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Taiwanese Hand Tool Industry Output Up 9.6% in Q3, 2013

Dec 12, 2013 | By Steve Chuang

With the second straight quarter of growth, Taiwan's hand tool industry finished the third quarter of 2013 with output of  NT$18.4 billion, up 9.6% year-on-year (YoY), according to the latest report authorized by Metal Industries Research & Development Centre (MIRDC), a government-funded research institute.

The report shows that the industry's Q3 exports totaled NT$16.07 billion for a 12% increase from the second quarter, or down 6.9% YoY, while imports amounted to NT$1.15 billion, up 10.8% quarter-on-quarter (QoQ) and 0.7% YoY. The domestic market size reached NT$3.48 billion; and the industry's import dependence and export-to-output ratio stood at 33.1% and 87.3%, respectively.

In terms of income, other kinds of hand tools as described by Taiwan Customs contributed NT$8.11 billion to the total as the biggest export category among others in the quarter, followed by wrenches and garden tools, which generated about NT$4.85 billion and NT$1.17 billion, respectively, the report indicates. Meanwhile, among imports saws (NT$530 million), other kinds of hand tools (NT$250 million) and wrenches (NT$200 million) were three most in demand by value.

Steady Recovery
MIRDC's industry analyst, Arthur Hsu, pointed out that since the second quarter of 2013, the industry has gradually rallied from a continuous downturn beginning in the fourth quarter of 2012 through the first quarter of the year, mostly thanks to efficient  industrial structure to sustain steady recovery.

Hsu noted that the industry's output, imports and exports in the third quarter of 2013 showed a 4.6%, 10.8% and 12% increase, respectively, over the second quarter, and were 9.6%, 0.7% and 6.9% more than a year earlier. In comparison, its 2012 output and exports shrank 0.6% and 1.36% YoY, respectively, to NT$61.5 billion and NT$59.01 billion. Another sign of the industry's ongoing recovery was the uptrend of both the import dependence and export-to-output ratio mentioned above, which could be due to increase in homebound investments in the industry.

As to outlook in the short term, Hsu mentioned that whether Taiwanese hand tool suppliers will continue to see a robust market remains to be seen, largely due to lingering global economic uncertainty. Based on economic data published by domestic and foreign research firms, he indicated that negative factors behind the uncertainty include anemic improvement in  employment in the U.S. and Europe, where governments have been working on austerity to improve fiscal health; China to formally stop credit tightening; and skyrocketing prices of raw materials due to climate change, natural disasters and political unrest worldwide, particularly in the Middle East and North Africa.

Hsu particularly pointed to sluggish international trade and economic growth in China as  alarming to Taiwanese manufacturers who depend on the world's most populated country. Affected by growing imports and soaring international prices of raw materials, the country is under  threat of inflation after gradually tightening credit, which will impact its domestic market demand and homebound investments in the near future. As such, Hsu said, many  Taiwanese suppliers have run their businesses more conservatively to cope.

Insiders' Movement
With strong manufacturing and R&D capability and strenuous commitment to upgrading, some Taiwanese hand tool makers have made notable achievements to strengthen abilities to better tackle underselling competition from emerging rivals.

Hsu reported that Kuang Yuang Industrial Co., Ltd., a veteran manufacturer of pliers and adjustable wrenches with its own Lion brand, has just completed integration of in-house production, from material sorting, mold and die developing through forging, CNC machining to heat treatment, laser surface hardening and quality testing, in efforts to achieve self sufficiency of nearly 100% to better compete globally. Moreover, at its newly constructed R&D center demonstrates a spate of innovative products developed over the past few years to underscore its R&D capability.

Coincidentally, William Tools Co., Ltd., a world-caliber ratchet wrench supplier, released its newest torque wrench at Taiwan Hardware Show 2013, held October 21- 23 in Taiwan's central city of Taichung for the first time to allow foreign buyers easier access to the local hand tool industry.

Hsu mentioned that for now, this company can produce up to 2 million units of various torque wrenches and ratchet wrenches, and has tapped global brands' ODM (original design manufacturing) chains. To stay globally competitive, it has put heavy emphasis on R&D, with related engineers accounting for 10% of its overall workforce.

To make the most of its expertise at global marketing, Parget Industrial Co., Ltd., a supplier of sockets, auto repair tools and power tools and owning the Licota brand, has started up its brand new production factory in Taichung, with the aim to advance from build-to-order manufacturing to original brand manufacturing, according to Hsu.

Also notable was that Taiwan Hand Tool Manufacturers' Association just elect its new chairman, Arthur Wu, president of Proxen Tools Co., Ltd., a specialized manufacturer of high-end adjustable wrenches, during the 13th annual general meeting held mid-September, during which he outlined the  blueprint for the next three years in office, including reorganizing the association's structure to set up 7 commissions engaged in different tasks to further boost organizational efficiency; enhance the association's global presence and exposure; and apply for more governmental resources and support to sustain the industry's future development. (SC, Dec. 2013)

Performance by Taiwan's Hand Tool Industry Unit: NT$1 billion
Period
2009
2010
Q2, 2012
2011
Q2, 2013
Q3, 2013
2012
Value
Value
Value
Value
Value
Value
QoQ Growth
YoY Growth
Value
Output
44.00
58.30
16.78
61.80
17.59
18.40
4.6%
9.6%
64.45
Imports
2.81
4.57
1.14
4.76
1.04
1.15
10.8%
0.7%
4.03
Exports
42.23
53.96
15.04
59.34
14.35
16.07
12.0%
6.9%
59.01
Domestic Market Size
4.60
8.90
2.89
7.22
4.28
3.48
- 18.7%
20.5%
9.47
Import Dependence
61%
51%
39.6%
66.0%
24.3%
33.1%
36.3%
- 16.4%
42.6%
Export-to-output Ratio
96%
93%
89.6%
96.0%
81.6%
87.3%
7.1%
- 2.5%
91.6%
Source: Metal Industries Research & Development Centre

Supply-Demand of  Taiwan's Hand Tool Industry by Year
Year
2007
2008
2009
2010
2011
2012
Import Dependence
56.8%
54.6%
61.0%
51.3%
70.8%
61.7%
Export-to-Output Ratio
95.0%
94.0%
96.0%
92.6%
96.8%
95.9%
Domestic Market Size
NT$6.83 Bn.
NT$7.85 Bn.
NT$4.60 Bn.
NT$8.90 Bn.
NT$6.72 Bn.
NT$6.53 Bn.
Source: Metal Industries Research & Development Centre


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