Rexon Chasing NT$7 Billion in Revenue Next Year

On May 15 Taiwan's Rexon Industrial Co., the flagship company in the Rexon Group, held a ceremony in celebration of the 30th anniversary of its founding at its headquarters in Tali, Taichung County, central Taiwan,. Rexon is a professional manufacturer of do-it-yourself (DIY) machine tools and woodworking machinery.

At the ceremony, Rexon president Chen Ruey-zon spoke to some 700 employees and 300 guests, delivering the message that the company will challenge the NT$5 billion (US$145 million at US$1:NT$34.6) sales mark this year, with NT$7 billion (US$202 million) targeted for next year.

A local institutional investor who follows the company closely estimates that Rexon will chalk up revenues of NT$5.5 billion (US$159 million) this year and garner pre-tax earnings of NT$500 million (US$14.5 million), or NT$2 (US$0.05) per share.

Rexon Group CEO Wang Kun-fu says his group is making a full-out effort implementing its electronic globalization strategy to enable comprehensive online connection with players in the international market in its sector. He states that this business strategy is intended to elevate the firm's global competitiveness and help it prosper over the next 30 years.

The world's largest producer of bench-type power tools, Rexon is the first domestic firm of its kind to have been granted ISO9002 and ISO14000 certification, as well as the first on the island to set up in-enterprise e-operations.

"We began setting up the system two years back," says Wang. "We now have a superlative enterprise resource planning (ERP) system in place as well as a collaborative product-development system. At the beginning of this year we established an online portal connecting us with customers online, who now enjoy real-time access on the status of inventories and sales."

The portal has recently brought an unexpected bonus--Rexon has largely avoided any negative impact as a result of the severe acute respiratory syndrome (SARS) epidemic. "The portal allows us to engage in all aspects of product design online," Wang claims, "and to conduct inventory and financial management with affiliated firms online."

Over the past three decades, 25 million electric-power tools have rolled off Rexon's lines. "Our market research shows that two of every three power tools used in the North American market are manufactured by our company," says Wang.

Established in 1973, Rexon specializes in the manufacture of various kinds of machine tools and the trading of relevant parts and components. The company went public in 1995 on the Taiwan Stock Exchange. Current paid-in capital is NT$2.49 billion (US$72 million).


Diversification Means Fitness


As part of its business-diversification strategy, Rexon began producing fitness equipment four years ago. In August last year the company signed a cooperative agreement with Life Fitness, one of the U.S.'s largest producers of fitness equipment. Since that time, the company has seen revenues in this area grow at a rapid clip.

"Though we've been making such equipment more than four years," notes president Chen, "we didn't receive any big-ticket orders until the final quarter of 2002. In the first three quarters of last year our sales tally came in at NT$160 million (US$4.6 million), but are now surging."

Fitness equipment currently accounts for 8% of the company's sales, with the rest going to woodworking machinery and machine tools. The company hopes to boost the ratio to 15% this year.

To meet the recent booming demand for fitness equipment from overseas buyers, Rexon will invest NT$100 million (US$2.9 million) to build a new plant, which will be erected on a 43,200-square-foot site behind the Rexon headquarters. When completed in the third quarter of this year, the company's fitness-equipment production lines will grow to five from the present two.


Windchill Factor


To meet the growing competitive challenges in the global market, Rexon has introduced the "Windchill" product-lifecycle management (PLM) platform developed by Parametric Technology Corp. This platform, Parametric claims, is the first business solution in the world to embrace the collaborative-product commerce (CPC) concept, which helps to speed up response times to orders, while also heightening efficiency, by linking headquarters operations with distant/overseas outposts.

This is key to Rexon's success, for it operates production facilities on both sides of the Taiwan Strait and has set up branches in the U.S., the United Kingdom, France, Germany, and Japan. "We have been closing more and more original design manufacturer (ODM) deals," Chen explains, "and found our old information and management mechanisms were outdated. The use of the Windchill PLM platform has helped us to markedly enhance our product research and development efficiency, and is greatly elevating our global competitiveness by eliminating the barriers of time and space within our far-flung operations."

Rexon posted NT$4.65 billion (US$130 million) and NT$210 million (US$6 million) in overall sales turnover and pre-tax earnings, respectively, last year. One institutional investor estimates Rexon has the strength to achieve NT$5.5 billion (US$159 million) in sales revenues this year, up 18% from last year. The company attained NT$1.55 billion (US$45 million) in sales revenues in the first four months of this year, a historic high and up 23% from the corresponding period of last year.

Rexon has a global support unit at its Tali headquarters. It also has what it calls a culture hall at the site; here is demonstrated the story of how Rexon transformed itself from a small NT$450,000 (US$13,000) plant into the world's largest producer of bench-type power tools. The hall also sets forth the entire development history of Taiwan's machine-tool industry in the central part of Taiwan.


Plans for the Group


"For the Rexon Group as a whole, we will focus on three directions--strengthening direct marketing, stepping up access to global real-time information, and enhancing our distribution channels and own-brand management," group CEO Wang Kun-fu says. With overall sales turnover of NT$9 billion (US$260.11 million) last year, Rexon Group is targeting NT$10 billion (US$290 million) this year.

Setting up solid foundations in its global division of labor, the group established Hangzhou Liwu Machinery & Electric Co. in mainland China's Hangzhou, Zhejiang Province in 1998. Since that time, the group has increased the number of its after-sales service outposts overseas to strengthen relations with customers the world over.