Kuang Yung : A real history of Taiwan Woodworking Machinery Industry
Joe Chang Said:
- Taiwan woodworking machinery cost-performance ratio has a competitive advantage.
- Starting from productivity 4.0
- Taiwan manufacturers can do strategic alliance with same or different industries.
When speaking about how good Taiwan woodworking machinery we first have to know its history. And “Kuang Yung” is the real history of Taiwan woodworking machinery.
Established in Fengyuen Taichung in 1960, Kuang Yung Machinery Co., Ltd. specialized inwoodworking machinery. Mr. Joe Chang, the General Manager and also the second-generation operator said, “In early years, lands and labors were cheap. Construction industry just started booming. Wood floor and staircases demand increased and helped the development of woodworking machinery.
At that time, in central Taiwan, there were fighter jets in the sky and trainswere used for shipping wood. The need for maintenance on jets and trains produced talented people with machinery knowledge in central Taiwan. These skills gave Taiwanese an advantage among other countries such as Singapore and Malaysia. All these factors in central area created opportunities producing woodcrafts and furniture exporting to the USA and then became an important base of furniture kingdom.
When Taiwan had high demands for power machinery, Kung Yung started the businessfrom selling second hand motors from shipbreaking companies. Mr. Joe Chang recalled, “When I was a kid I've seen my family making winding motors at the courtyard. Materials and tools were everywhere”. In the mid 1960s, various machinery demands came out around the world. Taiwan started to follow Japanese machinery, also started to make machines for making DIY tools and exporting to the USA. Prelude of Taiwan's economic miracle was revealed.
During the exporting peak years of the 1970s, the demand for woodworking machines were so high, Kung Yung sold one rip saw for 200,000 TWD, but they could only produce 6 machines per month. Mr. Joe Chang said, “At that time, clients carried money to wait in a line for buying machines”.
Unfortunately, in the 1980s, there were several International issues that effected Taiwanese economic development. The two successive oil crises, as well as the export industry strike due to the sharp move of the NT dollar. Before, the currency exchange rate was 40 TWD to 1 USD and declined to 25 TWD to 1 USD hurting the Taiwanese processing and exporting industry.
However, God closed one door and opened another. During the end of the 80's, Indonesia government announced to ban the export for wood and rattan raw materials, in order to support Indonesia domestic wood processing and furniture industries. This created a huge demand for woodworking machinery. Taiwan woodworking machinery became the first choice due the price and quality. Atthat time, Kung Yung was able to produce 30 ripsaws per month. Mr. Joe Chang said, “One change in policy caused Indonesia manufacturers turned to Taiwan to buy machines. It is no exaggeration that in order to save the time, some people chose to ship the whole machine with expensive air shipping cost.
In the era of “Money in Taiwan flooded your feet”, several economic crises came to the forefront. Taiwanese manufacturers realized that cheaper labor and cheap products are no longer the best solution to win. Sub-value should be added and not put all the eggs in the one basket. Disperse the market to disperse the crises.
At this time, Kung Yung has been injected into the young and dynamic second-generation operator. Mr. Joe Chang started to adjust business strategy focusing on sawmill machinery and increasing the sub-value of their products. Besides emphasizing and developing domestic market, in 1995, he started to debut his machines to International trade shows and targeting on South-east Asia, Europe and the US.
“Taiwan is a small island with no oil natural resources. Japanese came and cut the wood taking them away. And there are typhoons and earthquakes every year. To win a place in the world is not easy. But Taiwanese inherited Japanese spirit of no sloppy work and Chinese hard-working attitude, producing machines better each year”.
“90% of Taiwan woodworking machinery is exported worldwide. Taiwan woodworking machinery is stable and ranked top in the industry”, with decades of modification, improvements and experiences.
Mr. Joe Chang mentioned, “Kung Yung insisted design drawings before each production before computer graphics era. Therefore, the 30-year-old Kung Yung machines till now are still maintainable”.
Central Taiwan has very good conditions for developing woodworking machinery industry. Forest industry, machine tool industry, woodcrafts and furniture industry formed a dense precision mechanical satellite system. Mr. Joe Chang also the Standing Director of TWMA said, “The excellent supply chain condition allows woodworking machinery manufacturers to focus on assembling and lowering the cost. This is also why woodworking machinery factories are springing up”. So far there are around 263 manufacturers, mainly located in Fengyuan and Shengangdistricts in Taichung.
Taiwan used to be the “Furniture Kingdom”, woodworking machinery also following the vigorous developments at that time. During the 1990s large amount of the furniture factories moved to China and Taiwanese wood working machinery companies started exporting to main land China. In these few years, Chinesemachinery joined the market to compete and the growth of exporting in Taiwan is limited.
Mr. Joe Chang was born and grew up in machinery family. He has seen the rise and falling of the industry. He said, “Before 2008, Taiwan machinery has been ranked No. 3 in the world, next to Germany and Italy. After that year, Taiwan was surpassed by China and ranked No. 4. Five years later (2014), China exceeded and became No. 2 country in exporting woodworking machinery.
According to the International Trade Center (ITC) report, the world woodworking machinery exporting value in 2015 was 6.4 billion U.S. dollars. Germany was No. 1 with 1.4 billion U.S. dollars, accounting 22.41%; No. 2 was China with 1.2 billion U.S. dollars, accounting 19.25%; Italy was No. 3 with 1.1 billion U.S. dollars, accounting 17.96% and Taiwan was No. 4 with 0.5 billion U.S. dollars, accounting 8.08%.
Taiwan woodworking machinery exports 90% of their products. With years of experience in the international market they are able to overcome any issues and improve in a short time. Although the quality is still behind Germany and Italy, the cost-performance ratio is still very competitive.
After the rise of China, the construction industry began to flourish; local Chinese woodworking machinery industry took the advantage and grew rapidly and now China has ranked No. 2 exporting country. Chinese products have good price but the quality, stability and after-sale services were lacking. Taiwanese products are still the bestchoice because of the great cost-performance ratio. Mr. Joe Chang said, “Taiwanese woodworking machinery is 20-30% cheaper than European and USA but has the same quality. Cost-effective is not comparable in China”.
During the interview Mr. Joe Chang answered a phone call and talked for a while. He showed a mysterious smile and said, “The phone call is from Shanghai. One Chinese company lost an agent of European brand woodworking machinery. They are looking for a substitute and his European friend recommended Taiwanese products”.
In response to the future development trends of global technology, the question is how to enhance Taiwan's woodworking machinery products in the world's competitiveness? Mr. Joe Chang believes, "the European countries are now implementing Industry 4.0, and that the investment amount is very large. Taiwan woodworking machinery companies are mostly small and medium enterprises, it is difficult to achieve, but we can start from the Productivity 4.0”.
What is Productivity 4.0? Mr. Joe Chang said, “Simply to say, is the use of German Industry 4.0, the United States Internet of Things and Japan's fine management concept, to enhance productivity, improve product quality and add value”.
“For example, in order to optimize the utilization of wood, use scan-sensing technology to replace the workers' eyes; mathematical calculus, to replace the workers' calculation; and a servo motor to replace the operation of the operator. This way, you can reduce the waste of wood edge material and enhance the utilization of materials. Not only in line with environmental trends, but also can reduce costs”.
Mr. Joe Chang also mentioned, in the past, Taiwan mostly produced single machine. But now clients need a complete whole plant solution. More industries are involved, such as machines, Internet, electronics, software and sensors. Taiwan manufacturers can do strategic alliance with same or different industry or, the object of alliance can even be with Europe and the United States manufacturers.
Taiwan woodworking machinery factories many have been the second generation, or even the third generation of the rod. These days the younger generations are upholding the spirit of the previous generation. They have receive a better education, well equip at using modern technology and management, which is one of the advantages for future development of Taiwan woodworking machinery industry.
Mr. Joe Chang said, “Kuang Yung is now working on improving products liability and speed, as well as the cost-performance ratio. Also looking for strategy alliance with European or USA companies, to improve productivity and management”. This is also homework for Taiwan woodworking machinery in order to improve to a higher level.