Hand tool makers struggle in hard times

This article was published by the Taiwan Headlines on March 21, 2006. It reports that Taiwan's hand-tool industry is facing some hard times in recent years. In 2003, Taiwan was replaced by China as the world's No.1 supplier of the products. Taiwanese manufacturers have to working harder to solicit orders from overseas customers.

More than 80 percent of Taiwanese hand-tool manufacturers are concentrated in central Taiwan. Most of the leading makers target the United States market, where Chinese products are taking over market share from Taiwan. This is in sharp contrast to the prosperous days of the past. As this article explains, Taiwan's hand-tool industry began to take off in the 1970s, when the appreciation of the Japanese yen prompted hand-tool buyers to switch orders from Japan to Taiwan in order to take advantage of the lower costs.

Today, because of high production costs, a strong currency and shortages of labor, Taiwan is no longer competitive in the hand-tool line. The number of domestic hand-tool manufacturers has dropped from over 1,000 two decades ago to some 600 now.

Total revenues in Taiwan's hand-tool industry soared from NT$30.7 billion (US$959.3 million) in 1994 to NT$51.3 billion (US$1.6 billion). However, during the same period, the number of manufacturers in the line dropped from 960 to 620, while the hand-tool industry's workforce dropped from 17,500 to 10,500.

Taiwanese hand-tool manufacturers find it hard to recruit workers because of the hot, noisy and dirty working conditions. According to the Taiwan Hand Tool Manufacturers' Association, the shortage of labor and talent has made it impossible for domestic hand-tool suppliers to develop innovative products. Indeed, local manufacturers are urged to cultivate their own talents and develop products that are made of high-value light metals in order to boost their market values.

The Taiwan Hand Tool Manufacturers' Association has been helping small and medium-sized manufacturers in their attempt to carry out marketing, procurement and product development by themselves. The association's members are also encouraged to work collectively. For example, a joint marketing company was recently set up to promote the common "ARK" brand by eight members of the association. Other alliances like this are expected to help Taiwan's hand-tool industry find its way to sustainable development.

The government-supported Industrial Technology Research Institute is also helping the hand-tool industry. In 2004, the organization's Mechanical Industry Research Laboratories unveiled a new digital meter for hand tools. The meter includes a nail-sized LCD display and sensor ICs, and is able to measure torque and tension force as well as temperature. It is expected that the new meter will add up to NT$20 to the cost of making a tool, or as little as 10 percent of total production cost. However, the application of the new meter should be able to boost Taiwan's share of the US$10.6-billion global hand-tool market from 20 percent to 40 percent.

In 2005, Taiwan shipped about US$2.2 billion worth of hand tools. Industry analysts predict that by 2009, tool equipped with the aforementioned digital meter will add US$1 billion to Taiwanese hand-tool industry's revenues. So far, more than 20 hand-tool suppliers in Taiwan have jointly set up a company for the production and marketing of tools that incorporate the digital meter. These tools include wrenches, pullers and scissors. Power and manual screwdrivers will soon follow.