Chin Fong Builds New Heavy Machinery Plant In Taichung

On March 30, Chin Fong Machine Industrial Co., Taiwan's largest manufacturer of pressing and stamping machines (and flagship company of the Chin Fong Group), broke ground for a new operations headquarters and heavy-duty machinery plant on a 19-hectare site in the Taichung Harbor area of central Taiwan. Investment in the project will come to NT$3.8 billion (US$115 million at NT$33.1:US$1).

The company currently focuses on the production of mechanical presses, crank presses, knuckle-joint presses, high-speed presses, and strait-side double-crank presses.

The groundbreaking ceremony was hosted by Chin Fong group chairman C.B. Chi and witnessed by Hsieh Ming-hui, director of the Taichung Harbor Bureau, and Huang Chung-sheng, magistrate of Taichung County.

Hsieh hailed the project as the first to be carried out in the area under the Statute for Encouragement of Private Participation in Infrastructure Projects. The statute, he said, not only encourages local enterprises to keep their business roots in Taiwan, but also conforms to the government policy of expanding public construction. The harbor bureau director encouraged Chin Fong to work with his bureau to "create a more beautiful future."

Hsieh said that his bureau currently has more than NT$40 billion (US$1.2 billion) worth of investment projects under review, and contracts with the investors are expected to be signed by the end of May.

He also noted that first-stage construction of the Taichung Free Port Zone will be finished by the end of the year, and will improve the investment environment in the area.

Chin Fong is headquartered in Changhua City, central Taiwan, and has been making pressing machinery for almost 60 years. With a paid-in capitalization of NT$1.29 billion (US$37.94 million), the company operates two heavy-duty machinery plants in the Changpin Industrial Zone in Changhua County. Over the past few years it has expanded its production facilities into mainland China, the United States, and Japan.

It also has branches in Malaysia, Thailand, Indonesia, and mainland China.

Soaring Revenues

The company is projecting combined revenues (including those generated by its subsidiaries) of NT$4 billion (US$117.64 million) this year, and hopes to challenge the NT$5 billion (US$147 million) mark in 2005.

Chairman Chi said that the new investment project will bring his company into the field of heavy-duty machinery production. With its completion the company will begin the manufacturing of ultra-heavy-duty production equipment, including 6,000-ton-plus multi-station automated pressing machines and 5,000-ton-plus cold- and hot-forging machines.

Chin Fong decided to locate its headquarters (which will serve as global operations hub for the entire group) and factory in the harbor area because Taichung Harbor is slated to become a free port.

The site has been leased for 50 years and construction will be carried out in four stages, the first three of which will focus on the establishment of a production capacity for pressing machines and heavy construction machinery, as well as a bonded warehouse (on piers No. 42 and 43). The fourth stage will involve the building of a tunnel-excavator plant.

The project will provide 1,000 job opportunities and help Taichung Harbor increase its annual cargo-handling capacity by 300,000 metric tons.

Chin Fong originally wanted to build the new production facilities in the Changpin Industrial Zone, in central Taiwan, but accepted a suggestion from Premier Yu Shyi-kun that they be set up in the Taichung Harbor area to take advantage of the more convenient transportation facilities available there.

Another suggestion, this one from Chin Fong's cooperative partner Ishikawajima-Harima Heavy Industries Co. of Japan, resulted in a doubling of the investment from the originally planned NT$1.9 billion (US$57.4 million) to accommodate the construction of a heavy-duty machinery plant.

Yet another plan for the area calls for construction of a joint-venture plant with IHI-Chin Fong Press Engineering Co. for the production of heavy-duty pressing machines with operating capacities above 10,000 metric tons. The joint-venture company will serve as a global logistics center for both parties.

Cross-Strait System

Chin Fong officials say that the operations headquarters and heavy-duty machinery plant at Taichung Harbor will be linked with the Chin Fong Industrial Park in the Zhenhai Economic Development Zone in Ningbo, mainland China, to form a cross-strait service system for the automobile industry. The company wants to become the mainland's largest maker of auto sheet-metal pressing equipment.

Chin Fong spokesman Wang Nan-li says that after the new facilities in Taichung are completed, all key pressing-machine components that are produced in the mainland will be shipped to Taiwan for assembly and shipment to customers throughout the world.

The Chin Fong Industrial Park in the mainland has cost the group US$92 million over the past decade. Two group affiliates are now located there: the Chin Fong (China) Machine Industrial Co. and Chin Fong Precision Machinery Technology Co.

Chin Fong (China) concentrates on the production of pressing and forging machinery. It chalked up sales of RMB200 million (US$24.18 million) last year and forecasts a growth of 75% to RMB350 million (US$10.57 million) this year because of an influx of orders for pressing equipment used in producing auto sheet metal. Orders worth NT$40 million (US$1.2 million) for sheet-metal processing equipment, for example, came in from the Changan Ford Motor Co. of Shanxi Province at the beginning of this year.

The other subsidiary in the park, Chin Fong Precision Machinery Technology, specializes in the production of gears, transmission shafts, and clutches used in pressing machinery.

Chin Fong announced recently that it would launch public trading in its shares on Taiwan's Emerging Stock Market on April 5, and would submit an application for listing on the main Taiwan Stock Exchange in the third quarter of the year.

Thanks to the ongoing recovery of the auto industry and growing investment in the TFT-LCD (thin film transistor-liquid crystal display) industry, the company posted NT$2.73 billion (US$82.22 million at NT$33.2:US$1) in sales last year, a 19% improvement over 2002. Revenues in the first two months of 2004 soared 60% from the same period of 2003, to NT$450 million (US$13.55 million).

An NT$2 billion (US$60.24 million) order backlog makes it likely that Chin Fong will challenge the NT$3.5 billion (US$105 million) mark for revenues this year, and one institutional investor predicts that its earnings per share for the year will reach NT$1.6 (US$0.04).