Tong Hong Automobile Parts Co. reports that the upgrading of its 16,000-square-meter plant in Tainan, southern Taiwan, has been completed, with the installation of the most advanced equipment. Now, the company says, it is fully prepared to fill the rapidly growing demand for its auto-engine gasket-kit products, which management says feature original equipment (OE) quality along with aftermarket prices.

Established in 1969. Tong Hong is one of Taiwan's most experienced, and largest, makers of engine-gasket kits. Its products are marketed worldwide under the THG, KP, and NR brands.

David Wu, special assistant to the firm's chairman, says that Tong Hong has a number of unique features that make it the most competitive producer in the line.

First, he says, is an in-house production ratio of over 90%, which is unmatched in this sector in Taiwan. The company has boosted its self- production ratio through targeted long-term investment, with the aim of assuring the highest quality, shortest delivery times, and most efficient cost control. Unlike other local manufacturers in the line, which source most of their parts from satellite plants and make only one or two items themselves, Tong Hong has the capability to turn out every item in an engine-gasket repair kit by itself, including gaskets, valve seals, oil seals, and other rubber parts and accessories.

The investment in equipment and skilled manpower needed for this is well worth the cost, Wu stresses, because the company's core competitiveness lies in high quality, prompt delivery, and strict cost control.

The company uses the most advanced and most highly automated machinery in order to save on labor costs. These machines include rubber- injection, pressing, oil seal-making, valve seal- making, and many other specialized machines.

Japanese Concentration

The firm's second unique feature, Wu says, is its concentration on the development of products exclusively for Japanese-designed engines. This policy has remained unchanged, even though most other producers in the line have switched their attention to European autos as well.

Wu reports that Tong Hong has developed more than 3,000 engine-gasket repair kits over the past 30 years, over 95% of them for Japanese autos and the rest for Japanese forklifts and agricultural machines. This Japan orientation will not change, at least in the short term, because the company has established itself as one of the world's most comprehensive suppliers in its segment and all resources, including R&D, manufacturing, sales, and customer-service groups, are relevant to expansion within that segment.

In recent years the company has diversified into gasket-kit products for Japanese heavy-duty truck engines with the aim of enhancing its one-stop-shopping service.

A third unique feature for Tong Hong is a strong development capability that adds at least 150 new gasket-repair kits every year to meet market demand. Product development is not just copying the original items, Wu explains; every detail has to be closely watched, because the repair kits are used on old or damaged engines that are subject to ever-higher safety and durability standards. To meet these requirements, the company uses top-end equipment for such processes as materials analysis, materials inspection and testing, design, and measurement.

A fourth unique feature is superior quality, which is achieved by numerous other factors in addition to in-house production. For example, the company takes great care with every detail of the production process, from design and mold development to manufacturing, with the aim of achieving the same product standards as those of OE parts. The company even uses identical materials whenever possible, and settles for substitute material only if the original is not available.

To this end Tong Hong works closely with a German partner!Xa global leader in the line!X in the development of production techniques, materials, and even the importation of completed sets of production equipment.

Better Overall Competitiveness

Another advantage that the company enjoys, and in which Wu says it takes great pride, is its overall management. He reports that it has won QS-9000 and ISO-9002 certification, and has moved to boost its competitiveness even higher by introducing enterprise resource planning (ERP) solutions. ERP requires every step in administration and manufacturing to be repeatedly evaluated and upgraded, so that the final result is an overall strengthening of competitiveness.

For a manufacturer that specializes in small- batch, large-variety production, Wu says, every small improvement in Tong Hong's complex and ever-changing manufacturing processes and related matters, such as materials management and shipment control, can result in major improvements overall.

The special assistant stresses that short delivery times contribute a great deal to the company's competitiveness. With molds and dies developed and ready, Tong Hong has the ability to deliver any item ordered within one month!Xor, in cases of particular urgency, within two weeks. In-house production capability eliminates the uncertainties that are involved in cooperation with satellite plants, and helps to assure high quality and quick delivery.

Tong Hong has enjoyed a high, stable growth rate over the past 10 years, and expects the future to be even brighter because of the growing popularity of Japanese-made automobiles all over the world.

Exports go to markets where there are Japanese cars on the roads. The biggest market, Wu notes, is the U.S., and the company has set up a product warehouse there with plenty of stock to meet the rising demand in that market.