machine tool industry has a historic chance of growth due to the shift to
electric vehicles (EVs) and demand for localised manufacturing, as per the head
of the biggest Taiwanese machine tool company.
Yen Jui-hsiung, chairman of
Tongtai Machine & Tool, said that while many conventional auto components
will disappear in the transition from gasoline to electric cars, an array of
new parts and materials are needed for EVs. Tongtai is a key supplier of
manufacturers serving BMW, General Motors, Stellantis and Mercedes-Benz. It is
Taiwan's biggest listed machine tool company by revenue.
Yen said that through Tongtai's
two European subsidiaries, the company noticed that most key European
automakers began to "quietly" shift their research and development
spending to EVs around five or six years ago, well before publicly announcing
Taiwan is known as a vital hub
of the semiconductor industry, but less well known is that the democratic,
self-ruled island is also a machine tool powerhouse. It is the world's
fifth-largest exporter of such tools, at $2.06 billion in 2020, according to
Gardner's latest data, behind Germany, Japan, China and Italy.
Machine tools are sometimes
called "the mother of all machines" as they build the foundation for
all other industries, from making chips to assembling consumer electronics,
automobiles and military equipment.
In addition to the EV push, Yen
said more of Tongtai's automotive clients are also looking to bring production
onshore and closer to clusters of local automakers and markets. In addition to
reducing costs, shorter supply chains could also help reduce disruptions of the
kind seen over the past two years due to the pandemic.
Yen said his company recently
secured an order from a top European automaker to supply a set of machine tools
for a new brake disc plant in France. He added that his clients' moves are
already leading to the emergence of new industrial clusters everywhere, from
Mexico and North Africa to the Middle East and Central Asia.
Logistics and the parts crunch
have also weighed on the machine tool sector since the pandemic, Yen said,
pointing out that controller modules -- a critical component that Tongtai needs to build its equipment -- are still
in serious shortage due to a lack of the modules themselves and related chips.
U.S.-bound shipments of machine tools, meanwhile, are being impacted by global
port congestion, and the disruption is estimated to extend to this year, the
Looking forward, Yen said that
to continue to thrive, machine tool makers must change their mindsets from
simply providing standardized machine tools to working in tandem with the
industry to offer more customized solutions.
Source: Nikkei Asia