Rabbits vs. Mice… Focusing the Hunt Checking in with TWMA Chairman Tu

We paid a visit to the current chairman of TWMA at his new facility with the aim to get some of his perspective after his first year in office. Hovering the massive epoxy sealed factory floor are six sets of double-girder overhead travelling cranes, but only one was in action. Observing this, one wondered why such a huge facility was necessary... *** What's your first year as chairman been like? "It has been a year of adjustment. If you have never done a job before you can't just hit the ground running. Being chairman does not mean I can come in and dictate what changes need to occur. My role is to work with our member companies and do my best to facilitate their livelihood. A lot of time on my part has been spent obtaining government subsidies for activities like organizing member company delegations to take part in trade shows around the world. Much time is also spent on my part preparing for the upcoming triennial INTERWOOD exhibition in Taipei. There are a lot of things to work out. As more companies register to exhibit one has to coordinate with the exhibition center as to booth placement, transportation, lodging, special events, etc. The list goes on, and now that the show will take place in the new Nan Gang Center, the change of location could pose to present certain glitches if we don't think critically about every detail." *** Are you optimistic about the future? "The success of woodworking machinery depends heavily on the construction industry. As economic conditions improve the question comes down to who it will be that supplies demand. Germany? Italy? Taiwan? India? England and Japan are out of the game because it's more economically viable for those countries to produce other products. China is growing stronger in its production of standard equipment, sold mainly to its domestic manufacturers. Yes, I am optimistic". "At the same time one should understand that woodworking machinery, if built properly, is not the type of product that you just trade in for a new one on a regular basis like a cell phone or computer. In Taiwan we build them to last which means there are limits to our output." Wood and Humankind are Inseparable With a passion he explained why the market is massive for woodworking machinery because across the world people have and always will feel a deep connection to wood. "Where did people live back when there was no construction, no architecture, no infrastructure or society as we know it?" He asks. "In trees, with the monkeys! You can't separate mankind from wood. Wood is simply the best material there is for home construction, as well as furniture. If you make a chair out of metal or stone, what does it feel like on a cold day? The same goes for hot days. Sit on the same chair made of wood and your skin doesn't suffer the shock of the cold of the heat. Look at the Palace Museum in the Forbidden City. They built it back in the early 1400's; it housed emperors and served as political and ceremonial center for the government for centuries. It's listed by UNESCO as the largest collection of preserved ancient wooden structures in the world. It is made of wood." *** What regions are looking the best for Taiwan these days? "For Taiwan, the most lucrative market of recent has been Vietnam. In Europe and the US new home construction is still stagnating and people can't really sell their houses; renovations are down and so are orders for Taiwanese machinery there. However, we are starting to see an increase in demand. Looking at South America, production of wooden products is on the rise. For Taiwan suppliers of machinery their lay several problems: There is a language barrier, it is a great distance away and European companies are already entrenched there. The situation is similar in Africa. Vietnam doesn't really have many machinery manufacturers, so items like thickness planers, panel saws, sanding equipment and CNC machines are in high demand. We see most of our shipments going to Southeast Asia." *** Copycats are Like Mice, You Can Never Catch them all. "As for China, they get most of the simple woodworking machines from local manufacturers, but we supply a lot of the high-tech equipment like CNC machining centers, moulders and routers." *** Do you worry about reverse engineering once they get their hands on a high tech machine? "That is an inevitability that we can't really control. You must remember that back in the day, Taiwan did the same thing. It is natural. Many companies refuse to ship their top of the line items to China for that very reason, especially because there is little legal support for those aiming to protect their patents. Wasting financial resources on a law suit only serves to hurt both parties involved. The way to deal with copycats is to just leave them in your wake. What are your sales strategies? How strong are your services and client relations? How many satisfied customers recommend your company to their friends in the industry? How vigorous is your R&D? These are the things to focus on because sure, they can copy our designs and sell them off, but reputation, dependability, originality and quality are their weaknesses. Copycats are like mice, you can never catch them all." *** How about ECFA and relations with China? "You asked the right man on this one. The Economic Cooperation Framework Agreement between Taiwan and China is meant to reduce tariffs and trade barriers between us. It has been said that Taiwan stands to benefit five times more than China. However, the list of sectors China is opening like securities, insurance, hospitals and accounting, does not include woodworking machinery. It is due to the fact that we don't buy much of their machinery, but we export a lot to them. So we still have high taxes (over 30%) and shipping costs to contend with. Our product sector is hard to get on their list, and standard machines aren't viable to sell over there. I don't see Taiwan's woodworking machine sector benefitting from ECFA for another 15 years." "However, we are seeing more interest from Mainland China in working together. A delegation came recently to exchange views with us which transpired very well. They viewed the manufacturing facilities of 4 of our top companies and got a look at how we do things. That produced some compliments. Also, we see heightened numbers of Chinese companies registering to display at INTERWOOD, a trend that in the past was minimal. As a matter of fact, when you look at Taiwan's fall from third in the world for woodworking machinery export volume to fourth, you can correlate that with the fact that a huge portion of what China exports is made by Taiwan companies that relocated there. Few people are aware of that. They don't export much heavy machinery, it's mostly DIY items. Overall, in this industry I am noticing more exchange and benevolence on both sides of the Taiwan Straits, where strides to reach a better mutual understanding are underway." Rabbits Don't Travel the Same Trail Twice *** Do you see a recovery of Taiwan's former market share in the USA and Europe? "Absolutely. But one would be foolish to assume that things will be exactly like they were before. Building materials change and machines have to change with the trends. Also, there are various industries other than wood that can benefit from our machinery. If you're hunting a rabbit and it goes down a hole, the thing not to do is keep aiming in wait outside that particular hole. The rabbit will emerge from a different hole. It has been a cold winter, and Taiwanese manufacturers have holed up in their R&D labs. Smart hunters in the times when people lived with the monkeys in trees would ride winters out in their caves, sharpening spearheads and making new weapons for the first hunt of spring. At INTERWOOD, you can expect to see the unveiling of what we as an industry have come up with this time around." Hence, the Huge Facility It became clear why Chairman Tu has prepared his new facility to handle a huge workload. He feels it coming, the big fat rabbit States-side that is getting ready to poke its head out of a hole with a raging appetite. Forget about the mice that copy and focus on moving forward. He indicated that during this past economic freeze-over he hasn't seen a single Taiwan company go out of business. Like his own company they have downscaled their activity, but many have been busy in the lab and are poised to produce when the rabbit emerges.
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