Industry News

2007 Taiwanese Machinery Industry Market Status

－the growth of export in 2007 was 7.0% more than last year.

The growth of import was negative 1.2%, which indicates the willingness to invest was uncertain and the high tech industry's demand for import equipment reduced.

 By C. C.Wang

Vice President of TAMI

Mar/03/2008

The revenue of Taiwanese machine product export reached 13.75 billion US dollars in 2006, which was a 5.6% increase over the previous year, which was a respectable growth for the industry for that year. In 1998, under the effect of the Southeast Asia Financial Crisis, the amount of revenue from Taiwanese machinery export reduced greatly. The total was NT 25.61 billion, which was a 7.9% decrease over the previous year. The export amount to Southeast Asia that year was reduced by NT 20 billion. That was the slump for the Taiwanese Machinery Industry. Things turned better in 2004 and 2005. The export for these two years were NT 41.34 billion and NT 42.16 billion, which were 17% and 2% over each previous year, respectively.

The biggest gainers in export market in 2006 were Southwest Asia, the European Union and Russia. In addition, market in China as well highly competitive markets in Japan and Korea in Northeast Asia, and Singapore in Southeast Asia continued to grow. These markets have brought about the best opportunities for order taking and market expansion for Taiwanese makers. The 2006 Taiwanese export market growth was sufficient despite the rising prices of oil and raw material for steel, thanks to the value of NT dropping against US dollars.

The analysis for the sales for Taiwanese machinery based on 2007 import/export report by month was below:

1.     Types of machinery for exporting

According to the export data from customs, the export value of Taiwanese machinery in 2007 was 15.45 billion US dollars, which was 7.0% more than the previous year and indicates that the strength of growth was acceptable. The analysis by types of exporting machinery (in US dollars): the Machine Tools rank at no.1 with export value reaching 3.47 billion, which was 17.1% over the same period of last year. The Plastics & Rubber Machinery ranks at no. 2 with value reaching 1.04 billion, which was 6.9% more than the same period last year. Other Special Machinery ranks at no. 3 with value at 985.22 million, which was 8.3% more than the same period last year. The Valves & Parts ranks at no. 4 with value at 938.09 million, which was 9.0% more than the same period last year. Pumps, Compressors, Fans rank at no.5 with value at 8 hundred and 33.21 million, which was a negative 0.3% in growth, compared with the same period last year. The Wood Working Machinery ranks at no. 6 with value at 683.92 million, which was 8.4% more than the same period last year. For the rest, the value of Textile Machinery reached 6.44 billion, which was 5.1% more than the same period last year; Parts & components reached 6.38 billion, which was 17.5% more than the same period last year; Bearings, Gears, and Ball Screws reached 6.11 billion, which was 14.2% more than the same period last year; Molds & Dies reached 5.68 billion, which was negative 10.2% in growth, compared with the same period last year; Sewing Machines reached 3.86 billion, which was negative 12.4%, compared with last year; Paper Making, Printing Machinery was 2.78 billion dollars which was 22.5% more than last year. Finally, Leather & Shoes Making Machines was 80.5 thousand, which was negative 7.1%, compared with last year. For details statistics see chart 1.

2.     Taiwan machinery exportation by country

If ranked by country, in 2007, export to China and Hong Kong ranked at no. 1 with value reaching 4.93 billion, which occupied 31.9% of the total amount of export, and 4.5% more than the same period last year. Export to US ranked second, with value reaching 2.41 billion, which occupied 15.6% of the total amount of export and the growth of negative 5.1%, compared with the same periods last year. Export to Japan ranked at no. 3, with amount reaching 8.6 billion dollars, which occupied 5.5% of the total export and 3.1% more than the same period last year.

The main export markets in Euro-Asia area were increasing with Germany ranked at no. 4 with amount of export reaching 5.908 billion dollars, which was 31.7% over last year. Vietnam ranked at no. 5 with amount of export reaching 4.98 billion dollars, which was 22.1% over last year. Thailand ranks at no. 6 with amount reaching 4.93 billion dollars, which was negative 2.3% in growth, compared with the same period last year. The rest by order was are Malaysia at 3.51 billion dollars, which was negative 0.4%, compared with last year; Indonesia at 20.5%, India at 30.3%, Turkey at 24.8%, Italy at 16.8%, England at 19.2%, Korea at 10.0%, Holland at 11.8%, Canada at negative 1.2%, Singapore at negative 1.4%, Australia at 13.1%, Brazil at 30.0%, Spain at 41.9%, and the rest by order of growth are France, the United Arab Emirates, Finland, Philippines, Russia, Mexico, and Saudi Arabia. For detail statistics by country, see chart 2.

3.     Analysis for machinery import

According to data from the customs, in 2007 the total value of import for Taiwan reached 18.36 billion dollars, which was negative 1.2% in growth, compared with last year. The breakdown by the main types: the import of Other Special Machinery ranks at no. 1, with value at 5.42 billion dollars, which occupied 29.5% of the total import; it's mainly used for high tech applications such as semi-conductor and 3C and its growth was negative 2.9%, compared with last year. Machine Tools ranks at no. 2, with import value at 2.54 billion dollars, which occupied 13.8% overall, and was 26.4% growth more than last year. Pumps, Compressors, and Fans rank at no. 3, with the value at 9.76 billion dollars, which occupied 5.3% of the import value, which was negative 8.3%, compared with the same period last year. Engines & Parts rank at no. 4, with value at 9.29 billion dollars, which occupied 5.1%, and was 8.1% more than last year. Valves & Parts ranks at no.5; value reaches 6.12 billion, which occupied 3.3% of total import value, which was 1.3% growth over last year. Textile Machinery ranks at no. 6 with value at 3.16 billion dollars, which occupied 1.7%, which was 17.7% more than last year. Plastics & Rubber Machinery ranks at no. 7, with value at 3.11 billion dollars and occupied 1.7% of total import value, which was negative 11.6% in growth, compared with last year. The import machinery was mainly used for fiber optic, communication, information, and semi-conductor industry. This wave of more machinery imported was mostly used for high tech industry. The amount for import for traditional machinery such Textile Machinery were on the rise in 2007. For details statistics, see chart 3.

4.     Analysis of the source of import

Breaking down by the source of importation, the import for 2007 came from mostly US and Japan with Japan ranked at no. 1 with the value at 7.90 billion dollars, which occupied 42.5% of total import value, which was negative 12.8% in growth, compared with the same period last year. US ranked at no. 2 with value at 4.65 billion dollars, which occupied 25.3% of total import, which was 9.7% more than last year. Germany ranked at no. 3 with value at 1.45 billion dollars, which occupied 7.9% of total import, which was 13.3% more than last year.

China dropped to no. 4 and occupied 7.8% with value at 1.44 billion dollars, which was 14.0% more than last year. The rest are Korea, which occupied 4.0%, which was 8.5% more than last year. Switzerland occupied 1.9%, which was 25.0% more than last year; Italy occupied 1.6%, England occupied 1.4% and France occupied 0.9%. For detail statistics, see chart 4.

5.    Conclusion

 (1) The growth in 2007

The statistics for major countries in the world the global Economic growth rate was around 3.8%, with US at 2.2%; in Europe, Germany was 2.5%, England was 3.1%, France was 1.8%; in Asia, China was 11.4%, and Japan was 2.1%. In 2007 the economic growth of Taiwan was 5.7%, which was better than 4.9% in 2006. The economic development and investment in 2007 faced another wave of uncertainty and the fundamentals were worse than last year with the price of oil rising and the prices of raw materials high. These factors influenced the economic development and the willingness of industries to invest. After many years of development and structural improve, Taiwanese Machinery is now in a better condition than before and the industries are able to seize global economic growth opportunities and there's enough room to grow.

The growth rate for 2007 Taiwanese Machinery export using dollars term was around 7.0%. Under influence of high tech production equipment and precision machinery industry with additional values, the production of machinery should be about 10.0%. The major factors that were influencing Taiwanese Machinery: 1. the short supply on raw materials for steel and its rising price; in 2007 the price rise again. 2. The supply of key parts increased and the delivery dates of goods were mostly set without uncertainties. 3. The dropping in the value of NT caused pricing difference between the order and the actual goods delivered, which means profits were on the rise.

The price of raw material was still high, the banks raised their rates slightly, the oil price remained high and the fluctuation of the New Taiwanese Dollars was the most important factors affecting the growth of the machinery industry in 2007.

(2) The estimation in 2008

In 2008 it's estimated that the economic growth for major countries in the world will slide down. The global growth is predicted at 3.2%, with the growth of US at 1.4%, Japan at 1.2%. In Europe, the predicted growth of Germany is at 1.6%, England at 1.8%, and France at 1.5%. In Asia the predicted growth of China is at 9.9%, Korea at 5.5%, Thailand at 5.0%, Hong Kong at 4.9%, Singapore at 5.2%, and Indonesia at 6.1%. The growth rate for Taiwan is predicted at 4.3%. Because the prediction for most countries in 2008 is lower than in 2007, the investments in industries and purchases for machinery will slide downward.

The predicted growth for 2008 Taiwanese Machinery is around 8~10%, with adjustments in the value of export yet to come following the rising in value of the New Taiwanese Dollars. The production of Taiwanese machinery is dependent on the growth of the manufacturing equipment used in high tech industry such as IC circuit manufacturing equipment, panel industry equipment, and precision machines with high attached values and parts reaching 25~30%. With that, the total value of production of the Taiwanese Machinery will reach 960 billion dollars, or a possible growth of 8~10%.