Insiders' View to How Auto Parts Makers Succeed in Taiwan

Taiwan's auto-parts industry is globally renowned for unmatched, integrated production achieved by the clustering of highly-efficient subcontractors along the supply chain, enabling local auto-parts suppliers to boast high production flexibility, broad product range, competitive production cost, and fast development time. This is coupled with

division-of-labor in Taiwan and China, where higher-end products are made in Taiwan and lower-end, volume orders are filled in China. So suppliers in Taiwan can effectively meet various requirements for price, quality, quantity, and lead time, as well as fill small-batch but large large-variety orders.

In addition to the above-mentioned advantages, each company in Taiwan also adopts different strategies to weather challenges in business. While the global recession in the past one to two years has seriously impacted the automotive and parts businesses worldwide, the following companies, as summarized by the TTG editorial team, tell the inside story to achieving excellence, sustainability and global reputation, regardless of occasional downturns in business and unpredictable turn of events.

Leading Friction-Material Maker Nan Hoang May Set Up Another Factory

Embracing sense of responsibility critical to corporate success

Despite being the largest and technically-leading developer and manufacturer of friction materials and parts in Taiwan, as well as an increasingly important player globally, Nan Hoang Traffic Instrument Co. (NHC) is never complacent. What continues to drive the veteran company, to celebrate its 50th anniversary in 2011, is the sense of responsibility deeply embraced by Fred Cheng, the president, rather than only achieving profitability.

Cheng, a heavyweight in the local friction-material industry, feels responsible to his customers and end-users worldwide; to his father, who founded the company in 1961 (the younger Cheng took it over 37 years ago at the age of 22); to the 200 or so workers in the three NHC factories; to his trade to steadily develop newer, better, quality and durable products.

Pioneer

NHC is the first friction-material maker in Taiwan, and also the first to succeed in fully developing its product formulas in-house instead of relying on foreign partnerships, as is the case for many peers. And the company is one of the first in Taiwan to pass the stringent requirements for ISO/TS16949 certification, as well as one of the few pioneers in Taiwan to be ISO 14001 approved, with its world-class, Asia-leading friction-material R&D center also ISO/IEC 17025-certified.

Showing its social responsibility, NHC recently acquired the TOSHMS (Taiwan Occupational Safety and Health Management System) certification, developed by the Council of Labor Affairs in Taiwan as one of the most advanced of its kind globally.

Flooding Orders

Only less than three years after NHC moved to a brand-new, modern and integrated factory in Tainan, southern Taiwan to triple its capacity to meet flooding global demand, according to Cheng, its new factory as well as another older facility are running at capacity.

"NHC will decide by the end of the year whether to set up another new plant next to our factory inaugurated in 2007," Cheng announces. "If all goes as planned, the proposed factory will focus only on producing high-quality automotive disc-brake pads with fully-automated production, which will save 25% to 50% of labor relative to that at existing facilities to achieve much higher efficiency and output."

The proposed facility, driven by a very-big American customer, is expected to further push NHC towards global player status.

With intense interest shown by big global customers and the need to raise capital for rapid, steady business expansion, Cheng, for the first time, says that NHC may allow international strategic partners to buy into his company, as well as seriously evaluate the possibility of an initial public offering.

"NHC has virtually everything at its disposal for continual, rapid development in the future," Cheng says. "We have flooding orders, outstanding quality, safety, and durability reputation, advanced equipment, unmatched formula-development capability, world-class R&D center, long-established management and experience. The only thing left is to map out our future!"

Distribution in China

NHC's other ambitious plan this year is to set up at least six distribution points. "Demand from the big China market is so strong," Cheng says, "most major auto and motorcycle makers have come to NHC to find possible partnerships for our unmatched cost/performance (C/P) value worldwide. NHC's road to be original equipment (OE) supplier to Chinese motorcycle makers looks set to be paved for many Chinese powered two-wheeler (PTW) makers are developing big-displacement models, so an urgent need is to find the best supplier of safe, reliable safety-critical parts at reasonable prices."

Another plan is to purchase two top-end friction-parts performance testing equipment from a globally-leading American company, including one for brake pads/shoes, and another for clutch plates. These two advanced machines will help NHC collect product test data and the company's R&D, Cheng says.

In 2010, Cheng furthers, NHC will carry out two new product development programs, including one for brake pads/shoes for railed vehicles as trains, metro cars, light rolling stock etc., and another for heavy-duty wind-power generators.

In addition, Cheng proudly claims, NHC will gradually launch globally in-house developed ceramic-fiber material to show their outstanding performance, including higher temperatures resistance, fade-resistance, rapid-recovery, zero abrasion on rotors, stable friction coefficient, less dust, and low noise.

Clearly a respectable player in the global friction material and parts industry, NHC, in 2005, became the first local company to set up a world-class friction-material R&D center, which has since developed more than 80 new material formulas. The company's product catalog contains over 6,000 items, including brake linings, shoes, and pads, and clutch plates for cars, motorcycles, agricultural machines and other types of machinery, with over 200 items added yearly.

World-leading AM Control-Arm Supplier to Set Up New Warehouse in Taiwan

Doubling annual revenue amid the recession is incredible

Shih Hsiang Auto Parts Co., Ltd. sets a good example for peers who look to achieve high growth and make effective, timely decisions in the global aftermarket (AM) auto-parts segment.

Over the past two years or so, this maker has more than doubled its annual revenue, which is expected to grow rapidly this year driven by flooding orders. Equally incredible is that Shih Hsiang managed to double annual revenues when the global economy, especially the automotive sector, was mostly mired in the worst recession since the Great Depression.

Being a globally-leading supplier of wide ranging AM suspension parts calls for aggressive operations: Shih Hsiang bought land next to its factory in central Taiwan last year, where the company will soon set up a massive warehouse to keep more materials, key components, semi-finished and finished items, in addition to its impressive inventory valued at US$11.4 million to US$14.3 million of semi-finished products.

Stocking ample semi-finished products, according to Shih Hsiang president Kevin Chou, enables immediate assembly into finished products for short lead times. Chou also says that storing semi-finished items saves cost and storage space, while his company works with well-established subcontractors that can immediately supply key parts.

New Warehouse

"A well-managed warehouse is vital to an AM parts supplier who aims to become a leader in the field," explains Chou, "which calls for being able to fill small-batch, large-variety orders on-time." The new warehouse, according to Chou, will be spread across 20,000 square meters and, coupled with the 5,000 square meter existing warehouse, will soon total about 25,000 square meters to stock all kinds of material and products, thus further upgrading the company's peerless competitiveness.

To fill flooding orders, Chou adds, Shih Hsiang also plans to install an additional production line at its facility in Shanghai, China, while its Taiwanese facility will continue to upgrade efficiency.

Shih Hsiang operates a plant in Taiwan with around 100 employees, and another factory in Shanghai, China with over 260 people, whose total annual output is 1.2 million to 1.3 million control arms, of which about 90% of the pressing is done in China and the forging in Taiwan.

Major Goal

"Our main goal to set up the big warehouse in Taiwan is to expedite delivery, which for most global customers is more important than lower prices," Chou explains. "We always treat customers as family, so we help them as we would ourselves. Once the new warehouse is completed within about one year, we can halve delivery time, from 60 days to about 30 days."

"Over the next three years, Shih Hsiang will try to implement an even more ambitious plan, one that can immediately fill orders worldwide thanks to inventorying sufficient, comprehensive range of products," says Chou.

Wide Range

Established in 1978, Shih Hsiang specializes in manufacturing AM suspension and steering parts, being the largest and most comprehensive supplier of its kind in Taiwan. Supplying over 900 control arm models for almost all popular Japanese, European and American cars, according to Chou, his company is widely recognized as the world's largest and most-comprehensive supplier of AM control arms for American cars.

Consistently expanding its line, Shih Hsiang develops an average of 80-90 new items per year, with an annual R&D investment of US$2.3 million to US$2.9 million. Backed by the most advanced manufacturing equipment as computerized numerically controlled (CNC) machines, welding robots etc., the firm is internationally famous for being able to handle small-batch, large-variety orders.

To build corporate image, Shih Hsiang began a branding program late 2008, with its own SH-brand being the leader of AM suspension-parts in many markets as Russia, China, Eastern Europe etc.

Leading AM Windshield Molding Maker Yih-Tair to Double Capacity in Taiwan

Running production round-the-clock still lags flooding orders

Yih-Tair Industrial Co., Ltd., a high profile supplier of automotive body molding and windshield molding in Taiwan who globally markets high-quality products under its well-known ‘FlexLine' brand, recently announced plans to double its production capacity by constructing a new plant next to its existing facility in Longtan, Taoyuan County, northern Taiwan.

The new facility, according to Yih-Tair, will be a modern, integrated factory with advanced thermoplastic polyolefin (TPO), polyvinyl chloride (PVC) production lines capable of producing windshield moldings with integrated three-dimension (3D) rain channels.

Shanny Chen, director of sales, says that her company's production lines are running at full-capacity, 24-hours but still can't keep up to flooding demand, as well as being proud that all production is done in-house, including injection, extrusion, manufacturing, processing and packaging, to ensure the best quality.

Yih-Tair, established in 1983, is ISO 9001:2000-approved and a versatile developer and maker of windshield molding, solar-panel trim, body trim, corner protector, cold-roll forming products etc.

The firm is versed in many specialized techniques, including soft and hard plastic extrusion; multicolor/multiplex co-extrusion; metal roll forming; one-step metal and plastic forming; plastic hard-foam extrusion; wood grain extrusion; formulation of special raw materials and production technology especially for wood powder and plastic composites; 3D (changeable section) extrusion technology etc.

Continuous Upgrading

Yih-Tair's success is attributable to the company's consistent upgrading and transformation, Chen explains. After building a solid foothold in automotive body molding as the largest supplier of such product in Taiwan, Chen says, Yih-Tair began diversifying into the higher technical-threshold windshield molding about five to six years ago.

To date, Yih-Tair has developed over 1,000 windshield molding models, as well as boasting full in-house capability in corner injection, corner melting, metal insert, variable extrusion etc., Chen says.

Offering likely the best quality and competitive prices, Yih-Tair's windshield molding products are popular amid all major aftermarket (AM) automotive glass suppliers, automotive repair-shop chains, wholesalers, and big importers in major markets, including North America (accounting for 40% of overall export revenue), Europe (40%), and Japan (20%).

3D

Yih-Tair achieved another milestone a few years ago in the local automotive windshield-molding line, making the company the only player with full capability to produce 3D windshield moldings with integrated rain channels, which are adopted mainly by Japanese carmakers.

"The development and manufacturing of 3D windshield molding is very challenging for anyone," Chen claims, "because it requires very high technical and engineering capability, intensive know-how and experience, and of course considerable investment in new design systems and manufacturing equipment."

"Yih-Tair aims to be one of the world's leading suppliers of top-quality windshield moldings, so we never stop looking for new techniques and products," Chen proudly claims. "With all kinds of products and the comprehensive technical capability, our company undoubtedly is the most competitive supplier providing one-stop-shopping for top quality, rapid response, and small-batch, large-variety shipments."

TPO Material

Also producing products of new materials as TPO, TPE, TPV etc. in recent years, the maker invests intensively in new production lines. With the advantages of elastic, softness, recyclable, better tactile sense, and wide temperature tolerance (-60 to +135 degree), Chen says, TPO is a trendy and environment-friendly material.

"Yih-Tair has been aggressively trying to utilize our technical strength to differentiate our products. With new materials as well, we create products with quality and reliability even exceeding those of OE counterparts," says Chen.

Clutch Bearings Industries Invests Sizably in Product Development

Quality reputation helped to drive double-digit growth during downturn

Striving to supply the most comprehensive range of belt tensioners for passenger cars and trucks/buses, Clutch Bearings Industries Co., Ltd. is a specialized maker of aftermarket (AM) automotive bearing-related parts, including timing-belt tensioners, automatic belt tensioners, idler pulleys, wheel bearings and hubs, other special bearings, and clutch release bearings.

The company globally markets its high-quality products under the private brands HBC and FWD, as well as supplying some products to many international AM brands.

Clutch Bearings was founded in 1992 by a management team with over 25 years of experience and know-how in the line, and is now a top-two supplier in Taiwan with approximately 1,300 products.

Product Development Investment

Investing consistently US$600,000 to US$700,000 per year in new product development, the maker is able to launch 30 new items annually, particularly automatic tensioners, whereby such R&D effort, according to Ben Kuo, sales manager, keeps Clutch Bearings in the lead. Kuo is confident in the company's product quality and global competitiveness mainly due to extensive experience, product diversity and well-managed inventories.

Backed by expertise and ample real-world experience in filling orders, Kuo says Clutch Bearings knows everything about making the finest, most durable automotive bearings using optimal materials and manufacturing techniques. The company is able to offer unmatched product diversity and make one-stop sourcing truly feasible, with about 1,300 models for virtually all popular Japanese, American, European, and South Korean makes. On-site testing of all products before packaging assures buyers of the highest quality and lowest defect rate. In addition, Kuo says the firm has three warehouses that stock over 80% of the product line, meaning urgent orders are rarely backlogged.

Optimistic about his company's future, Kuo says belt tensioners have to be replaced after 60,000 to 100,000km. of driving. "That means the market always exists, and we develop new tensioners for most popular makes and models two or three years after a car's launch. “You always command a market provided you offer good quality, wide range and sufficient inventory,” Kuo justifies Clutch Bearings' success.

Kuo also points out that Clutch Bearings has been focusing on developing and making only high-end items, and selling them to major customers in especially Germany and Italy, who look for high quality rather than low prices. Clutch Bearings products are fully made in Taiwan of the finest materials, Kuo stresses, that last more than twice as long as cheaper counterparts from rivals.

In recent years, Kuo says, demand for hydraulic tensioners has been rising steadily, a trend which Clutch Bearings is tapping by aggressively developing new products.

Defying Downturn

The company enjoyed two-digit sales growth in even the past two years, when the global downturn hit many businesses, due to well-established quality reputation that is very important to help businesses weather tough times because customers look for maximum cost/performance value regardless of economic climate.

Another secret to success is, according to Kuo, the keeping of an adequate inventory for both materials, key components and finished products. Such strategy, developed based on the company's long experience in the business, not only enables Clutch Bearings to fill small-batch, large-variety orders, but to do so on short notice.

Camco Auto Focuses on High-end Styling and Performance Parts

One strategy is to concentrate outsourcing in Taiwan to ensure quality

The Camco Auto Sangyu Co., a leading and seasoned Taiwanese trading company that focuses on high-end performance auto parts and accessories, once again proves that its business strategies and responsible attitude help to build steady growth, even amid the uncertain global economy.

Market Trend

Bruce Liu, the chairman, says in a recent interview with TTG magazine that the American performance parts and accessory market has been on a downtrend for several years, the European market is expected to stay stable or decline a little bit this year, while the Japanese market is expected to buy more Taiwan-made items.

Liu not only clarifies for TTG readers recent market trends, but also offers tips for good business, saying that the responsible attitude of Taiwanese companies, including Camco, of course, has given players on the island a clear advantage over underselling Chinese rivals.

"Increasingly more American, European, and Japanese customers have returned to us after being subjected to bad experiences and frustrations in doing business with Chinese companies," Liu explained, "such trend will bring increasing orders back to Taiwan to form a solid advantage for the island."

"Our core advantage includes being accountable for product quality and creditworthiness," Liu furthers, "which, coupled with high product reliability, tactile sense, satisfactory service, and on-time delivery, allow us to retain competitiveness in the global high-end market, despite the global market not at its peak."

Successful Strategies

Camco's success also lies in the firm's appropriate business development strategies designed to consolidate its lead in the line that boost revenues.

The first of such strategies, says Liu, is to concentrate outsourcing in Taiwan to satisfy customers' needs for truly high-end, high-quality performance parts and accessories that are innovative as well.

"Our shipments of high-end Taiwan-made performance parts have grown rapidly in the past few years," Liu comments, "implying that quality and functionality not low prices, are top-priorities in the performance-parts market. Our experience tells us that the quality of Taiwan-made performance parts are unmatched by Chinese counterparts; while local manufacturers consistently upgrade their innovative capabilities and production techniques, which help maintain their lead in this demanding business."

Camco, Liu stresses, always works closely with customers to find high-quality manufacturers in Taiwan, establishing personalized contact to help them secure a wider range of suppliers to achieve one-stop-shopping.

Exclusively High-end

The other strategy, Liu goes on, is to continue a series of ambitious plans to develop high-end, style-enhancing plastic bumpers and chromed grills for luxury European cars; top-end carbon interior/exterior decorative items for Mercedes and BMWs; and top-quality metal and chromed grills for popular American pickup trucks, a program that has won positive market response since implementation last year.

Liu says that Camco already offers about 30 restyling bumpers for Mercedes and BMWs, as well as several dozen chromed grills for Mercedes, BMW, Audi, and Volkswagen sedans, with the number increasing rapidly.

This year, Liu says, Camco expects to continue enjoying smooth sales of high-end bumpers and grills for luxury German cars in especially Europe and Japan. In addition, the company has already mapped a plan to develop a broad range of exterior styling parts and accessories for the latest Toyota Hiace van to be unveiled later this year.

Racing Dash Develops Innovative LED Accessories for the World's Autos

The latest product of Racing Dash Enterprise Ltd.'s creative development effort combined with its advanced optoelectronic technology is a new energy-saving, long-lived LED license-plate lamp designed for a growing number of car models.

Besides saving energy and lasting longer, the new lamps produce a much brighter, much whiter light than traditional yellow bulbs. This gives cars on which they are installed a truly eye-catching rear section.

Racing Dash notes that its LED license-plate lamps can be used to replace original equipment. Each lamp has 18 surface-mounted device (SMD) super-bright LEDs, with an optical lens designed to spread the LED light beams widely and evenly. The housing is fully water-proof, and the efficient heat-dissipation mechanism prolongs the life of the LEDs. And, company officials stress, their LED lamps (unlike some other optoelectronic auto accessories) will not interfere with on-board computers.

Company executives say that some European cars and the Japanese Lexus began adopting LED license-plant lamps around 2007, and that their own product can bring other models up to date with the LED trend.

LED license-plate lamps are available from Racing Dash for more than 20 popular (mainly European) car models, and the number is growing rapidly thanks to customer demand.

Ever since its establishment in 1992, Racing Dash has worked hard to take the lead in the international market by developing innovative auto and motorcycle accessories that incorporate the most advanced optoelectronic features.

One example of the success of this effort is the electro-luminescent (EL) glow gauges for automobiles and motorcycles which Racing Dash commercialized back in 1995 (before which most such gauges had been used only in advanced aerospace applications). Over the years the company has introduced more than 800 models of these gauges for Japanese, American, and European cars.

EL glow gauges continue to contribute a substantial portion of the company's revenue, thanks to their high design flexibility (in terms of color, character, logo, scale, shape, etc.), color rendition, illumination uniformity, and the magical ability to give a brand-new visual appeal to old cars.

After establishing a solid market foothold with its EL gauges, Racing Dash started diversifying into cold-cathode fluorescent lamp (CCFL) headlight rims (“angel eyes”) and other high-end exterior accessories for luxury cars.

The firm pioneered the popularization of headlamp rims, which had previously been seen only on BMWs, by offering conversion kits for various car models. Most of these conversion kits, along with other Racing Dash products, are exported to the United States, Germany, Japan, and other advanced countries, implying that they can meet the highest quality standards for the most demanding markets.

Now the company is developing LED lamps for interior auto use: foot lighting, entry lighting, trunk lighting, glove-compartment lighting, etc. “Racing Dash is always ahead of the market,” claims the company's president, Hans Chien, “and our products always create new waves in the global auto-accessory market.”

Chien insists that his company will continue developing more innovative products by using its strong R&D capability in combination with the powerful advantages of Taiwan's optoelectronics industry.

Yow Jung Solidifies Leading Global Position in Ignition Parts

Yow Jung Enterprise Co. claims to have become one of the world's most comprehensive suppliers to the global ignition distributor assembly aftermarket. The company is not satisfied with that success, and constantly looking for ways to upgrade its operations and further diversity its product line by employing its impressive know-how in the field of automotive electronics.

Yow Jung markets its quality products around the world under its own “YJ” brand, and also serves as a supplier of products to global parts brands. The products are widely used in automotive, motorcycle, yacht, light aircraft, and industrial machinery applications.

The company has already achieved its fundamental goal: to become a specialist in combustion-engine ignition and electronics systems.

Established in 1979, Yow Jung now boasts TS 16949, ISO 9001, ISO 14001, and OHSAS 18001 certification, and supplies more then 800 models of ignition distributor assemblies. And we can also supplies more than 2000 difference kinds of pencil coil, ignition modules & coil , crank / cam sensor, TPS/MAP/AFM/ABS sensor and throttle body , idle speed motor for Japanese, European, and American cars.

It has an especially comprehensive range of products for Japanese automobiles.

In 2004 the company made a critical decision to begin its own development of ignition modules/ ignition coil. That makes YJ became the manufacturer who can produce the Ignition Distributor from scratch to completed assemblies. Success in this effort has made Yow Jung the world's only vertically integrated maker of AM ignition distributor.

The huge amount of investment expended in this effort, the company stresses, was made to assure the highest product quality.

The company further solidified its position as one of the world's foremost ignition/electronics system specialists in 2007, when it began developing and producing a wide array of sensors for vehicle applications. This resulted, in a short time, in the introduction of a comprehensive line of crank, cam, speed, fan-controller, gear-knock, anti-lock brake system, cylinder, and other sensors.

Yow Jung emphasizes that all of the tooling work for its products is conducted in-house, including trial-production processes. The company is proud of the fact that about a third of its 140-strong workforce is R&D-related; and that, says a senior company official, “…is why Yow Jung has such strong competitiveness in the crowded global market.”

A new venture is taking the company into the development and production of idle air control valve (IACV) and electronic throttle body (ETB) products, adding yet more strength to its leading position in electronic systems.

More advancement lie in the future: the development and production of controllers for alternators and starter motors, for example. And, with its huge reservoir of expertise, more such efforts are sure to follow.

YJ-brand products are popular with customers all over the world who are looking for high quality, durable, reasonably priced products. About 70% of the company's products are exported to the United States, around 20% go to Europe, and the rest to other parts of the world.