Taiwan's OA Furniture Parts Makers Stay On-track Amid Recovery

One maker boldly ups production capa

While the global economy continues to recover, albeit upset by occasional blips as the Greek debt crisis, sectors as PCs, LCD TVs and consumer electronics are also returning to pre-meltdown levels. But one cannot generalize about the fate of most Taiwanese furniture and parts makers for different reasons. One factor missing in the faster recovery of furniture and parts makers in Taiwan is the lack of governmental support and woeful finances, especially that plaguing makers who had been pushed to the edge by the global downturn last year.

The timeless adage "when the going gets tough, the tough get busy" certainly applies to three Taiwanese OA furniture parts makers, who are adopting different strategies to speed leaving behind the impact of the global recession. OA or office automation is a loosely used term in the furniture industry that covers just about any item used in office, commercial settings. CENS interviewed the three makers to shed light on what survival tactics are being adopted to not only stay in business but get ahead of rivals.

Liang Harng

One supplier who made a bold decision to boost production capacity amid market uncertainty in 2009, when many downsized or suspended operations, and has since injected solid growth into its business is Liang Harng Industry Co., Ltd., founded in 1986 in Taichung County, central Taiwan.

Liang Harng, initially a maker of plastic rollers and bearings for OA and household furniture, once posted impressive sales for some time. Angus Tsai, the manager, said his company, to gain an edge over competitors, adopted POM (polyacetal) plastic exclusively imported from Germany to produce rollers, which are precision integrated with bearings for excellent action and long lifespan.

Such dedication to quality aided the company to surpass others in the line, eventually evolving into the largest supplier with a 60%-plus share of Taiwan's plastic roller market in the early 1990s, according to Tsai, adding that his company also became Japan-based Hitachi Koki's first certified foreign supplier of plastic rollers during the span. Liang Harng, in short, backed by all-round production capability and solid recognition among buyers, is a top-notch supplier of its kind in Taiwan.

Responding to the decline of Taiwan's furniture industry in the 1990s, as well as emergence of ball bearing slides starting in 1995 that is regarded as either an economical or practical alternative to plastic rollers for drawers, Tsai's company began developing OEM (original equipment manufacturer) business in 2000, successfully becoming part of an European company's supply chain of K/D furniture parts. Since then, the company has broadened its line to include houseware and K/D furniture parts as plastic and zinc alloy hinges, adjustable glides and drawer slide rails.

The global meltdown in late 2008, however, forced Liang Harng to devise savvier strategies for sustainable development, which materialized as expanding production capacity, Tsai noted, that would sharpen competitiveness and consolidate partnership with European clients.

New Factory

"We decided to spend considerably to build a new 6000-square-meter factory to achieve integrated production, with a full line of advanced lathing, plastic injection, grinding, welding, punching and bending, and powder painting machinery, enabling us to engage in molding, manufacturing as well as quality inspecting and packaging," said Tsai, with the new factory having come online last February.

Despite counterparts' leeriness of Tsai's move amid the downturn, Liang Harng, with enlarged capacity and capability, actually landed orders from existing customers to finally post solid revenue for 2009, contrasting most Taiwanese counterparts who generally suffered 10-30% revenue declines. "Our European clients are glad to see the factory operational for integrated in-house production helps to assure quality and efficiency," Tsai said.

The new factory is laid out according to world-caliber standards learned from Liang Harng's Japanese clients, and has been running at half capacity so far this year, as well as expected to drive corporate growth in the coming years. "We have developed furniture parts and hardware made of new materials, such as our newest product Steel Mesh Cube or the so-called Creative Storage System, an item sought-after in Europe; while we're ready to further explore mid-to-high end segments in Europe, the U.S. and Japan," Tsai said

OHLA

OHLA Plastic Co., Ltd. is another supplier who, despite ups and downs since its establishment in 1993 when most Taiwanese furniture makers were moving to China, has been gradually gaining solid ground in the OA furniture parts sector due to consistent pursuit of optimal organizational efficiency.

Headquartered in Taiwan's central county of Taichung, OHLA has been making mostly plastic furniture parts for over a decade, turning out a variety of casters, hardware and tube plugs. Of fine quality and under strict quality control, the company's products are widely used in OA furniture. This maker also has a reputation for uncompromising quality, despite having to cope with rampant underselling in this sector.

Relatively young at 17 years old, the company takes pride in being known as a seasoned supplier among buyers. The senior sales manager Joan Chen says, "We help customers at the preliminary stage with R&D projects by offering consultation, advising them on suitable manufacturing methodologies that would deliver products that will last under specific ambient conditions."

Extensive R&D

For example, she added, her company does extensive research of material characteristics and suitable production techniques, efforts that will enable delivery of parts that meet SGS tests, which sometimes specify usage under sub-zero temperatures. Such dedication and meeting global standards place this maker solidly on the global map as a reliable OEM of furniture parts

This maker's consistent efforts to sharpen operational efficiency has helped the firm differentiate from rivals, as well as survive and grow over the past 17 years. Its program to sharpen operational efficiency includes focusing on corporate optimization, consistent personnel upgrading, management of sales, inventory and production capability, according to Chen.

Another key to OHLA's survival has been its keen eye for financial health, often neglected by some Taiwanese traditional small and medium-sized enterprises that eventually go bankrupt. Chen said her company, learning from such real-world examples, closely watches corporate finances to make sure it is not over-leveraged and cash flow is maintained. Being a savvy bean-counter has actually kept OHLA from going under during the global meltdown, which sank a number of enterprises across different industries. This maker is not only surviving but also sees bright prospects.

Shen Shan

Also unfazed by the still uncertain global recovery, Shen Shan International Glide Mfg. Corp., established in 1981 in Taichung County, central Taiwan, is diversifying into machinery parts manufacturing.

This maker specializes in supplying plastic and metal furniture parts, including plugs, casters and hardware parts, all of which are exported to Australia, the U.S., Germany and Canada. With nearly three decades of experience in continual improvement of molding, manufacturing and warehousing capability, the company has built a solid name as a competent OEM and ODM (original design manufacturer) in the global supply chain of OA furniture parts.

Molding Skill

One of the most significant skills in this firm's portfolio is its consummate molding capability, which helps the maker to achieve better flexibility in production than competitors, according to Wu Sen-mao, managing director. Simply put, the more molds the wider product variety. Wu sees his company's one-thousand-plus molds in various specifications as the ace-in-the-hole, which enables the company to immediately set up production upon demand to shorten lead times.

Besides diversifying into making machinery parts, Shen Shan, to offset the global recession, has also tactically expanded product lines, and has been building higher exposure by participating more frequently in global trade fairs, according to Wu.

"We have been in this business since 2008 and are drawing on our R&D capability and accumulated knowledge of material science to develop machinery parts in zinc and other alloys," said Wu. In fact, Shen Shan's experienced R&D team has played a pivotal role in sharpening the firm's competitiveness for a long time, plying its years of real-world experience in problem analysis and solving to build products in new materials and with suitable manufacturing processes. Such engineering expertise has helped the maker to leverage skills to stay ahead of competitors for decades.

Adopted by German Firm

Wu said that his company's machinery parts are adopted by foreign buyers mainly from Europe, including a top-notch German enterprise who has added the company to its OEM list. Diversifying into machinery parts has helped the maker to land orders from new clients, hence minimizing impact from the global meltdown, which has been keeping Shen Shan busy since the beginning of this year.

Asked about his future directions, Wu said that his company will continue to expand market share, offering manufacturing services, more products and practical R&D solutions to more clients worldwide. "Although China and India look set to emerge as two of the world's largest markets, we won't put all eggs in the one basket, instead our aim is the whole global market." he said.

Also Wu revealed plans to build a new factory in 2011 at the earliest to handle the larger capacity needed for machinery parts; but the new factory will not be as big as originally envisioned, though large enough to drive corporate operation effectively. "In short, we don't aim to be the largest but the best," Wu concluded.