Taiwanese Hand Tool Makers Turn to Power Segment to Stay Ahead

Global demand for power tools will grow 3.7% yearly through 2013

One of the ways for hand tool makers in Taiwan to stay ahead of emerging rivals and battle ever thinning profit margins is to explore newer segments. Despite calling for more advanced manufacturing technologies and higher capitals, making power tools, which tend to be used by professionals, can generate bigger margins than manual hand tools. Also power tool demand looks to continue to rise alongside uptrend in affluence in developing nations, where consumers will also buy more power tools to suit their lifestyles and the DIY home improvement trend.

Power tools for ordinary homeowners is a fact of life in the U.S., where serious hobby carpenters can own more power tools than many professionals in Asia; while literally every N. American home would have at least a power drill, with power saws being equally common. Such ubiquitous power tool usage and ownership in N. America is realistic, for many people have detached homes with garages and workshops. Also higher labor cost in western nations makes owning and using power tools for DIY car and home repairs cost-efficient. A 2009 report by the Freedonia Group Inc., a global market survey institute, shows that global demand for power tools will grow yearly 3.7% through 2013, when global sales will approach US$24.1 billion, almost half of which will be rung up in the U.S. The scale of the American power tool market in 2010 is estimated at US$11 billion, based on a higher growth of 5.05%.

About 180 companies in Taiwan produce power tools, compared with over 800 making manual hand tools, totally producing around NT$200 billion in various electric and pneumatic tools a year. Such figures look set to gradually increase in the coming years, as more Taiwanese makers are going upmarket to diversify into auto repair tools, combined with the developmental potential provided by the increasingly mature lithium battery technologies in Taiwan for electric tool makers.

Taiwan's First Semi-powered Digital Torque Wrench
One maker has gone further than to diversify from manual hand tools into power tools: William Tools Co., Ltd., founded in 1999 in Taichung County, central Taiwan, has developed the prototype of Taiwan's first “semi-powered digital torque wrench” in cooperation with the ITRI (Industrial Technology Research Institute) and a Taiwanese peer this year to turn a new page in the local industry.

Initially a maker of torque tools, the company has also developed a series of ratchet wrench handles, torque multi-pliers and torque wrenches. The company's hand tools are available in standard or customized specifications, with torque rating and durability complying with or even exceeding ANSI and DIN standards. With maximum output of over 2 million units a year, the company is well-known as a torque wrench expert among professional buyers from the U.S., Japan and European countries.

Supplier to Global Brands
Few can question the company's status as a world-caliber torque wrench maker for its products are supplied on the ODM (original design manufacturing) basis to a couple of global tool brands, including Stanley and Facom, as well as exclusively supplying metal parts for Eclatorq's digital torque wrenches (Eclatorq is Taiwan's largest brand of digital tools).

Showing the prototype semi-powered wrench, company president William Chiang says, “I understand that the world's first powered torque wrench was invented in Japan; powered digital torque wrenches were developed by British and Japanese companies. However, ours is the first semi-powered digital wrench in the world.”

Based on ITRI's experimental results, Chiang's R&D team found that a powered wrench has torque fluctuation as high as 30%, mainly because torque is almost impossible to control precisely by electrical motors. “So we decide to build a less powerful motor into our digital torque wrench to optimally balance efficiency and torque precision,” says Chiang, noting that the electrical motor generates torque up to 50n/m, with the tool able to torque up to 200n/m manually.

Citing a Japanese carmaker requiring each wheel lug to be tightened to a maximum torque of 103n/m, Chiang says that its semi-powered wrench can be used to quickly set the lug to avoid damage, and then fully tighten manually, adding that the semi-powered tool ensures a torque variation within 1% while being faster than manual digital wrench.

In addition, Chiang's team uses high-quality lithium batteries to drive the motor, enabling the tool to run at maximum RPM for four minutes. “The battery has been tested to turn 150-180 bolts. And all the parts are of ABS, which is impact and weather-resistant,” says Chiang.

However, the prototype is not ready for volume production after eight months of development, and will take several months to fine-tune till full marketability, admits Chiang. “Next we plan to use aluminum alloy to further reduce the weight while trying to lower production cost.” Chiang has confirmed that the tool won't be ready for store shelves until 2012, when the next International Hardware Fair opens in Cologne, Germany.

Another sign of William Tools' determination is its recent move into a brand new office building in the Taichung Science Park as the only traditional manufacturer of hand tools, where it has set up its own test lab with a full line of advanced inspection instruments, including a metallographic microscope, hardness tester, micro-hardness tester and torque loading test rig from Gorbar, a globally well-known British supplier of advanced, precision measuring equipment.

Computerized Management
A hand tool maker who has adopted computerized operations to be more competitive than its Taiwanese peers in the air tools segment is Years Way International Co., Ltd.

With more than 30 years of experience, the company is a time-tested OEM and ODM in Taiwan, supplying a variety of pneumatic tools as spray guns, impact wrenches, air sockets, air ratchet wrenches, air tackers, pneumatic grinders etc., all of which are tested o meet CE and global standards.

The manager James Wang says that using computerization to improve data processing and storage helps to streamline operations. “Backed by IT know-how, Years Way is one of the foremost companies certified by the Article Numbering Center of Taiwan, as well as having introduced the 4719847 Barcode System in Taiwan. Such tools help us to enhance operating efficiency, inventory control and customer relationship management.”

Without revealing the nitty-gritty of effective computerized customer relationship management, Wang says that corporate sales this year have quickly recovered to pre-global-meltdown level, mainly because old customers from S. Korea, Russia, Egypt, Belgium and France have returned with orders.

Lighter but with Equal Torque
Wang also introduced the newest product, Professional Air Impact Wrench, which is as light as a 1/2” air impact wrench but generates the torque of a 3/4” model. The comparatively lightweight wrench has a high-strength aluminum alloy housing and improved motor to outperform competing models; while the anvil is of specially-annealed alloy steel for unbeatable durability, and a rear exhaust enables through-handle-exhaust to divert air away from users. The tool is also available in an impact socket set, ideal for vehicle, truck and boat maintenance.

“We have marketed products under our own Yearsway brand for years and successfully built overseas footholds in several countries, which is attributable to our computerized management, R&D capability and commitment to building trustworthiness,” says Wang. He religiously believes Taiwan-made air tools are globally competitive for being on average one-third or one-fourth the price of competing models from the U.S. and Japan, but similar in quality and performance.

Taiwanese hand tool makers can keep at bay emerging rivals by venturing into the power tool segment. “Emerging competitors generally lack the technological, financial resources to cross over to manufacturing such tools, which also call for stricter pre-delivery testing and inspection.”

Veteran Air Tool Maker
Founded in 1974, Hong Bing Pneumatic Industry Co., Ltd. is also a remarkable maker of pneumatic tools in Taiwan, supplying air screwdrivers, wrenches, drills, tapping wrenches, robot arms, sanders, riveters, body tools etc.

Mark Yo, a sales representative of the firm's International Division, says that all of the company's products meet ISO 9001 standards and are CE marked.

Having debuted its newest OPD series air drills at the Taiwan Hardware Show 2010, Yo says that the series is available with seven different torque ratings, ranging from 14n/m to 40n/m, and is less noisy than competing models. The drills are designed for prolonged use, with an ergonomic, slip-proof handle, and redesigned, lighter parts. “This is a professional-caliber series and will help drive the corporate growth in the coming years,” Yo says.

The company is also a notable OBM (original brand manufacturer) who has marketed products under its own Onpin brand in a couple of overseas markets, building a solid name among professional users. Yo states that 45-55% of Hong Bing's sales are from own-brand products, and the share will increase due to the company's move into the U.S. and European markets.