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Taiwan's Machine Tool Makers Stock up on Parts for Rush Orders

Jun 25, 2014 | By CENS

Leading machine-tool makers in Taiwan are vigorously purchasing crucial components and materials for machines or raising materials and parts inventory to the level of at least two months lest incoming rush orders should be lost.

Taiwan's industry executives say that the recovering global economy is driving machine-tool demand worldwide which Japanese manufacturers alone can hardly meet, with ample orders also diverted to Taiwan.

Taiwan's leading manufacturers, including Tongtai Machine & Tool Co., Ltd., Victor Taichung Machinery Works Co., Ltd., Awea Mechantronic Co., Ltd., Goodway Machine Corp., Kao Fong Machinery Co., and Yeong Chin Machinery Industries Co., Ltd. are landing increased orders.

Citing data from the Japan Machine Tool Builders' Association, Tongtai executives say that new orders Japan's machine-tool industry landed in March and April posted all-time highest and second highest, respectively, in its history. The Japanese manufacturers ship 60-70% of their machines overseas. Usually, when Japan's machine-tool industry lands 130-140 billion yen (US$1.28-1.38 billion) worth of orders a month, the global economy is recovering, they say.

Tongtai executives ascribe the record number of orders to Japan partly to the steep devaluation of the yen against the US dollar in recent months, hence enhancing competitiveness of Japanese exports.

They expect Taiwan's machine-tool industry to begin turning the corner in the second half of this year and to be better this year than last year. They say the company's order book has filled throughout the second quarter and steady orders are being landed for its third-quarter production capacity. So far, the company still has NT$2.1 billion (US$70 million) of unfilled orders with order visibility of two to three months.

Victor Taichung executives say the company's orders have recently surged 30-40%, helping swell the company's undelivered orders to around NT$1 billion (US$33.3 million), with order visibility of three to four months.

They say that most of the new orders swarming the company in recent months are for rush deliveries, with some accepting stock machines and some with  customization.

Fearing that inadequate inventory of spare parts and materials would dissuade buyers from placing rush orders, Taiwan's machine-tool makers are vigorously stocking up spare materials and parts.

Goodway executives say that the company is increasing its purchases of  ball screws, liner guideways, bearings and crucial materials by 20% to prepare for surging orders over the next two to three months.

Goodway's subsidiary, Awea, has tasked its purchasers to aggressively visit materials and parts suppliers to stay ahead of competitors. Awea executives say the company will have to delay deliveries by a few days to a few weeks if components and materials suppliers fail to deliver orders on schedule.

Taiwan Takisawa executives say that the company is maintaining at least two months of inventory of ball screws, linear guideways and bearings.

Kao Fong executives say the company received steady orders in April and May and is working on potential orders likely to arrive in July. So far, the company still has NT$400 million (US$13.3 million) of unfilled orders. To ensure on-schedule deliveries, the company has increased expenditure to NT$600 million (US$20 million) on materials and components available for four months of production.

The vigorous materials and parts purchases have largely benefited Hiwin Technologies Co., Ltd., Taiwan's major manufacturer of ball screws, linear guideway and other precision components for machine tools. The company's executives say the company's orders for off-the-shelf ball screws and linear guideays has been booked throughout the second quarter while those for customized products has been booked for at least one month. (KL)

Jan.-Apr. 2014 Revenue at Taiwan's Leading Machine Tool Makers

Stock code
Company
Apr. consolidated revenue
YoY change (%)
Jan.-Apr. consolidated revenue
YoY change (%)
1530
Awea
NT$281M
+11.24
NT$1.1bn
+25.03
1540
Roundtop
NT$83M
-12.06
NT$338M
+19
1583
Goodway
NT$523M
-6.13
NT$2.1bn
+17.81
2049
Hiwin
NT$1.1bn
+33.98
NT$4.1bn
+28.75
4510
Kao Fong
NT$177M
+6
NT$735M
+29.73
4513
Falcon
NT$177M
+35.08
NT$735M
+20.79
4526
Tongtai
NT$718M
+8.35
NT$2.5bn
+20.87
4533
Shieh Yih
NT$359M
-12.99
NT$1.3bn
+5.14
6609
Taiwan Takisawa
NT$302M
+51.72
NT$1bn
+38.09
Source: the companies


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