In a 60-kilometer corridor along the foot of Mt. Dadu in central Taiwan lies one of the biggest precision machinery clusters in the world. This area in Taichung City is home to most of the country’s machine tool manufacturers. Spanning subsectors such as cutting, grinding, lathing, milling, punching, pressing and laser cutting, Taiwan’s machine tool industry generates annual output of more than NT$150 billion (US$4.96 billion), making the country the world’s seventh biggest machine tool producer and fourth largest exporter.
In the past four years, however, Taiwan’s machine tool output has been declining amid an industry slump, with weak exports to mainland China the leading culprit.
On a broader scale, while the output of Taiwan’s machinery sector has topped NT$900 billion for five years in a row and totaled NT$990 billion in 2016, it has never been able to surpass the NT$1 trillion mark.
Intelligent manufacturing technology provides a possible solution to bring the local machine tool industry out of its present predicament and boost the sector’s output.
Take for example recent innovations by Yuan Yi Chang Machinery Co. Ltd., the country’s leading manufacturer of precision racks. Based in Wuri District of central Taiwan’s Taichung City, the firm sells its products in more than 20 countries around the world. To show its appreciation to customers, the company always dispatches either a Bentley or Maserati to pick up foreign visitors arriving in Taichung via the Taiwan High Speed Rail.
YYC General Manager George Chen has been leaving no stone unturned in promoting smart manufacturing at the company, with related investment reaching NT$50 million (US$1.65 million) out of annual revenues of NT$300 million. He is pleased by the company’s recent collaboration on developing a smart testing machine with the Industrial Technology Research Institute, a government-supported R&D organization based in northern Taiwan’s Hsinchu County. Chen also has very high hopes for an automatic loading and unloading system that went online in June.
The precision racks produced by YYC are a key component of machine tools. As these racks vary in size according to different customer specifications, standardized quality inspection is impossible, and it takes 30 minutes to fill out an inspection report for manual random inspection of a rack, which generally measures 1 meter in length and weighs 15 kilograms. This often leads to quality control staff working overtime and even making errors. “This is my biggest challenge, rushing to meet delivery deadlines day in and day out,” Chen said.
Everything changed after the company implemented a smart QC system that leaves a quick response code on a finished rack and allows for computerized inspections. The customer can also use a smartphone to scan the QR code at any time.
Around 75 percent of local machinery firms have taken similar steps in response to the global trend toward Industry 4.0.
In the area near Taichung International Airport, one can find a machine factory every 300 meters along the main access roads to the Shengang Interchange. Among these firms is Yeong Chin Machinery Industries Co. Ltd., a major supplier of machining centers.
Established more than 60 years ago, YCM conducts its manufacturing and assembly within the same facility. Its priority at the moment is smart manufacturing.
The company recently won the country’s top R&D innovative product award for its high-speed, high precision five-axis double column machining center. While gratified to have claimed the prize, Chen is more pleased by the fact that sales are already picking up, with the latest customers coming from the aviation industry. This marks a great beginning for company’s move toward smart manufacturing.
“This is more about transforming YCM than making profits,” General Manager Patrick Chen said. YCM successfully converted its facility into a smart production center, and its proprietary i-Direct management system enables the company to collect and monitor data generated from work order processing, production, process flow control and product completion for quality assurance. This is a game-changer for YCM, which has now become a software developer.
Smart machinery is also changing the sector’s profit structure.
Taiwan Association of Machinery Industry Chairman Alex Ko once said that making a piece of production equipment for a client is like creating a hen that can lay golden eggs. In the past, once the equipment was delivered, it stopped making profits for the supplier. But the situation is different with smart machinery. One emerging business model is providing installation and maintenance services for intelligent systems.
According to David Maa, general manager of Fair Friend Group’s Industry 4.0 business unit, the export potential of turnkey solutions and integrated systems for Taiwan’s machinery tool industry are estimated at between five and 10 times the sector’s current total output.
“Let’s say a piece of equipment is priced at US$100. If you add in related software and the integration system, the total package can sell for US$1,000,” Maa said. Given its strong competitive edge in the information and communication technology and Internet of Thing sectors, Taiwan stands a good chance in the development of Industry 4.0 systems, which integrate computer and ICT technologies with machinery.
In light of the tremendous business potential stemming from Industry 4.0, TAMI, which comprises some 2,700 member companies, is pulling out all the stops in promoting this industry trend in Taiwan, declaring 2015 the inaugural year of smart machinery production, with 2016 the year of action and 2017 the year of integration.
Another strong shot in the arm has come from the government. Among the sectors targeted for strategic development under President Tsai Ing-wen’s five-plus-two innovative industries initiative, smart machinery was the first whose development plan received a green light from the Executive Yuan, with printed circuit boards, textiles, aviation, servomotors, plumbing and automobiles the first group of sectors set for priority promotion.
The Smart Machinery Promotion Office, established in February 2017, aims to build Taichung City, along with the surrounding cities and counties in central Taiwan, into the global capital of smart machinery.
To this end, TAMI has designated 12 firms from its membership to serve as demonstration facilities. During regular meetings, they share their experiences including bottlenecks in talent and technological development. Representatives from the country’s academics and research organizations are also present to offer advice and assistance. In addition, Ko has led members of various TAMI committees on tours of these firms and introduced external resources to help them address challenges.
According to Chen Chung-kuang, chief executive officer of TAMI’s smart machinery industry-academia research committee, when these 12 firms accumulate enough experience, they will allow visits by firms seeking to follow in their footsteps.
In the past, locally produced machines were typically seen as quality products sold at budget prices, while those made in Europe were often priced 10 times higher. “The situation is going to change with smart machinery,” he said.
For example, Far East Machinery Co. Ltd. produces aluminum alloy wheels, a sector that used to be dominated by Italian and Japanese firms. But now, smart machinery developed by FEMC is capable of automatically inspecting the form and function of a piece of equipment.
FEMC has already secured orders from Europe and the U.S., and is ready to compete head to head with its Italian and Japanese competitors.
Eager to upgrade their businesses, Taiwan equipment suppliers, with intelligent manufacturing as their compass, are making great strides on their way to turning the country into a kingdom of smart machinery. (E)
[By Chiu Li-yen / tr. by Meg Chang]