Taiwan's Mold Industry Output Up 3.2% in Q4 2012

Taiwan's mold industry finished the fourth quarter of last year with an output value of NT$13 billion, down 5.1% from a year earlier but up 3.2% compared with the previous quarter, according the latest report issued by the Metal Industries Research & Development Centre (MIRDC), an industry researcher.

The report shows that NT$5.6 billion of the quarter's output was generated by exports, 7.3% more than a year earlier. At the same time, the industry's imports totaled NT$1.6 billion, up a significant 22.1% year-on-year but almost unchanged from the third quarter. Domestic sales for the quarter amounted to about NT$9 billion, for a YoY shrinkage of 8.1%.

For all of 2012, the MIRDC estimates the industry's output at NT$47.1 billion, down from NT$49.9 billion in 2011, with exports of NT$20.3 billion up from NT$19 billion the previous year. The research firm adds that imports were expected to have increased to NT$5.8 billion, up from NT$4.7 billion in 2011, and domestic market demand was expected to have declined from NT$35.6 billion to NT$32.6 billion over the same period.

The MIRDC indicates that the downturn in whole-year output last year resulted from a significant weakening of domestic demand amid the global economic doldrums. Another reason was the migration of some Taiwanese enterprises offshore in search of lower operating costs.

The MIRDC points out that the industry's exports grew last year partly because manufacturers were capable of producing high-precision molds at comparatively low prices, making them attractive to customers globally, and partly because of increased shipments to China thanks to the duty-free treatment afforded by the Economic Cooperation Framework Agreement (ECFA) between Taiwan and China.

Academe-Industry Synergies

The most encouraging recent news for the industry is that four local universities--Taiwan National Ocean University, Chung Yuan Christian University, Chien Hsin University of Science and Technology, and Taoyuan Innovation Institute of Technology—have decided to jointly offer students an education program for digitalized molding and related fundamentals, involving courses in mold development, planning and manufacturing, material properties, plastic injection molding, and computer aided engineering (CAE), as well as practices and training in eco-friendly molding.

The MIRDC notes that the education program will help the industry secure a stable source of young, basically trained workers, and incubate local talent for more sustainable development in the future.

While these impending synergies with academia brighten the industry's prospects, it is still worried about growing rivalry from Chinese competitors, especially after the Tianjin FAW XIALI Automobile Co., a Chinese carmaker, initiated a move to acquire GIW, a German designer and manufacturer of molds for car metal and aluminum plates, whose customer list includes Porsche, BMW, and Mercedes-Benz.

If the acquisition actually takes place, the MIRDC emphasizes, it will not only help Tianjin FAW XIALI to enhance its molding technology and its sales in the European market, but will also boost the overall competitive advantage of the Chinese mold industry in the global market.

Future Outlook

The MIRDC expects the industry to gradually gain growth momentum, starting this year, for a variety of reasons.

Although the global financial system remains unstable, which seriously hampers Taiwan's manufacturing industries, local mold suppliers are still likely to ramp up their exports in the coming year because of the launch of QE3 in the U.S. and the 12th Five-Year Plan in China. Both programs are designed to stimulate the domestic economy in those countries.

In addition, at the same time that it is accelerating follow-up ECFA talks for duty exemption on some 8,000 items of locally made goods shipped to China, Taiwan's government is also approaching the end of negotiations with Singapore and New Zealand on the signing of free trade agreements. It has also resumed its FTA talks with the U.S., and is working toward a bilateral investment agreement with EU.

These factors make the MIRDC optimistic about the mold industry's prospects. It predicts that the industry's output and exports will grow to NT$50 billion and NT$22 billion, respectively, this year, and that its imports will reach NT$5.6 billion. Output and exports in the first quarter of 2013 are forecast at NT$10.8 billion and NT$4.9 billion, respectively.

Output of Taiwan's Mold Industry Unit: NT$1 billion
Period	2011	Q3, 2012	Q4, 2012			2012 (estimated)	Q1, 2013 (forecast)	2013 (forecast)
	Value	Value	Value	QoQ Growth	YoY Growth	Value	Value	Value
Output	49.9	12.6	13.0	3.2%	-5.1%	47.1	10.8	50.0
Imports	4.7	1.6	1.6	0.0%	22.1%	5.8	1.4	5.6
Exports	19.0	4.9	5.6	14.3%	7.3%	20.3	4.9	22.0
Domestic Market Demand	35.6	9.3	9.0	-3.2%	-8.1%	32.6	7.3	34.6

Source: Metal Industries Research &

Development Centre