Rexon Boosts Fitness Equipment Production Capacity

Taiwan's Rexon Industrial Co., a specialized maker of do-it-yourself (DIY) machine tools and woodworking machinery, will start building a new plant this month to meet the growing overseas demand for fitness equipment.

The company will invest NT$100 million (US$2.9 million at NT$34.5:US$1) in the new plant, which will be built on a 43,200-square-foot site behind the Rexon headquarters in Tali City, in the central Taiwan county of Taichung. When the new plant is completed in the third quarter of the year, the company's fitness-equipment production lines will grow to five from the present two.

A local institutional investor who follows the company closely estimates that Rexon will chalk up revenues of NT$5.5 billion (US$159.4 million) this year and garner pre-tax earnings of NT$500 million (US$14.5 million), or NT$2 (US$0.05) per share. This compares with sales of NT$4.65 billion (US$134.8 million) and pre-tax earnings of NT$210 million (US$6.1 million), or NT$0.08 (US$US$0.02) per share, in 2002.

"We've been making fitness equipment for more than four years," notes Rexon president Chen Jui-jing. "But we didn't receive many big orders for our products until the final quarter of last year. In the first three quarters of the year, our sales of fitness equipment totaled only NT$160 million (US$4.6 million)."

Following an original design manufacturer (ODM) order received last August from Life Fines Co., one of the largest manufacturers of fitness equipment in the United States, the company has seen sales grow month after month. Expectations are that its sales of fitness equipment will reach NT$500 million (US$14.5 million) this year, and double that figure in 2004.

"Winter is usually the boom season for deliveries of fitness equipment to the U.S. and European markets," Chen comments. "More people in those areas tend to do their exercise at home during that season, because the cold keeps them from doing it outdoors."

Thanks to the 4Q influx of orders, especially from the U.S., Rexon saw its sales of fitness equipment jump to about NT$100 million (US$2.9 million) per month in November and December 2002, up from NT$70 million (US$2 million) in September. This increase helped make up for the sluggish demand for its woodworking machines in the quarter.

Overall, Rexon is targeting sales of NT$7 billion (US$203 million) in 2004.

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

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 solution in the world to embrace the collaborative-product commerce (CPC) concept, which helps to speed up response to orders by linking headquarters offices with overseas outposts.

This is important to Rexon, which 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. "As we are receiving more and more ODM orders," Chen explains, "our old information system and management mechanism were outdated. The use of the Windchill PLM platform has helped us to enhance our product research and development efficiency, and in time will also greatly elevate our global competitiveness by eliminating barriers of time and space in our international operations."