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Well Integrated Supply Chain Props Up Taiwan as World's No.2 Fastener Maker

Aug 05, 2016 | By Steve Chuang

The payoff of Taiwanese fastener makers’ effort on going upmarket is a major growth drive for the industry’s sustainable development (in the photo are the high-strength, quality-approved bolts and fixings for rail construction).The payoff of Taiwanese fastener makers’ effort on going upmarket is a major growth drive for the industry’s sustainable development (in the photo are the high-strength, quality-approved bolts and fixings for rail construction).

Although lacking sufficient natural resources, Taiwan, however, is today an important part of global industry and supplies various industrial parts with reliable quality and competitive prices as a trustworthy source for professional buyers from sectors of cars, machinery, construction, vessels, 3C products and so forth, hence evolving into a export-driven developed economy.

Taiwan's phenomenal economic achievement is attributable to local manufacturing industries, including the fastener sector, which has developed sustainably for over five decades and makes the island world's second-largest supplier of such products by quantities only next to China, partly thanks to insiders' hard work on enhancing value and partly to a well-developed, well-integrate supply chain developed at home.

Fastener production became a blooming industry in Taiwan during the Vietnam War, when the U.S. military began outsourcing large quantities of needed screws, nuts, bolts and fastening products from the island for lower costs. That business provided a solid basis for Taiwanese suppliers to proliferate in a way that reach their current well-established profile in the global market, primarily because the considerable demand motivated most of them to upgrade production capability and capacity through R&D for production technologies and equipment, so that their products could meet strict military requirements.

Following decades of development, in which insiders have been increasingly engaged in upgrading production from low-end fasteners into middle-to-high-end products that are subject to more stringent quality standards for higher strength, safety and functionality, the industry is now composed of over 1,250 manufacturers and subcontractors, 40% clustering in Taiwan's southern cities of Tainan and Kaohsiung to contribute around 70% to total output.

A key success factor among others enabling the industry to have developed sustainably for over a half century is the industrial cluster in southern Taiwan, which turns out to be a thorough supply chain and, in turn, helps sustain the industry's development.

Making up the upper end of the supply chain is the suppliers of steels and wire rods, and among the most influential one is the Kaohsiung-headquartered China Steel Corp. (CSC), Taiwan's largest domestic steelmaker and wire rod supplier by size.

CSC boasts integral production capability, including blast furnaces, hot and cold-rolling lines, annealing and pickling equipment, to turn out various low and medium carbon alloy steels for cold heading and cold forging, non-lead patenting steel wire rods, high carbon steel wire rods, low-alloyed steels for cold heading wire rods, and spheroidized coils, with production under precise control conforming to ISO-9001, TS16949, JIS Mark, QC080000, RoHS and REACH to make sure all products measure up to international standards, such as JIS, SAE and ASTM.

To say CSC serves as the growth locomotive for Taiwan's fastener industry is not overstated. To pump momentum into local fastener makers interested in exploring higher-end markets, the firm has worked out many value-added materials, such as A286 nickel-based high-performance alloy, applicable to make bolts for aircraft engines and components; SCM435-graded steel for production of high-strength bolts for cars; and CH1T and CH1A, extra low carbon cold heading steel for precision fasteners.

Also notable is that CSC has developed high-precision nuts and screws made of titanium alloy, which sends the firm to Apple Inc.'s supply chain of iPhone 6 and helps boost Taiwan's images as world's top-end supplier of titanium-made, miniature and lightweight fasteners.

To give a further boost for Taiwan's fastener industry to improve overall operational efficiency, CSC just signed an agreement with Taiwan Institute of Fastener Industry and some 20 fastener companies to develop the cloud for Taiwan's fastener manufacturing services. The platform, developed jointly by CSC and domestic IT firms and universities, is designed to help the industry with business matchmaking, enhanced exchanges of industrial know-how and technologies and full-blown supply chain management, so as to better promote Taiwan-made fasteners worldwide.

In addition to CSC, Taiwan's major wire rod suppliers also include Quintain Steel Co., Ltd., Feng Hsin Steel Co., Ltd. and Lung Ching Steel Enterprise Co., Ltd. among others, whose high-quality products together lay the corner stone for the industry's sustainable development.

Fastener Production Equipment Sector
Production of fastener manufacturing equipment is a vital sector of the fastener industry, with its development mainly led by the island's big two suppliers, Chun Zu Machinery Industry Co., Ltd. and San Shing Fastech Corp.

Chun Zu was spun off from the machine manufacturing division from Chun Yu Works & Co., Ltd., one of Taiwan's oldest fastener makers, in 1973, and is engaged in developing, manufacturing and marketing fastener production machinery, including 5-dies bolt and parts formers, threading machines, rolling dies and tools, 2-die 2-blow cold headers, heading machines, and cold forging machines. Presently, the company commands a 55-60% share of the South American market, and has a couple of globally known enterprises, such as MMF Industries, Ford's contract supplier of automotive fasteners, on its customer list.

Chun Zu's machines are generally noted for highly automated operations, and great productivity that can be adjusted by operators easily with computers. Besides, those machines all employ quick die change systems and can be beefed-up with up to 7 dies and additional clamps and related apparatus to help enhance production efficiency and cut defect rates. The company turns out about 250 sets of different machinery a year, with 70% going to foreign countries, and has sold its products to over 400 customers worldwide, including Southeast Asia, the Middle East, India, Turkey, Korea, Europe and America.

While filling about 10% of global market demand for nuts a year as world's leader, San Shing, whose annual nut output exceeds 75,000 tonnes for now, is also one of Taiwan's biggest suppliers of nut forming machines, nut tapping machines, bolt formers and nut sorting machines. The company was first exposed to the sector in 1968, when its first independently developed nut forming machine model was volume-manufactured. San Shing today has a wide business scope covering nuts, screws, bolts, tooling, dies and wires for shoring up fastener production businesses.

Tainan-based Jern Yao Enterprise Co., Ltd. is also a supplier of nut formers, as well as blind rivet assembly machines, secondary processing machines for special nuts, automatic thread rolling machines, bolt threading machines, bolt slotting machines, and heading machines for bolts and screws. Despite a young maker compared to the two big heads mentioned above, Jern Yao employs skilled engineers and state-of-the-art software like Deform 2D & 3D to offer customers not just high-performance machines, but also value-added services from product development, total design and tool analysis, hence emerging as a top-level supplier among others in the line.

Existence of the sector bolsters Taiwanese fastener suppliers in the global competition, for it assures them a reliable supply of economical and high-performance homegrown machines that can truly address problems seen during production and enhance their productivity and capabilities, such as that in custom production.

Industry Mainstays
With trustworthy upstream suppliers of materials and machines, it is not surprised that Taiwan's fastener suppliers generally have built a high profile in the global market, particularly at a time when most of them insist on continuous improvements of products and quality to keep one jump ahead of emerging rivals.

Among mainstays in the midstream sector of the industry, Chun Yu Works & Factory Co., Ltd. is remarked for tapping the global supply chain of fasteners for high-speed railway construction. Founded in 1944, Chun Yu is now Taiwan's first and only fastener maker certificated by IRIS (International Railway Industry Standard), and has supplied its railway fasteners to Taiwan's High Speed Railway Corp. and Japan's Shinkansen on an OEM (original equipment manufacturing) basis.

Since automotive fasteners are contributing ever more to Taiwan's fastener output year by year, Chun Yu is note for being is Taiwan's first fastener maker certificated by TS16949 standards in 2003. Presently, over one third of the company's total output is delivered to carmakers and related subcontractors all around the world. Large-sized international carmakers like PSA, Honda, Daewoo and Yulon are among its customers.

Founded in 1973, Ho Hong Works Co., Ltd. is also a world-level supplier of automotive fasteners. The company has put heavy emphasis on implementation of quality control policies as well, such as PPAP (Production Part Approval Process), a requirement that has been vastly used in the auto industry to measure consistency of quality characteristics. Plus, just like Chun Yu, the veteran maker has also established an A2LA (American Association for Laboratory Accreditation)-accredited QC lab at its 180,000-square-feet factory to guarantee customers unbeatable quality. This has helped the company effectively keep defect rates to less than 0.2% on average over the past decades, an unparalleled achievement in the industry.

Fasteners for medical application is an emerging business with strong growth potential, and among advocates for the trend is Taiwan Shan Yin International Co., Ltd., who has been actively diversifying its production from motorcycle and automotive fasteners into dental supplies and implants for over five years, and gradually established a solid reputations in the field. The company has set up a microbiology laboratory at its factory to research and study dental implants, and joined hands with up a medical supplies firm to promote such products worldwide.

The considerable business opportunities brought by the thriving aerospace industry, in which new aircraft production is estimated by global market researchers to exceed 30,000 units in the next two decades to trigger tremendous demand for fasteners, are increasingly realistic for Taiwan's fastener industry, as a couple of local manufacturers have gradually penetrated the very closed market thanks to strong commitment to insistent pursuit of excellence.

National Aerospace Fastener Corporation (NAFCO) and Jau Yeou Ind. Co., Ltd. are currently the most successful suppliers of aircraft fasteners in Taiwan. Following the ISO 9001 certificate obtained in 1998, NAFCO then introduced the AS 9100 aerospace quality system standard in 2004, with its Metallic Material Laboratory also accredited by S400 and FAL448 from its customers later. Today, NAFCO has been granted certifications by GE, a world-famous aircraft engine manufacturer in America, and Snecma, of Europe's Safran Group, as well as the only certified manufacturer of aerospace engine fasteners in the Asia-Pacific region, with the customers list encompassing Avio, Aviall, IHI, Eaton, Faurecia, Infastech, and more

Coincidentally, Jau Yeou has also upgraded its production from screws of low carbon steels through stainless steel screws to quality-approved fasteners for aircraft production ever since the Taiwanese government carried out its aerospace fastener development project in 2004. In 2006, the company passed the AS9100B quality certification established in the global aerospace industry, as well as NADCAP (the National Aerospace and Defense Contractors Accreditation Program) certification. Accordingly, the firm, also Taiwan's first firm certified by AS9120A to deal with aircraft parts distribution and sales, has been supplying its fasteners for the application.

Driven by growing concerns on environmental production and responsible use of energy, development of wind turbines is at a brisk pace worldwide, including Taiwan, where the government has decided to set up 600 offshore wind turbines with a total of 4200MW in generation capacity by 2030 as an alternative to old nuclear power stations. This construction plan is expected to create business opportunities worth NT$500 billion, including a big amount generated from necessary fasteners.

Riding on the green energy boom, Boltun Corporation and Fang Sheng Screw Co., Ltd., both have worked out large-sized wind turbine bolts and been assisted by local R&D bodies to seek cooperation with Tire 1 companies worldwide and distributors and traders in the U.S. and European countries, targeting such global customers as Gamesa, Vestas, GE and Clipper.

Worth mentioning is that Boltun has reportedly acquired a foreign, large-sized fastener firm that has a very long history and strong reputations across Europe this year, which, if being true, will further leverage Taiwanese fastener industry's global competitiveness in the short term.

There are also some of top-end fasteners manufacturers distinguished for their efforts paid on improving operational efficiency with advanced technologies.

Among them is Sheh Fung Screws Company, also known as Sheh Kai Precision. The ISO-9001, QC-080000, ISO 14001 and CE-certificated maker is actively automating its production and applying ERP (enterprise resource planning) systems in daily operations. The company indicates that applying ERP in operation is part of Sheh Fung's effort to realize digital and computerized management for improved efficiency, and emphasizes that despite costly, the system has paid off to greatly enhance its managing efficiency to generate more profits. It is evident that the firm's annual revenue showed a flat growth last year, but the gross profit rate tripled.

Founded in 1978, Sheh Fung was first ranked among Taiwan's top 1,000 enterprises by a local market research institute in 1989, and then further advanced to the No.707 spot in 1992. For now, the firm, listed in the Taiwanese bourse, has won national awards many times for its outstanding contribution to local economies and the sector, and been globally known as a top-end supplier, who supplies stainless steel screws, chipboard screws, decking screws, drywall screws, self-drilling screws, self-tapping screws and Kaitex coating screws, mainly for construction, and has commanded a 0.5% share of the global market for fasteners.

Chong Cheng Fastener Corp., established in 1989, is Taiwan's first fastener maker introducing automatic warehousing equipment, inspired mainly by the transition after the global financial turbulence in 2009 that buyers are increasingly prone to place rush orders to avoid over-stocking of inventory. The investment has generated benefits to the firm, for the equipment helps not only shorten lead time for delivery, but drive its global profile as a competent, reliable OEM (original equipment manufacturer).

Chong Cheng now operates a modern factory spread over a land area of over 15,000 square meters in Tainan City, southern Taiwan, and capably turns out around 600 metric tons of various fasteners of different materials, such as carbon steel, stainless steel, copper and aluminum, a month, all meeting DIN986, DIN1587 and DIN917 standards so well received by professional buyers from North America and Europe.

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