An international procurement delegation from AGCO, a UK-based company that is one of the world's largest makers of agricultural-use tractors and other heavy machines, recently held a procurement-strategy seminar at the Taipei World Trade Center for over 100 potential suppliers in Taiwan. The delegation, which was led by Nigel Imbush, the firm's European headquarters president, and included procurement officials from plants in the U.K., Brazil, and France, stayed on the island for two weeks, visiting the factories of 35 local auto-parts manufacturers.

AGCO has factories in six countries and recorded revenues of about US$2.9 billion in 2002. It procures about US$1.5 billion worth of machine parts each year. During the seminar, it demonstrated 63 parts items on its procurement list.



According to the China External Trade Development Council (CETRA), which helped organize the seminar, a large number of local auto-parts suppliers used the seminar to make contact with AGCO. These included Macauto Industrial Co., Tatung Co., Shihlin Electric & Engineering Corp., and Tiger Steering Co. Two cargo-transportation companies also took part in the seminar.

Among the local factories visited were those of China Steel Corp., Hota Industrial Co. (a maker of high-precision gear and transmission parts), and Ta Yih Industrial Co. (Taiwan's largest producer of auto lamps).

CETRA president Chao Yung-chuan noted that this was AGCO's second procurement mission to Taiwan. The company, he said, has pinpointed Taiwan, Turkey, and India as its new procurement targets in a bid to cut costs and elevate competitiveness.

AGCO first came to Taiwan looking for parts suppliers late last year, and at that time CETRA sent representatives to accompany the delegation to visit Taiwan-based companies in mainland China in order to provide those companies with business opportunities. At least two local companies have begun supplying parts—sunshade panels and auto lamps—to the British manufacturer.

According to CETRA, AGCO never procured parts in Asia prior to last year. After the company announced the closure of its tractor plant in Coventry, England, in June last year, however, CETRA urged it to look for reliable, reasonably-priced parts in Taiwan. This is part of CETRA's efforts to implement its International Sourcing Center project, which was started under the auspices of the Taiwan government in 1997.

Last year's delegation, according to CETRA, stayed in Taiwan for 10 days and visited 18 local auto- and machinery-parts makers, including Right Way Industrial Co., (a maker of pistons), Kio Ho Machinery Co. (aluminum-alloy wheels and die-casting parts), Eurocharm Innovation Co. (auto accessories), TaiYue Electric Co. (auto electrical parts), All Horng Gear Co. (gears), and Fu Pen Rubber Industry Co. (rubber auto products).

During that trip AGCO was looking for over 200 types of parts, including sheet-metal parts, plastic parts, rubber hoses, electrical harnesses, die-casting parts, machining parts, gears, control cables, and forged parts. Following the mission, AGCO and local suppliers began to work out quotation procedures, plant certification, and other supply details.

A CETRA official says that while orders from agricultural-equipment makers are relatively small, they are ideal for Taiwan's small-batch, large-variety production mode.

In a separate case, CETRA reports that two Germany luxury-car makers, BMW and Audi, have also sent procurement officials to talk with auto-parts suppliers in Taiwan. This attention shows that the island has achieved the level of quality demanded by big foreign auto companies, CETRA notes, adding that local parts supplier also enjoy such advantages as low prices, a good record of punctual delivery, sound after-sales support, and a global reputation for manufacturing and management skills.