President Chen Shui-bian recently announced at a machine tool trade show that the government would promote the industry in Taiwan with the aim of creating a "mega sector" with a targeted production value of $33.27bn by 2009. He said that Taiwan should aim to be the third largest producer of advanced high precision tools by that time.
Chen stated that the government wants the machine tool industry to develop into the country's third "trillion-dollar industry" as part of its "Mega Investment" and "Mega Warmth" national economic development stimulus projects initiated last October to boost investment in Taiwan, create employment, narrow the urban rural gap and narrow the wealth gap. The semiconductor and flat panel monitor industries are already considered "trillion-dollar" industries.
The ministry of finance reported that the machine tool sector exported NT$96.2bn ($2.9bn) worth of equipment in 2006, which was up 7.5% from the previous year. Taiwan is currently the world's fourth-largest producer of machine tools behind Japan, Germany and Italy. According to the Industrial Development Bureau, a government organisation under the Ministry of Economic Affairs, the production of machine tools along with parts and components is expected to increase to NT$400bn ($12.1bn) by 2010.
The six-day Taipei International Machine Tool Show (TIMTOS) opened on March 12. The numbers attending the biannual show are expected to reflect the growth of this industry. There are 713 exhibitors this year, 10% more than the previous show. Attendance is expected to include 3800 foreign buyers and 35,000 from Taiwan. The Taiwan Association of Machinery Industry (TAMI), a co-sponsor of the show, estimates that procurement meetings will help generate business opportunities worth $200-300m for the domestic machinery industry this year.
One of the event's co-organisers, the government-backed Taiwan External Trade Development Council (TAITRA), invited members of the machine tool industry from 24 nations with the hope of encouraging them to make procurements from Taiwanese companies.
The show will also allow foreign machine tool companies a chance to promote their products. German and Swiss companies are expected to showcase their latest products to take advantage of the international nature of the event.
Like much of the economy, the machine tool sector in Taiwan is dominated by small- and medium-sized enterprises (SMEs). Their size limits their capacity to compete globally so TIMTOS is an important tool for them. The machine tool sector has earned a good reputation on the international market, thanks to its longstanding efforts to upgrade precision and control production costs, said Chen.
While SMEs have some advantages over larger companies, particularly their flexibility, which is an asset during economic downturns, the current "trillion-dollar" industries in Taiwan, are to an extent, made up of very large companies. The technology industry in Taiwan contains large conglomerates that operate subsidiary companies concentrating on particular niches and products. This gives them the advantages of economies of scale, such as purchasing power, while still retaining a certain independence, which can allow them to be flexible.
TIMTOS highlights Taiwan's machine tool capabilities and brings together similar companies from all over the world. Both Germany and Switzerland have nationally themed pavilions within the exhibition halls while the Czech Republic, Japan, India and Australia are among the other countries that have exhibitor booths at the show.