Workforce shortages and prolonged delivery as top machine tool sector concerns

Taiwan Machine Tool & Accessory Builders' Association (TMBA) Chairman Hsu Wen-hsien said on Wednesday that the most worryingly concern the domestic COVID-19 outbreak posed to the industry would be the potential impact on the supply chain.

A shortage of the workforce and the longer delivery time would mean that customers may gradually switch orders, Hsu said. Any advantages that Taiwan gained over the past year and the first year will be gone.

As a bulk of Taiwan's economy is built on small-and-medium enterprises, Hsu pointed out that these companies often need to streamline their workforce compared to larger enterprises, making them vulnerable to worker shortages. Hsu estimates these companies would be at least 10% short. Many manufacturers already have full Q3 orders, even into Q4, but Hsu said the potential delivery delay could prompt clients to transfer their orders away from Taiwan.

Prices for everything in Taiwan are also rising, Hsu said, yet companies have their hands tied in that they can't raise prices for urgent orders. With shortages in materials, workers, and now with the pandemic, Hsu said many companies are in a tight place.

TMBA has expressed hope that the government would assist industry members through rebalancing steel prices and the entire market with state-company China Steel.

Other crippling factors that could wipe the industry's growth this year include the prolonged water shortages and packaging materials for the machinery itself.