Taiwan's Metal Parts Subcontractors Survive by Being Adaptable
2011/01/06 | By Ben ShenHaving advanced production equipment is critical to meet diversifying demand
One underlying, historical reason for the success of Taiwan's contract manufacturers is price competitiveness initially and then later improving quality. In the 1960s, some Japanese customers, in the wake of the WWII and trying to make ends meet, probably started sourcing rudimentary contract manufacturing of hardware and fasteners for cheaper prices. Along the way Taiwanese suppliers were taught tricks of the trade to improve processing. Later on as Taiwan evolved beyond agrarian livelihoods, more Taiwanese entrepreneurs had to find other trades. And the stale tale is that many locals packed simple products in luggage and flew overseas looking for buyers. Such trend likely spread the word that Taiwan was a place with manufacturing capacity at very low cost, which attracted savvy buyers to the island to source contract manufacturing of all kinds of products.
An overriding advantage held by Taiwan's contract suppliers is adaptability—another way to say willingness to do whatever works. For instance, they moved offshore when local costs surged, began to target high-end segments when Chinese rivals undersold them with unbeatable prices. In addition, Taiwan's contract suppliers have diversified services to offer, for example, design consultancy during new product development, to retain client loyalty, a feat not easily copied by Chinese competitors whose forte revolves around volume production and rock-bottom prices.
Extensive Subcontractor Network
With a factory of 1,990 square meters, Shun Den is conveniently located adjacent to the island's largest steelmaker—China Steel Corporation—and is captained by president David Chang, who claims to have over four decades of experience in developing forged and cast-iron hardware.
“We can roll out made-to-order specialty hardware and advise customers to boost their product value. Being conscientious and sincere has helped us to build a large base of loyal clients,” says Chang.
The company works with many subcontractors to form a reliable, mutually-beneficial supply chain that is able to maintain strict quality control, says Chang.
Strict QC
Backed by years of metalworking experience, Shun Den knows how to maintain quality when outsourcing production, insisting on a series of pre-agreed quality-control measures. “We ask for quality testing reports on tolerance and specifications, and send QC engineers to do random checks in factories,” says Chang. Sometimes, Chang personally spot-checks production to get a first-hand look, and, if necessary, discusses immediately with operators for modifications.
Having such an extensive subcontractor network enables Shun Den to be flexible in production, helping to build product comprehensiveness and production efficiency. For instance, Shun Den guarantees a lead time of less than 35 days—from receipt of order to delivery of sample.
The subcontractor network also enables Shun Den to take on specialized, customized orders even with ultra-fine specifications. “In short, Shun Den and its subcontractors work as team to achieve a simple objective—deliver high-caliber products and services,” says Chang.
The bee in Chang's bonnet is steadily rising material prices. “Our profits have been eroded by rising steel prices over the past several months, but we are doing our utmost to cut cost by streamlining production. Fortunately, material prices have tapered off over the past one and a half months to make operations easier,” says Chang.
Exporting mainly to the U.S., Canada, and industrialized European nations, the company plans to extend export to Southeast Asia, Latin America and Africa soon.
Lathed Parts
Lien Chin Industrial Co., Ltd., founded in 1994 in Fengyuan, Taichung County, central Taiwan, is an OEM of milled, lathed non-ferrous parts, who has accumulated ample metalworking expertise and built a solid name globally.
Employing advanced manufacturing equipment such as computer numerically controlled (CNC) lathes, milling machines and machining centers, Lien Chin turns out zinc, cast aluminum alloy, copper, forged aluminum alloy, annealed aluminum alloy parts for high-end, precision applications on bicycles and optical products, most of which are anodized.
The company has been for over 20 years a subcontract supplier to the listed Largan Precision Co., the internationally renowned lens maker, indicative of Lien Chin's product quality.
Lien Chin adopts many testing machines, which are strictly calibrated and maintained, to assure high degree of precision. “A supplier in Taiwan who wants to survive in the line must upgrade equipment and technologies to stay competitive,” says Zhonglin Lai, the company president.
To stand out from rivals in China, Lien Chin emphasizes service. “Lien Chin is already QS-9000 certified and handles customer complaints in accordance with TS16940 standards,” Lai says.
Systematic Approach
“We can adjust production process and change molds even three times a day to turn out specialized parts. In short, we regard adjusting production an integral service, earning Lien Chin customer's trust,” Lai says.
Being very efficient in production has helped the company to offset price hikes in metals over the past few years. Lien Chin can fine-tune and streamline production not only to meet customers' requirements but also reduce production cost, which make buyers more receptive to rising product prices.
Doing its part for the green cause, Lien Chin asks subcontractors to submit analytical reports on materials to meet SGS-approved international standards, and to deliver lead-free parts.
Custom Molds & Parts
makers in Taiwan and China to turn out complex metal and plastic parts.
Headquartered in Taipei and with a service center in Dongguan, Guangdong province, China, EFC has over 20 employees and engineers engaged in integrated production, from mold design, material purchasing, raw casting fabrication, CNC machining, to surface treatments and parts assembly. Serving 50-odd customers in North America, Europe, Asia, India, Japan, the Middle East etc., the maker has ample experience in mechanical product development, manufacturing, quality assurance and marketing.
Besides being able to, with in-house experts in production and quality control, rapidly respond to market trends and customer suggestions, the company boasts the capability to help customers secure new business and strengthen competitiveness by managing cost, project, engineering, process, quality, productivity, risk, supply chain, centralized purchasing and delivery.
Prioritizing quality over quantity, EFC's QC department fully checks critical dimensions; while using cutting edge technologies and advanced manufacturing techniques enables the company to turn out superior products cost effectively.
This ISO9002 and QS9000-certified supplier mainly offers aluminum and zinc die-castings, molds and parts that are polished, coated, chromed etc.; sand-castings, forgings, investment castings, plastic injection molds and parts, OEM and customized stamped and machined parts, machined hardware, and CNC lathed electronic parts and computer peripherals.
Metal Forming
To stay competitive globally while continually growing, the TUV ISO9001:2008-certified firm has paid great attention to on-the-job training to help workers upgrade and be updated.
And to meet diversified demand from around the world, Inter-Tech has expanded production facilities, having set up near the original plant of 21,600 square feet a second factory of 10,800 square feet as a dedicated water-jet cutting facility, with merger and acquisition being an another option to raise capacity.
State-of-the-Art Equipment
W.S. Liu, founder and president of Inter-Tech, says that having state-of-the-art production equipment is critical for subcontractors to meet diversified demand, adding that his company has garnered plenty of metal-cutting know-how over the past several years due to installing many advanced, automated production machines, which has helped elevate processing quality and production efficiency.
The company's major production equipment includes four laser cutters, two water-jet cutters, one NCT automatic puncher, six CNC electric benders, one sheet-metal shearing machine, three drilling machines, one CO2 welder, and one argon welder. The L4030 2D laser cutter has maximum capacity of 4,000mm x 2,000mm and a thickness of 20mm for iron, 10mm for stainless steel, and 3mm for aluminum sheets.