Caught between Japanese high-technology savvy and cheap labor from mainland China, Taiwan's injection molding machinery manufacturers view developing electric machines as a necessity to competing in the future.
A group of nine firms - five injection molding machinery makers, one blow molding machine maker and three parts producers - have banded together under the auspices of the Taiwan Association of the Machinery Industry to launch a Taiwan-made all-electric injection press by 2007.
``Taiwan's plastic machinery manufacturers must devote themselves more to [research & development] and marketing in order to maintain our advantages over our competitors from China,'' said Y.C. Hu, convener of the alliance and chairman of member company Multiplas Enginery Co. Ltd. of T'ao-yuan, Taiwan. He spoke to Plastics News at Taipei Plas 2006.
If at first you don't succeed, try, try again appears to be the motto of Taiwan's injection molding machinery makers. Five or six years ago, most manufacturers began producing all-electric presses. Today, only two firms still make all-electric machines, and only one of those mass-produces them.
Japanese machine manufacturers own many of the patents related to developing electric machines. In Japan, electric presses make up 85 percent of the market. The Taiwanese companies currently producing electric machines, Victor Taichung Machinery and Creator Precision Co. Ltd., license technology or buy pre- made parts, primarily servomotors and drivers, from Japanese makers. The technique is too expensive for most Taiwanese manufacturers to turn a profit on electric machines.
The alliance includes Taipei's Launch Machinery Works Co. Ltd., Outstanding Machinery Co. Ltd. and Blowplas Technology Co. Ltd. (a blow molding machinery maker), Fu Chun Shin Machinery Manufacture Co. Ltd. of Tainan, Victor Taichung Machinery Works Co. Ltd. of Taichung, and Multiplas Enginery.
Hu said some new industries, like medical equipment and LED screen manufacturers, want all-electric injection machines and have begun ordering machines directly from Japan to install in their China plants.
The possibility of Taiwan manufacturers being cut out of the supply chain between Japan and China, where Taiwanese business people and companies have long acted as agents and distributors for Japanese companies, adds urgency to the goal of developing a made-in-Taiwan electric machine.
Not everyone agrees with the urgency or even the need to develop such a machine.
Leo Wang, a technical engineer at Tainan-based Chuan Lih Fa Machinery Works Co. Ltd., thinks Taiwanese electric presses would not be competitive.
``You have to look at the price. The price will be important because, otherwise, people will use Japanese machines,'' said Wang. ``Some of the parts are expensive to produce. There is not much demand for electric machines.''
Chuan Lih Fa produces an electric machine for Japanese manufacturer Meiki Co. Ltd. But the company won an award at Taipei Plas for its hybrid injection press, which Meiki developed in cooperation with Tainan's Yuan Dong Technology College.
``Many Taiwanese companies failed to produce good electric machines because they did not have a background in machine tools. Victor has a strong background in machine tools, which is useful in understanding the mechanical components like servomotors,'' said Martin Li, senoir export manager for Victor Taichung Machinery.
Based in Taichung, Victor developed its first electric machines a few years ago, and now has five electric models, one hybrid and a range of hydraulic machines.
Li said electric machine sales in Taiwan alone amounted to 1,200 units for 2005. He expects the Chinese machinery market to grow because more components makers there will be asked to use electric machines. He said Victor generates about 40 percent of its sales from China and 30 percent from Taiwan.
Another Taichung-based company, Creator Precision Co. Ltd. also produces electric machines, but far fewer than Victor. Watson Wu, Creator's special assistant to the chairman, told Plastics News that in 2005 the company sold one electric injection unit in Taiwan, four or five in China, and two in South Korea.
Wu said that most Taiwanese manufacturers stopped producing electric presses a few years ago because of the cost of buying Japanese parts and technology problems with the machines. Also, he said, many types of manufacturing do not require the precision and cleanliness that electric machines offer.
``It is possible for Taiwan to convert to all-electric, but it depends on the type of manufacturing,'' Wu said.
Barr Klaus of Newton, Ohio-based machinery consultant Electric Injection Services agrees with Wu, in part.
``Electric machines are more efficient than hydraulic in terms of energy savings, but the cost difference gets shorter as the machine gets larger,'' Klaus said by telephone. ``Payback may not be attractive enough in certain situations to get individual injection molders to change to electric machines from hydraulic.'' Cost savings for injection molders depend on energy costs, he noted.
Hu believes that Taiwanese companies must upgrade to electric machines, which he calls ``the future of the industry.''
On that point, Klaus agrees: ``Hydraulic machines are looking at a major extinction,'' he said, adding that higher energy costs will drive manufacturers to use electric machines. But the conversion to electric machines will be gradual, he said. ``You will see lots of hybrid machines before a pure conversion to electric.''
Since low-cost molding is migrating from Taiwan and Vietnam, the plastics industry in Taiwan may be poised for a change to electric machines. Dependent on exports, Taiwan's government has been pushing industries to modernize and take up high-value-added production to keep up its reputation as an ``Asian tiger.''
Added to that, as the world's No. 4 producer of plastic processing machinery, according to official statistics, Taiwan would be the only country in the top four without any patents in the field of electric injection molding machines. The others are Japan, Germany and the United States.
The Electric Machinery Research Alliance represents one of the government's initiatives to stay in the manufacturing race. To that end, the alliance will get government research support through the Taiwan Industrial Technology Research Institute, Mechanical Industry Research Laboratories.
The research budget of US$7.5 million comes from public funds and alliance membership fees. Members join for about $615,000 per firm, accounting for a total of US$5.5 million of the budget. Alliance members get the technology for free, but hope to recoup funds by licensing the technology.