Proxene Tools Rides Own Innovations To International Success

Proxene Tools Co., Ltd. Has many notable achievements in Taiwan's hand-tool manufacturing segment. One of them is the company's patented "Tiger's Paw" adjustable wrench--a model that management states has been imitated by many international big-name suppliers.

This tool, introduced in 1998, is able to pinch nuts in diameters up to 10 inches. The body is eight inches long. Four punched holes are located at the middle of the handle, reducing the weight by 10% in comparison to similar models and at the same time increasing power and torque, according to Shirley Chao, Proxene's export manager. On the upper and lower inside edges of the jaw are teeth-like protuberances that enable firm clamping to prevent damage to objects being worked on.

The handle's lower section is made of ergonomic plastic molding, making the tool supremely comfortable to hold. The tool body is made of chrome-vanadium steel, the worm gear of even harder chrome-molybdenum steel. The jaw's edges are given an additional hardness treatment. The Tiger's Paw is covered by five patents, with more to come, and has been granted Taiwan's National Award of Excellence. "Basically, the 'core' of this tool is lightness, environment-friendliness, and streamlined design. On average, every seven years a trailblazing product appears in the tool industry, and this cycle it is our Tiger's Paw," Chao states.

Proxene spent around two years and NT$5 million (US$156,000 at US$1:NT$32) on the development of this breakthrough tool.

Like this tool, most of the company's adjustable wrenches are for heavy-duty industrial use. Primary categories are professional-use models for small enterprises such as car workshops, industrial-use models for such sectors as the shipbuilding, petrochemical, and mining industries, and a range of light-duty traditional-type models for household users.

Traditional-type models currently account for 35% of the company's total output, industrial-purpose tools account for 49%, and professional-use tools for 16%. Chao says the firm expects its output growth for lower-end traditional-type tools to slow over the next few years. "This is because mainland Chinese manufacturers have been capturing ever more orders for lower-end types, taking them from Taiwanese suppliers," she explains. Her company will concentrate more on high-end products, which feature greater precision and durability.

"Unlike mainland China," Chao states, "Taiwan has distinct advantages in developing industrial/professional-use tools. We have well-developed design capability and nimble production, as well as well-trained and well-educated workers."

Her company has a five-person team doing product development and design, and an eight-person team engaged in manufacturing-technique improvements. The product-development work includes physics analysis and finished-product testing and analysis. Each team member is expert in the use of CAD (computer-assisted design) software.

Chao stresses that for quality wrenches 3D programs are a necessity to ensure precision. She notes that an adjustable wrench is composed of one adjustable jaw, a jaw fixed to the body, and a worm gear. These parts must be precisely fitted in order to work smoothly. "To ensure faultless precision we do everything in-house save for forging and surface treatment, which are contracted to dedicated manufacturers," she says.

The company develops all machinery used, and all molds, on its own. "No one knows better than us what machine specs are best suited to production of our tools," Chao states. "This is our another advantage we have over rivals."

Each year, the company spends an average of NT$10 million (US$310,000), or 5% of its revenue, on the development of new products. "This, added to our advantages in product design and quality manufacturing, means we are more comparable to Italian suppliers that those from mainland China," the export manager stresses.

In light of its marked success in terms of product differentiation, the company now intends to further lower costs by opening facilities in low-labor-cost economies. "We will open the facilities anywhere except in mainland China," Chao states, because the mainland is no more a low-cost production base as compared to a number of other surging-economy developing countries. "The mainland's labor costs are rising rapidly," she says, "and with the addition of the lack of direct transport links between Taiwan and the mainland, a poor domestic transportation infrastructure there, lack of labor loyalty/reliability, and poorly developed supporting industries, we don't believe production costs there are markedly lower than here in Taiwan.

Nevertheless, Chao forecasts East Asia, in which mainland China constitutes the largest portion in terms of geography and population, to be the most promising market for her company's tools, particularly those carrying its "Fulco" brand name. The area has a population of two billion. Currently, Australia and Asia are the two major markets for the company's branded tools, which make up around 15% of its total output. Europe and the United States are its major markets for ODM (original design manufacturing) tools, which constitute the remaining 85%. "Tool consumption is growing slowly but steadily in Asia, year after year," she observes.

Chao believes that marketing will become easier in the near future because of wider acceptance of doing business on the Internet. "Electronic commerce is a good marketing tool, especially for small hand-tool suppliers, which cannot afford expensive global promotion efforts. Since there is demand for a terrific range of models in the hand-tool industry, even the biggest players find it difficult to supply a full range on their own. This reality provides opportunity for small suppliers to build their brands, and the Internet is the cheapest way," she says.

Like many Taiwanese tool suppliers, Chao also thinks the island's innovative digital-tool initiative is a good chance for local tool suppliers to dominate a segment of world's tool industry. The government-backed Industrial Technology Research Institute (ITRI) debuted a patented LCD digital gauge for hand tools in early 2004, the world's first of its kind. The coin-sized meter can display a variety of data including torque value.

Digital tools may prove a big hit in the world market, but Chiao is worried that the strength of Taiwan's hand-tool industry may be negatively affected by a supply shortage of quality steels from the island's main steel maker, China Steel Corp. "Many domestic tool suppliers have begun using steels made of scraped steels under the pressure of tight delivery schedules and indefinite deliveries of CSC's steel made of refined raw materials. I'm fearing that the improper steels will become a prevalent material in Taiwan's tools if CSC fails to provide us with adequate supplies," she analyzes.