Taiwan Woodworking Machinery - A Way Forward

/   by Han-Jung Cheng and Han-Chang Liu

Brief Historical Background 
Taiwan woodworking machinery industry has been developing since the 1950s.There are around 300 manufacturers in the industry. About 87% of them are located in the middle part of Taiwan, Taichung City. 200 of them have been in the business for more than 10 years, and around 30 of them more than 20 years. In terms of employment, there are around 10,000 people directly involved in the industry. However, the size of employment would be ten times larger if the upstream supply chain vendors are accounted. 
The industry began with domestic market and   started to export during the 1970s, first to Southeast Asia then to the United States, Europe, Australia and Russia. After the financial crisis in 2008, China becomes an increasing important market and currently China together with the United States are the two major markets for Taiwan woodworking machinery industry. Concerning global market share, Taiwan ranked no.4 and no.3 in terms of technical capability in the world. 

External and Internal Challenges 
Taiwan woodworking machinery industry is facing two major challenges. On the one hand, there is an increasingly competitive global environment externally, and on the other, the “talent gap” between retiring mechanics and new employees is widening internally. 
In 2008, the financial crisis detonated a huge impact on the housing market globally, it led to a decline in global order in woodworking machinery. High-end machineries were sold at a discounted price which affected the market for the “mid-high machineries” from Taiwanese companies. At the same time, the manufacturers in Mainland China were rising up quickly, with the support from tax barriers and local government, to take over the domestic low-end woodworking machinery market. Taiwan manufacturers are facing pressure from both sides, it is therefore crucially important for them to enhance their technical capability as well as service quality to establish themselves in the global market in the future. 
Apart from the external challenges, Taiwan woodworking machinery industry is also facing a talent gap between the new recruits and the retiring mechanics internally. This is a very common issue in Taiwan traditional manufacturing industries. Due to a structure reform in vocational schools in Taiwan during the mid-1990s, the enrollment of vocational schools declined rapidly, which led to a decrease in the provision of new mechanics. In addition, the new recruits often lack sufficient skills; there is a clear knowledge/capability gap between education and employment. Once after completing the training, however, many of them may decide to switch jobs to other industries. It is important therefore for the industry to reinforce its talent pipeline. 
Despite the challenges, Taiwan manufacturers demonstrate a high degree of resilience and adaptability in the midst of these challenges. Even though the industry is made of SMEs, they seek to cooperate more closely than ever in terms of R&D, marketing and participating international exhibition through the existing cluster network and a strong industrial association  Taiwan Woodworking Machinery Association (TWMA). 

Recent Development in Taiwan Woodworking Machinery Association (TWMA)

TWMA acts as the mediator between manufacturers, the public-funded research institute, the university and the government concerning Taiwan woodworking industry. It was founded in 1986, with the main purpose of facilitating the overall industrial development and providing solutions to the industrial technical challenges. In 2014, It consists of 261 members which accounts for 90% of the manufacturers in woodworking machinery industry. 
One of the most important achievements made by TWMA is the publishing of Buyer's Guide & Directory annually. The book does not only maintain a close connection between association members, it also contains useful information such as member's latest contact details and existing products, and services both in Chinese and English. It is therefore a very effective tool for bridging members and the international market. TWMA also plays an active role in linking members to participate in major woodworking machinery exhibitions in countries such as Germany, China or Dubai. TWMA is also hosting a brand new triennial show for 2015. Furthermore, TWMA also attracts about  NT$10 million of government subsidies every year in average to facilitate members in, for example, participating international exhibitions and other kinds of activities. 


The formation of the “W-Team”

In recent years, another important achievement made by TWMA is the promotion and implementation of W-Teams (“W-Team” stands for both “Woodworking Team” and “Win-Team”) The setting up of W-Teams, in the short run, aims to make Taiwan the world's third largest country in exporting woodworking machineries. While in the long run, the goal is to catch up with Germany and Italy in terms of industrial technology level. W-Team is the formation of different manufacturers in Taiwan woodworking machinery industry. Each team member provides their specialized woodworking machineries, and these machineries are integrated to be a fully automated woodworking production line with the support from the government and the public-funded research institute (Precision Machinery Research & Development Centre). Therefore, with a close cooperation between the Industry, the public-funded research institute and the government, it is possible for the industrial structure based on SMEs to achieve system/product integration for a higher added-value. In 2012, the first W-Team, also known as W-1, was launched to assemble the fully automated solid wood flooring production line. The five companies involved were Shen Ko Machine Co, Technik Associates Inc., Ta Sane (Pro Sam) Co, Yu Shyang Machine Co, and Tsung Chang Machinery Co, the production line is successfully assembled and demonstrated in May 2013. 
The launch of W-1 includes at least two important strategic implications. Firstly, it demonstrates the ability of TWMA to bring together the whole industry to move forward in terms of technical capabilities. Most participants in W-1 are board members in the association, and W-1 successfully demonstrated how cooperation between the government, the public-funded research institutes and industry leaders can achieve important technical breakthroughs. In fact, R&D alliances like the W-Team are rare in Taiwan. Hence, Long-term benefits shown by the W-Team will lend tremendous benefit to not only the woodworking machinery industry itself but setting an example also for other traditional manufacturing industries in Taiwan. 
Secondly, with the advancement of W-1, W-2 and W-3, it may provide a solution to the more fundamental challenges faced by Taiwan woodworking machinery industry that is the industrial structure of SMEs and their inability to concentrate R&D resources. As more W-Teams continue to be set up, it is expected to have a higher demand, through the running of different W-teams, in various and specific automatic control units and system integration technologies and eventually a “R&D center” for the woodworking machinery industry may come into reality. And as this R&D center continues to develop, it may offer technical and more comprehensive services for specific needs to individual firms in the industry. 

The Prospect of Taiwanese Woodworking Machinery Industry 
Looking towards the future, Taiwan woodworking machinery industry still has a very bright prospect. Firstly, in terms of international connection and marketing, TWMA with the support from Taiwan External Trade Development Council (TAITRA), is rescheduling a new triennial show for 2015, the “Taiwan International Woodworking Machinery & Furniture Supplies, Building Materials Exhibition”, this brand new exhibition is expected to attract more buyers over the world, provide better exhibition services and increase procurement opportunities. Secondly, in terms of closing the talent gap between the retiring generation and the new recruits, the industrial leaders have focused the issue on successors, many of the leaders sent out their children abroad to enhance their management skills which may lead to a fundamental change in the management style to the industry as a whole. Thirdly, in terms of upgrading the technology level of the industry, the focus would be on a deeper collaboration between TWMA, the government and the public-funded research institute in aspects such as the promotion and implementation of W-Team and other R&D alliances. 
In conclusion, the development of Taiwan woodworking machinery industry can be sum up as two important aspects: “pass down woodworking machinery craftsmanship” and “innovation” argued by Professor Lin. While much focus has been placing on pushing forward more innovative outcomes these days, yet another often neglected aspect in traditional manufacturing industries is the importance to pass down the “craftsmanship” of the industry. This includes not only key technologies transfer, but also the characteristics of the Taiwan firms such as resilience, adaptability, flexibility and willingness to learn. As stated by the TWMA chairmen when they took office, it is a great responsibility and honor for them to pass down the craftsmanship that previous generations have created. 
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