Taiwan's Machine Tool Makers Propose Plan to Target Local Aircraft Parts Market

Spearheaded by Taiwan's  Ministry of Economic Affairs (MOEA) and coordinated by Goodway Machine Corp., around 10 of Taiwan's leading machine-tool makers plan to organize a consortium by the end of this year to develop high-end machines for the island's aircraft-parts industry, to potentially generate multibillions a year for equipment makers.

The machine-tool makers include AWEA Mechantronic Co., Ltd. (Goodway's subsidiary), Kao Fong Machinery Co., Ltd., Falcon Machine Tools Co., Ltd., Fair Friend Enterprise Group, Victor Taichung Machinery Works Co., Ltd., Dahlih Machinery Industry Co., Ltd., She Hong Industrial Co., Ltd., Vision Wide Tech Co., Ltd., Royal Precision Tools Co., Ltd. and Chung Hsin Electric & Machinery Co., Ltd.

The alliance will mainly develop vertical five-axis, double-column five-axis, vertical lathing-milling combo, bridge-type double-column, and vertical five-axis machining centers to process aircraft components in cooperation with the government-backed Industrial Technology Research Institute (ITRI) and privately held Aerospace Industrial Development Corp. (AIDC), according to Goodway Chairman D.H. Yang.

AIDC has been increasing outsourcing since being restructured into a private company, from a state-owned  governed by MOEA, by going public in Taiwan in August 2014. Industry executives estimate the aircraft builder to create at least NT$30 billion (US$1 billion) of business over the next two years for contract suppliers and machine-tool makers.

AIDC executives say aerospace is one of the fastest growing industries globally, with the industry in Taiwan, for instance, posting sales of NT$78.3 billion (US$2.6 billion) in 2012 relative to 2000's NT$25.2 billion (US$840 million), also estimating  global aircraft builders to boost  production capacity to turn out  26,000 airplanes to keep up with  brisk air traffic, projected to grow at annual rate of 4.7% over the next 20 years.

To maximize profitability by minimizing production costs, major aircraft builders in Europe and the USA have begun farming out contracts to overseas manufacturers competitive both in manufacturing technique and price, according IDC executives.

Kao Fong President and Chief Executive Officer (CEO) David Shen says the alliance provides the company with good opportunity to get involved in the manufacturing of machine tools for aircrafts, a sector mostly new to the company. He says the company will be primarily focused on development of double-column five-axis machining centers in the alliance.

Shen says AIDC will likely increase cooperation with Taiwan's machine-tool manufacturers as the alliance starts to build civilian aircrafts, in contrast to earlier relationships.

Goodway has submitted to MOEA the alliance proposal, to be  implemented for three years from the end of 2014. (KL)