kitchenware etc. as a subcontractor, and then turned to production of hardware, plastic parts and accessories for tube furniture, when Taiwan's traditional manufacturers moved abroad in the 90s.

This maker owes its success to years of dedication to R&D. “We insist on developing products with an engineering approach despite higher cost. Even the most mundane parts, like tube plugs, are worthy of our efforts to improve to meet market needs,” said Wang. Such mode of operation has enabled Hung Wang to accumulate more extensive, in-depth R&D knowledge than competitors, which helped to keep the company afloat during the global downturn in 2009.

R&D is sometimes even more important than manufacturing to Taiwanese OEM (original equipment manufacturers), for such capability can insulate them from underselling rivalry to secure better profits, said Wang. While busy growing business but neglecting R&D during the first half of 2010, he said, most Taiwanese makers in the line saw growth slow down in the second half of 2010, when raw material prices skyrocketed. “Ultimately, they had to give in to customers' demand for lower prices, which squeezes margins to paper-thin level that turn manufacturing into a struggle,” said Wang.

In contrast, Hung Wang could deliver functionally better products despite higher prices, even with rising material prices in the second half of the year. “Our gross profit has remained at 30% for years and 2010 was no exception,” said Wang.

Molding Capability
Another factor driving Wang's optimism about a bright 2011 is a new molding factory in Taiwan, having been online for only a few years, that employs advanced machinery, computerized technologies and skilled engineers. Wang said that the molding factory enables his company to increase product diversity, shorten R&D time and minimize manufacturing costs.

“Mold developing capability is equally important as R&D. Having stronger molding capability allows Hung Wang to independently design, develop more new products to attract customers, also helping them to complete product developments more rapidly. This is another reason why Hung Wang will grow briskly in 2011,” said Wang.

Homer Hardware
Homer Hardware Co., Ltd., founded in 1994, is a furniture hardware maker who has expressed ambition to explore more overseas markets in 2011.

With 40-plus workers in its 3-story plant, this maker turns out a wide range of metallic parts, including punched metal mesh, auto accessories, body parts, safety belts, seat adjusters, door hinges, window regulators, building materials for interior decoration, semi-finished furniture, iron wire kitchenware and hardware, fittings, cabinet hardware and door knockers, with 30% going to Europe, 20% to Japan, 15% to Southeast Asia and the remaining to North America. So the company fully exports its output.

Having transformed into an OEM several years ago when the general manager Chen Win-pin believed dealing with buyers personally is the only way to make truly needed products, Homer consistently upgrades production machinery to achieve the highest precision and efficiency despite resource limitations, as well as adopting world-caliber quality control measures.

Only a few makers in the line can compare with Homer, which has in-house NC (numerically controlled) and CNC (computer numerically controlled) machining centers, punching machines, heavy-duty hydraulic presses and wire-cutters, which are regularly maintained and calibrated, according to Chen.

In addition, tapping real-world feedback and experience to enhance know-how and improve production capability enables Homer to become adept at handling steel, stainless steel, iron, copper, zinc, plastic and aluminum with minimal defect due to misusing materials.

Build Global Presence
“Global demand for furniture hardware will grow modestly in 2011 as in 2010, mainly because the furniture market is very mature and stable. For stronger rebound this year, Homer, among its strategies, has been enhancing competitiveness, since the demand slowdown in the second half of last year, by trying to become an ODM (original design manufacturer),” said Chen.

Raising production efficiency is a priority for Chen. Believing that building production and offering services to fully satisfy customers is the key to get ahead, the company has focused on worker training and manufacturing process optimization. “Only the efficient will survive. We have reviewed and systematically improved the company's processes to provide added-value, quality and good service,” said Chen.

Also, the company plans to attend more global trade shows this year to build global presence, as well as explore new markets. “We have done so much to impress customers with a distinctive profile as a trustworthy, competent production arm,” Chen stressed, which is significant considering that Taiwanese traditional manufacturers typically lack promotion capability, hence often hand over opportunities to emerging rivals who thrive on hype based on their smattering of knowledge.

Impressed by Homer's competitiveness, a couple of new customers from the U.S. and Germany just visited its factory to audit manufacturing in mid-January, indicative of a promising beginning in 2011, Chen said.

Taiwanlock
With its locks and accessories increasingly recognized by heavyweight users in Taiwan and abroad, Taiwanlock Co., Ltd.'s marketing manager C.B. Liu also remains confident of a rosy 2011.

Founded in 1989 in Taichung City, central Taiwan, the company has specialized in locks, successfully building solid ground over the past decades, with two factories spread across 10,000 square meters turning out a maximum monthly of over 30,000 sets of locks, ranging from the middle to high ends, including padlocks, cam locks, coin locks and combination locks to card door locks, electronic keyless door locks, RFID (radio-frequency identification)-based digital locks, as well as various lockers.

Adhering to by-the-book quality controls to assure meeting international requirements as CE and RoHS, the company has a reputation for being a top-notch supplier, with customers as Wal-Mart, Carrefour, Tesco, Trust-Mart, B&Q etc. The company ships its products to China, Southeastern Asia, North America, Central and South Americas and Europe, with some under the own FUKEDA brand.

Hot-sellers
“Taiwanlock is a recognized high-end lock maker in Taiwan and keeps rivals at bay with unparalleled know-how and R&D capability,” stated Liu, adding that the company taps real-world experience and computerized technologies to develop locks with improved cylinders and more key combinations to achieve higher security and convenience.

One of the company's hot-sellers, for example, is the Coin Operated Lock SC series, which are mainly built into its locker series or customer's cabinets. All made of high-grade stainless steel for durability and dust-resistant and suitable for indoor or outdoor use, this coin-op lock series has an innovative cylinder design and special coin-sensor to offer over five million combinations, making duplicating a pass key virtually impossible. In addition, the cylinder is easy to replace without having to remove the lock for excellent practicality and easy maintenance.

New Factory
Liu confirmed that a second factory in the Changbin Industrial Park, Changhua, is operational, which will help to drive growth this year, adding that the new factory will expand its OBM (original brand manufacturing) business in Taiwan and China for sustainable development, as well as raise corporate profile as an OEM and ODM overseas to generate solid sales growth this year.

“Developing locks to be user-friendly and based on advanced technologies has helped Taiwanlock products to be widely recognized by consumers and buyers worldwide, which is the basis for future growth,” said Liu.