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Highlights of the Latest Hand Tool Industry Report by the ITIS of MIRDC in Taiwan

Oct 03, 2013 | By Steve Chuang

Taiwan's hand tool manufacturers produced NT$17.79 billion of products in the second quarter of this year, up 6% year-on-year (YoY) but down 13.2% quarter-on-quarter (QoQ), according to the latest report authorized by Industry & Technology Intelligence Service (ITIS) of Metal Industries Research & Development Centre.

Meanwhile, the industry's exports totaled NT$14.6 billion, growing 12% QoQ but edging down 1.8% YoY, while imports increased 7.5% quarterly to NT$1.07 billion, which was 6.2% less than a year ago. The domestic market demand amounted to NT$2.3 billion. As a whole, the industry's export rate and import dependence rate reached 90.6% and 42.0%, respectively, according to ITIS's report.

Main Events
ITIS indicated that the Taiwan Hardware Show (THS) 2013, an annual trade fair mainly for hardware, fasteners and hand tools industries, will move to Taichung to be in an international venue near the THSR (Taiwan High Speed Rail) Taichung station for the first time from October 21 through 23. This will better help boost Taichung's image as the island's manufacturing hub of hand tools, and facilitate sourcing, given that 80% of Taiwanese hand tool makers are clustered around the Taichung-Changhua area.

Held in Taipei for the past 12 years and to celebrate its 13th edition with more than 350 exhibitors at home and from abroad to participate, this year's show hosts over 500 booths to showcase eight main product categories, tools and accessories, locks, fasteners, building materials, garden and outdoor products, car maintenance products and accessories, mechanical hardware, whole-plant equipment and safety protection products.

Sponsored by the Taichung City Government and Taiwan Hand Tool Manufacturers' Association (THTMA), the show, organized by Kaigo Co., aims to generate even more business opportunities for Taiwanese suppliers after moving to Taichung, which enables convenient touring arranged by the organizer for foreign buyers of factories, also materializing both on-spot and post-show business chances, says ITIS.

While development of hand tools moves toward lightweight, material-efficient designs, ITIS's report introduces Arrowmax, a U.S.-based hand tool supplier, that brings the industry its trendsetter, Honeycomb series screwdriver, which, released at the 2013 International Toy Fair Nurnberg held March 12-18 in Germany, impresses global tool makers with its eye-catching hollow honeycomb design coupled with a light weight handle for easy portability.

This revolutionary tool should inspire Taiwanese manufacturers to develop their next-generation lightweight tools, says ITIS's report.

Despite gradually downsizing, National Hardware Show (NHS) in Las Vegas keeps wielding unparalleled influence in the global hardware industry to help Taiwanese hand tool industry's bottom line, according to ITIS.

Held May 7-9, this year's NHS offered a slate of wide-ranging products, which were laid out systematically in featured areas according to categories, including Hardware & Tools featuring some 650 manufacturers, Farm & Ranch highlighted with over 200 makers, Building Products full of 150-plus producers, Hardwares occupied by more than 250 suppliers, Lawn, Garden & Outdoor Living gathering over 850 manufacturers, Paint & Accessories with about 250 makers, Plumbing & Electrical with around 250 suppliers, Storage & Organization with some 250 makers, Outdoor, Tailgate & Recreation with 80 exhibitors, Inventors' Spotlight, International Sourcing with several hundreds of suppliers mostly from China, India and Taiwan, and Pet Products with over 200 companies.

As one of U.S.'s most reliable trade partners, Taiwan continued to boost its image at this year's NHS, backed by participation of some 80 Taiwanese exhibitors led by either Taiwan External Trade Development Council (TAITRA), a semi-official trade promoter, in cooperation with THTMA, or CENS.

Hand tool manufacturers made up the majority of the exhibitors organized by TAITRA and THTMA, including such heavyweights as Allprofessional Mfg. (snip cutters), Infar Industrial (wrenches), Lucky-Brand Industrial (hammers), Re-Dai Precision Tools (ratchet handles), Apex Mfg. (staplers and tackers), Yih Cheng Factory Co. (screwdrivers), etc.

Additionally, TAITRA and THTMA also joined hands to set up the Taiwan New Product World Pavilion. THTMA indicated that they came up with the idea because some veteran exhibitors from Taiwan couldn't show up this year for a variety of reasons, which was overcome by displaying a spate of new, innovative products in their absence.

Mark Lin, THTMA chairman and the owner of Yih Cheng, the biggest screwdriver maker by output in Taiwan, felt that buyers at NHS 2013 actually increased, saying in an on-site interview with CENS, “Although the benefits of exhibiting at NHS are diminishing progressively over time and the problem is today commonly seen in other trade fairs as well, one thing that inspires us is that quality buyers are actually returning to the show this year, and most of them are looking for something new here. The positive atmosphere was due to the recovering U.S. economy and increasing housing starts nationwide.”

ITIS also emphasized the great benefits of the procurement conference, initiated by Bureau of Foreign Trade and organized by TAITRA with the aim to help local suppliers of hardware, hand tools and oil seals to land orders with foreign buyers that rounded off on October 18, 2012, resulting in 144 in-person meetings between 17 invited foreign buyers from 12 countries and 78 Taiwanese companies.

One heavyweight buyer was Premium, a Russian importer of hand tools with annual revenue of over US$600 million, and another being Dong Shin TTM, one of Korea's top three hand tool suppliers. The organizer claims the procurement conference helped to materialize business opportunities worth US$20.3 million between foreign and local participants.

Prospects Uncertain
Reviewing the global economic conditions in the first half of this year, ITIS pointed out that the global economy remained unstable for a variety of reasons, including China's economic growth slowdown, lingering debt crisis in the EU bloc. Therefore, the research institute opines that the industry had experienced moderate growth during the period, with future prospects being uncertain.

ITIS furthered that with U.S. Fed's tapering of its QE3 already forcing international investors to shift capital to other markets from emerging countries, economies in Southeast Asia, especially India and Indonesia, have been seriously impacted to worry Taiwanese suppliers, not to mention that the unsolved debt turbulence in the EU, especially when Greece is reportedly asking for the third round of the bailout from EU Commission, may lead to tighter credit to worsen market uncertainty. Also, the West's discussion of armed invention of Syria's use of chemical weapons has further enhanced global economic instability.

Hence, ITIS advises that Taiwanese companies should expand businesses more rationally and prudently amid an increasingly unstable global economy in the second half of this year, also step up restructuring organizations and sharpening competitiveness to steel themselves for possible market changes.

Despite unfavorable economic conditions, ITIS notes that Taiwanese manufacturers should be able to stay in comparatively fine shape in the third quarter of this year, based on the industry's performance in 2012 with output value of NT$64.45 billion after witnessing sudden downturn in the second half of the year, as well as Taiwanese manufacturers' time-tested manufacturing skills and flexible marketing strategies.

Taiwan's Hand Tool Industry Output

Unit: NT$1 billion

Period

2011

Q4, 2012

Q1, 2013

Q2, 2013

2013
(forecast)

Value

YoY Growth

Value

Value

QoQ Growth

YoY Growth

Value

QoQ Growth

YoY Growth

Value

Output

61.80

5.15%

15.24

14.11

-7.4%

-1.9%

17.79

-13.2%

6%

62.0

Imports

4.76

4.20%

0.91

0.96

6.5%

6.3%

1.07

7.5%

-6.2%

4.5

Exports

59.36

9.97%

14.00

12.78

-8.7%

-9.5%

14.60

12%

-1.8

60.0

Source: Metal Industries Research & Development Centre


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