Forged Aluminum Wheel Sector in Taiwan Rolling to Take on Global Leaders

Over the past few years, the forged aluminum wheel sector has been growing rapidly in Taiwan, with a handful of serious players having geared up to take on the Big Leaguers.

Industry observers are eagle-eyeing the moves made by Taiwan-based forged aluminum-wheel makers, who aim to crack the long-term oligarchy in the hands of firms in the U.S. and Europe, including the industry giant Alcoa of the U.S.

To encroach on the turf dominated by a few major players, especially Alcoa, also an upstream supplier of aluminum, is a battle between David and Goliath, for the pioneering American wheel maker is savvy enough to sell forged rims, a high-end product, at very low prices, effectively preventing newcomers from slicing away market shares by underselling.

So far, three major makers in Taiwan are fully-equipped to challenge the establishment, including SuperAlloy Industrial Co., Ltd., Fullchamp Technologies Co., Ltd., and Alex Global Aerospace Technology Inc., the latter two of whom shared insights at the Automechanika 2008.

Superior Advantages

Forged aluminum wheels, due to the metal processing and resulting characteristics, feature a number of advantages relative to cast and machined steel counterparts, making them worthy of the extra cost. However and with gas prices still high and perhaps to stay that way, higher demand for forged aluminum wheels is expected, helping makers achieve economy of scale that will reduce prices.

One advantage of forged wheel is its high strength-to-weight ratio that allows thinner cross-sections, making for lightweight, and less mass leads to fuel savings. A 24.5-inch forged truck wheel weighs only 22.5 kilograms, compared with 45-50 kg for a steel wheel, or about 25% to 30% lighter than a cast aluminum wheel. Using forged wheels can save drivers 5% to 8% in fuel, which can be significant for truckers who roam across Europe or between Miami and Anchorage. Also lighter wheels put less stress on suspension parts, hence extending their durability, as well as easing handling.

Another advantage is better heat dissipation, which makes for enhanced safety. Cooler wheels are especially important for long-distance truckers, with lower wheel temperature causing less tire fatigue and making for cooler brakes, resulting in better stopping.

Cold-forged rims also feature excellent hardness due to being pressed, while die-casting tends to leave microscopic pores inside wheels that weaken the structure, making them more subject to failure.

Fullchamp

FullChamp Technologies, established in 2002, began mass producing forged aluminum wheels in 2004, and is known in the sector for offering reliable, price-competitive products for passenger cars, sport utility vehicles (SUVs), motorcycles, and various duty trucks.

Canon Hsu, marketing and sales manager, points out that the forged-wheel business is not for just any newcomer, especially those without heavy-duty capital. Besides, Alcoa, the global leader, virtually dominates the entire market with very competitive prices.

After investing over NT$1 billion (US$30.3 million at US$1: NT$33) to construct a production line and devoting years to R&D, Hsu says that Fullchamp has developed a wide-ranging product line, including forged wheels in sizes from 16 to 26 inches.

Major Achievement

Fullchamp has successfully tapped into the supply chain of premium auto brands as a second-tier maker, shipping semi-finished high-end wheels for Lotus, Aston Martin, and Mitsubishi sports cars. More importantly, Hsu stresses, the firm became in 2007 the sole original equipment (OE) supplier of customized forged wheels to International, a major American truck maker. Such track record, the manager says, will help the company to likely win more OE orders from global makers of cars and trucks.

Hsu is very optimistic about the future of forged truck-wheel segment. With soaring fuel prices worldwide, increasingly more truckers and operators are turning to forged wheels, discovering not only fuel economy but also extended tire lives. "At the peak of gasoline prices in mid-2008, a trucker can recoup his investment in forged aluminum wheels in two years," Hsu says, "without mentioning the clear contributions of such wheels to environmental protection."

However, Hsu points out that the forged truck-wheel business has some hazardous ruts in its track. "Especially in developing nations," he explains, "road conditions can often be rocky while trucks are often overloaded, revealing unforeseen pitfalls and tough challenges." In addition, the manager warns newcomers, the forged truck-wheel market is extremely unforgiving: a company that delivers a defective wheel will forever be deleted from a customer's supplier list.

Despite the inherent difficulties, Hsu is confident of Fullchamp's future growth, a sentiment not only based on its OE-supplier track record, but also its full-service ability, offering computerized and customized design, analysis, safety testing, manufacturing, and total quality assurance.

Alex Global Aerospace Technology

One forged-wheel maker in Taiwan who may be similar to Alcoa, albeit on a small-scale, is Alex Global Aerospace Technology Inc. (AGAT), which is also expected to be a significant player due to its integrated capability, from upstream material supply to downstream manufacturing and processing.

AGAT is not, strictly speaking, brand new in the field of aluminum wheel making. Its parent Alex Global Technology is already the world's largest maker of aluminum-alloy bicycle wheels. Aiming to tap its parentage to branch into forged-wheel making for heavy-duty trucks, passenger cars, powered two-wheelers (PTWs), and all-terrain vehicles (ATVs), AGAT has pulled out all the stops to become a serious player.

Having begun planning its new production line back in 2002 after extensive evaluations and close collaboration with industry experts, research institutes, and schools, AGAT has invested about NT$3 billion (US$90.9 million) to set up Taiwan's first integrated cold-forging production line, including furnace, aluminum extruder, and comprehensive CNC machining centers. According to Alex Chen, chairman of AGAT, his company spent three years building Taiwan's first aluminum extrusion plant to ensure a stable supply of high-quality ingots. The aluminum furnace was completed in early 2007, and trial production of forged truck wheels began in the first half of that year.

Wide-ranging Line

Chen proudly claims that, after restless effort in the past few years, the firm has developed a wide range of 16- to 24-inch forged truck and bus wheels. In addition, he adds, AGAT kicked off trial production of two-piece forged rims for passenger cars in October, with three-piece rims to come.

AGAT's forged wheels are not only of excellent quality but also feature superior styling and craftsmanship, according to Chen.

"The core competitiveness or quality assurance of AGAT's forged wheels is our fully-in-house forging, heat treating, computer numeric control (CNC)-processing," Chen proudly claims.

Despite being a newcomer, AGAT aims to be a total-solution provider by combining stable supply of fine materials, advanced production equipment and technology, and outstanding design capability.

"Besides having world-class strengths," Chen claims, "AGAT also has clear strategies for developing our forged-wheel business. First and being a newcomer, we have to offer not only the best quality but also state-of-the-art design. We chose to start in the forged truck and bus wheel segment because most OE suppliers offer only traditional products with few styling changes, which we can improve upon."

"Second," Chen continues, "we aim to compete against world-class suppliers in a game they often refuse or neglect to play, by fully tapping our capability in prompt delivery, small-batch but large-variety manufacturing, which will help us to win orders initially. Such strategy is expected to help AGAT achieve economy of scale, after which we can try developing other business opportunities, including targeting OEM/ODM orders from global leaders, with our unmatched production flexibility, efficiency, and cost-control capability."

Possessing integrated strength, from upstream furnace and extrusion to downstream CNC processing are critical for AGAT, Chen reiterates, because such capacity enables us to achieve overall competitiveness, the key to succeeding in a high-threshold business.