Taiwan's Automotive Sheet Metal Forming Mold Makers Have Strong Advantages: MIRDC

By STEVE CHUANG

Developed countries are increasingly outsourcing automotive sheet metal mold production because of cost considerations, and Taiwan's government-funded Metal Industries Research & Development Centre (MIRDC) is confident that the island's manufacturers have the conditions necessary to take advantage of this trend.

Increasing competition is forcing suppliers in countries such as the U.S., Japan, and Germany to cut costs by farming out production to overseas contract manufacturers. The MIRDC predicts that this will turn Asia into the world's main manufacturing base for automotive molds, especially since market demand for such products in Korea, China, India, and other emerging Asian nations has surged strongly over the past few years.

Under this scenario, the MIRDC says, Taiwan's automotive sheet metal forming mold sector is very likely to see high growth in both export orders and production value, further boosting its global market share in the short term. This is partly because most of the island's producers in the line have become recognized by large international enterprises for their well-honed development and production capability, and partly because their Korean counterparts, though benefiting from a strong domestic automotive supply chain and arguably superior technology, are mostly focused on local sales.

Supplying the World

The MIRDC notes that Taiwan's auto sheet metal forming mold sector is composed mostly of small and medium-sized companies. According to a 2012 survey they had a total of 1,667 workers; their production value that year reached NT$5 billion, or NT$3 million per employee.

According to the MIRDC, Taiwan's larger mold suppliers engaged in original equipment manufacturing (OEM) currently include Gobo Enterprise, Jui Li Enterprise, COC Tooling & Stamping, Van Guard Mold Enterprise, Ejee Pressing Dies Industry, Chun Shyang Shin Yeh Industry, Qiao Feng Machinery Mold, Li Sheing Tooling Industry, and Yow Jann Chern Enterprise. Those focusing on the aftermarket (AM) are Jui Li Enterprise, Gordon Auto Body Parts, Taiwan Kai Yih Industrial, Auto Parts Industrial, and Yuehcheng Co.

The research institute adds that OEM makers export their molds mostly to Japan, China, Malaysia, and the U.S., while AM suppliers rely mainly on the U.S. market. About 70% of the sector's overall production value is generated by its 10 biggest companies, including Jui Li and COC Tooling & Stamping, which supply not just molds but also automotive sheet metal to carmakers at home and overseas. Their customers encompass such big names as Yulon Motor, China Motor, Ford, Honda, Nissan, Toyota, General Motors, Tesla, Chrysler, and Tata.

Advantages, Disadvantages, Threats

With the production of auto sheet metal and molds gradually shifting to Asia, the MIRDC believes that Taiwanese suppliers have the competitive advantages they need to snap up a large share of the huge market.

The MIRDC first points to the industry's time-tested technology, which ensures customers not only of excellent quality but also of highly customized, flexible, and efficient production, a particularly significant factor at a time when cars' shortening life cycles result in a persistent contraction of delivery times. The institute notes that under these circumstances, their flexible, custom production capability will enable Taiwanese suppliers to beat their rivals in the global competition, and they should be more confident of the quality of their forming molds, which can match that of Japanese and Korean rivals.

Moreover, the MIRDC adds, the Economic Cooperation Framework Agreement (ECFA), which liberalizes trade between Taiwan and China, is another powerful weapon that Taiwanese mold suppliers should use to compete globally. ECFA has proven effective in fueling the return to Taiwan of overseas Taiwanese manufacturers wanting to take advantage of the sector's competitiveness, a trend that should help local suppliers build a more solid foothold in the Chinese market.

These opportunities, however, come with challenges. The MIRDC warns that suppliers from emerging countries, with their aggressive acquisition of technology and relatively low operating costs, are strong rivals to Taiwanese companies in the competitive landscape. These suppliers are able to undercut Taiwanese makers, particularly in the low- and middle-end segment. To secure sustainable profits in the face of increasingly competitive rivals, the MIRDC advises Taiwanese suppliers to step up the development of higher-value-added auto sheet metal forming molds.

Among the disadvantages of Taiwanese mold makers, the MIRDC points out, is their relatively small size, which limits their investment in R&D and capacity expansion. Another problem is weak government support compared with Japan and Korea. The sector also faces a lingering manpower shortage, due mainly to the fact that young people generally dislike working in traditional manufacturing industries.

Even worse, the MIRDC says, Taiwanese makers are subject to unfair competition from rivals in countries having free-trade partnerships with big market countries. For instance, the free-trade agreement between the U.S. and Korea may make it hard for Taiwanese companies to compete against Korean rivals for orders from American customers, since the agreement provides for duty-free treatment for most products, including automotive sheet metal and molds, whereas such Taiwanese products exported to the U.S. are still subject to a 5% duty.

Suggestions and Advice

To help Taiwanese suppliers secure a sustainable competitive standing in the global market, the MIRDC suggests that the government should take the initiative in cooperating with local R&D institutions in setting up testing centers for production equipment for large-sized automotive sheet metal.

This suggestion aims to address the problem of the small size of Taiwanese mold makers, which generally limits them to stamping presses with a capacity of 800 to 1,500 tons. This puts them at a disadvantage in the scramble for profitable orders, such as those for body side moldings. The MIRDC stresses that with testing centers established using government resources, producers will be able to improve and assure the quality of their molds and sheet metal using their existing equipment, making them better able to fill big orders.

Also, the MIRDC urges the government to help Taiwanese mold makers, which have been engaged mostly in OEM work, boost their profiles by marketing their products globally under the collective brand “MIT inside.”

Finally, the MIRDC says that Taiwan should speed up its negotiations with the U.S. for a free-trade agreement, which is vital for Taiwanese mold suppliers in their quest for orders from American carmakers. (SC)

Taiwan's Automotive Sheet Metal and Forming Mold Supply Chain
Upstream Mold Makers	Midstream Sheet Metal Makers	Downstream Customers
OEM Gobo Enterprise, Jui Li Enterprise, COC Tooling & Stamping, Van Guard Mold Enterprise, Ejee Pressing Dies Industry, Chun Shyang Shin Yeh Industry, Qiao Feng Machinery Mold, Li Sheing Tooling Industry, Yow Jann Chern Enterprise	OEM Jui LI Enterprise, Chun Shyang Shin Yeh Industry, COC Tooling & Stamping, Lioho Machine Works, Hsin Chon Machinery Works, Yulon Motor, China Motor	Local Carmakers Yulon Motor, China Motor, Luxgen, Kuozui Motors Foreign Carmakers Honda, Nissan, Tesla, Ford, Chrysler, MSIL, Tata, M&M, etc.
AM Jui Li Enterprise, Gordon Auto Body Parts, Taiwan Kai Yih Industrial, Auto Parts Industrial, Yuehcheng Co.	AM Jui Li Enterprise, Gordon Auto Body Parts, Taiwan Kai Yih Industrial, Auto Parts Industrial, Yuehcheng Co.

Source: Metal Industries Research & Development Centre