Her Chee Industrial Co., Ltd., a leading maker of powered two wheelers (PTWs) and all-terrain vehicles (ATVs), recently confirmed that Bombardier of Canada, one of the top three ATV brands in the world, has chosen the Taiwan firm as its global procurement center.

Hsieh Lung-huei, president of Her Chee, says that Bombardier's decision is expected to greatly elevate his company's exports of ATV and relevant parts, leading to a revenue boost of at least 15% to 25% this year alone. The increase, he says, will make Her Chee one of the top 10 ATV makers in the world.

The deal with Bombardier could net Her Chee at least 30% more orders on original equipment/design manufacturing (OEM/ODM) terms, according to Hsieh. To accommodate the increase, the company plans to invest NT$200 million to NT$300 million (US$5.76 million to US$8.65 million at US$1:NT$34.7) to build new facilities and an R&D center in southern Taiwan's Yichu Industry Zone (Chiayi County), doubling the company's production capacity after their completion in the first quarter next year.



Her Chee is an ISO9001-approved company listed on the Taisdaq market. It sells about half of its products under its own "Adly" brand, and the rest to Bombardier and Arctic Cat of the U.S. on OEM/ODM terms. The firm's sales director, Chen Yu-yu, reports that Her Chee sold about 39,000 ATVs and PTWs last year--over 25,000 of the former and more than 13,000 of the latter. Over 90% of the vehicles are exported to North America and Europe.

Her Chee is currently promoting a new series of 300cc ATV models, the most powerful of its type made in Taiwan. According to the company, the new 300cc ATV is aimed at the mid-range market. This model has a brand-new single-cylinder air-cooled engine developed by Her Chee especially for ATVs, in contrast to the adapted PTW engines used by most other manufacturers in the line. The new engine delivers 19 horsepower, enough to propel the vehicle up 50-degree slopes.

Other features of the new model include a newly designed ATV frame made of high-tensile mechanical square tubes (which, the company claims, are at least twice as strong as the frames normally used in 125cc and smaller models), a new five-speed-plus-reverse manual transmission, a dual-A-arm suspension system with two preloaded adjustable shock absorbers in front and one in the rear, dual-disk brakes in front and a single on-shaft disk brake in the rear, an oil-seal transmission chain (each pin of which has two oil seals for better dust-proofing and waterproofing and two or three times the durability of non-seal counterparts), a choice of sport or utility versions, and 22-inch crossroad tires on 10-inch rims.

In addition to the new 300cc series models, Hsieh says that his company is also developing a series of 175cc ATVs for Bombardier. The president says that the final design for the 175cc models are expected to be ready by the end of the year.

In addition, Her Chee's board has okayed an investment of US$5 million in a mainland China-based aluminum-alloy die-casting manufacturer to assure an ample supply of key ATV parts and components, including the cylinder heads.


International Player


The partnership with Bombardier, says Hsieh, will help Her Chee rapidly upgrade from a major ATV maker in Taiwan into an international player that can compete directly with big rivals in Japan and the U.S.

According to Hsieh, the off-road recreational-vehicle market in the U.S. is revving up this year and global demand for ATVs has enjoyed double-digit growth in recent years. The proliferation of ATV sport clubs in North America has greatly increased demand for 50cc to 90cc ATV models there, with sales in the U.S. up 32.2% last year alone.

While North America still accounts for about 80% of the global ATV market, Europe is likely to be a fast-rising force in the segment over the coming three to five years, says Hsieh.

Hsieh is confident that his company is well poised to tap the swelling market with its leading international brands and quality reputation. Her Chee has bagged several seals of approval for quality in recent years, including ISO9001, QS9000, TUV and TNO badges. Hsieh claims that his company also has a 20% to 30% price advantage over rivals in the U.S. and Japan.

After 30 years of effort, Her Chee's Adly brand has become synonymous with high quality and dependability, says Hsieh. He notes that Her Chee has also established a global distribution network, solid materials- and parts-supply chains in Taiwan, and an outstanding in-house R&D team to head the company's drive into the international market.

As a long-term contract supplier to Bombardier and Arctic Cat, two very prestigious and very demanding buyers, Hsieh says that his company has its finger on the pulse of the market and constantly upgrades its R&D and manufacturing ability to be able to turn out products on the industry's cutting edge.

Thanks to these efforts, Her Chee expects to achieve its revenue goal for 2003 of NT$1.03 billion (US$29.68 million). The company's board recently decided to distribute an NT$3 (US$0.09) dividend per share.


Diversification


In addition to its growing ATV and PTW lines, Her Chee is diversifying its product lines into such areas as go-karts, electric bicycles, and mopeds.

According to Wang Chao-chin, vice president of the company, sales of Her Chee's four-wheel electric scooters for aged and disabled people have been brisk since the model was demonstrated last year. Wang is confident that sales for the item will double this year as Her Chee is expected to soon obtain on-road safety certification for the scooter from the European Union.

Though electric scooters are not yet a major revenue source for Her Chee, Wang says the EU approval will be a persuasive indicator of the company's product quality and safety in this line, and will lead to its emergence as a driving force in boosting the company's global sales.