In recent years, because of the rapid increase in the airline industry and the aging of planes built in the 60's and 70's, major aircraft manufacturers in the U.S. and Europe have, unable to meet rising demand, made the newly industrialized countries partners in cooperation.

The ROC stands second only to Japan in Asia in electronics and machinery. Add to this that capital is abundant, and it is clear why the aircraft industry is making eyes. At the beginning of April, for example, the First Conference on Aviation Industry in ROC was held in Taipei, attracting numerous foreign manufacturers. Among them, MacDonnell-Douglas of the U.S., Airbus of France, Aerospace of Britain, and others provided funding, showing the importance they place on the ROC

Getting attention is fine--but what's important is whether or not the ROC can seize the opportunities offered.

"The Chung Shan Institute of Science and Technology's Aero Industry Development Center is the only unit in the ROC which currently has the ability to produce high precision molded parts for aircraft," notes George Shen, general manager of the Industrial Cooperation Program Office of the Ministry of Economic Affairs.

Chen-Tech Taiwan Industries Corporation, which undertakes upstream forging production, is the only domestic enterprise doing this work deemed qualified by the Boeing and Garratte companies of the U.S. CTTI was established in 1982 by the Science and Technology Advisory Group of the Executive Yuan. On the recommendation of the North American Chinese Engineer Association, it invited the U.S. Chen-Tech corporation, which has considerable achievements in forging production, to enter a joint investment with the Military Defense Industrial Development Foundation and the Bank of Communications of NT$200 million. It was established in the Yangmei Industrial District to produce parts for engines.

However, there are no private sector factories with this kind of "lineage." Those trying to get into aerospace manufacturing must go through the AIDC.

Looking back over the history of aerospace development in Taiwan, it is not hard to discover a strong military flavor. Ku Kuang-fu, formerly director of the predecessor to AIDC, notes that because of diplomatic setbacks it was hard for the ROC to buy high performance fighter aircraft and it became necessary to make them at home.

This year the AIDC is twenty years old. Dr. David R.C. Chu, chief of the Planning Department at AIDC, recalls that in the early period, there was only basic maintenance and manufacture of spare parts. Later, the center did joint production with Northrup of the F-5E fighter and with Bell of the UH-1H helicopter, gaining experience and laying the foundation for the Ching-kuo fighter.

Besides military work, the large capital investment and cultivation of talent can provide enormous resources for the future development of a complete air industry and for raising the level of domestic industry in general.

In fact, aircraft manufacturing is very complex, and for the military to produce independently is not economically efficient. Foreign military aircraft are mostly contracted out to the private sector. Thus, AIDC, under the guidance of Chief of General Staff Hau Pei-tsun's theme "develop in the military, manufacture in the civil sector," has already begun to find compatible partners to contract out parts for the Ching-kuo.

The search does not seem hard, because the aircraft industry encompasses a broad scale, including machinery, electronics, raw materials, and so on.

AIDC's Jeffrey C.S. Hao explains that "the enterprise only needs to be interested; then it can go to the AIDC to apply for trial production." The raw materials are provided by AIDC. Even if the product is a failure, the enterprise need not pay compensation. If the two sides feel things are adequate, the enterprise can go one step further and apply to complete a cooperation agreement after passing a series of oversight and technological guidance procedures (see diagram 1).

To guarantee that it plays its role as a bridge in technology transfer well, AIDC does "housecalls." If the enterprise has any technology problems, the center will immediately dispatch someone to undertake guidance. Also, the enterprise can, according to regulations, apply to enter AIDC to study.

However, the AIDC also has a few unusual procedures in the process of contracting out. In making up the contract, the enterprise must first deliver a guarantee deposit. This is the exact opposite of the ordinary situation of the buyer putting down a down payment. "Once bitten, twice shy," says George Shen. In the past, because some businessmen were unreliable about deadlines, now guarantees are required.

Of course, where there are profits to be made, businessmen don't care much about the process. The biggest obstacle has been the lack of a clear market.

J. R. Liu, vice president for engineering at CTTI, says that "The work sent to us by AIDC in a year can be completed in 3 months." The only thing they can do is take orders from outside to fill time.

Currently the situation is changing. Aside from the NT$7.394 billion expected to be contracted out for the Ching-kuo fighter, the government plans to use the "industrial cooperation" method to provide even more markets and technology to the private sector.

Liu says, after the coming out of the Ching-kuo, foreign businesses appraised it well. Therefore they made numerous offers of joint risk investment, in which the foreign enterprise provides capital and technology, and uses AIDC facilities and personnel for joint design and production. This way risks can be spread out, and goals of technology can move one step closer to realization, providing domestic industry with better resources.

Former MacDonnell-Douglas Director Donald Malvern pointed out at the aviation conference that demand for aircraft will increase inevitably. From 1988 to 1998, the number of civil aircraft coming off the line will be 1.4 times the previous ten years. This offers the happy prospect of Taiwan's technology transfer strategy picking up a tailwind from the broad environment of the industry as a whole.

Senior advisor to the president K.T. Lee recently noted that the opportunity offered may not come again. All that's lacking, it seems, is a flight plan.

[Picture Caption]

The flight of the Ching-kuo fighter caused expectations of the aerospace industry to soar.(photo by Arthur Cheng.)

The F-5E fighter, the UH-1H helicopter, and the AT-3 trainer are all examples of aircraft coproduced by the Aero Industry Development Center with foreign aircraft manufacturers. (photo courtesy of the AIDC)

A photo of the Ching-kuo fighter in the assembly plant.

(photo by Arthur Cheng)

The upper photo is of workers using a digitally controlled drill to construct the frame of a fuselage. The lower photo shows various drill bits used t o cut parts for different functions.

Workers at the AIDC making alloyed materials.

DIAGRAM 1

Process for Contracting Out Aircraft Parts[Picture]

DIAGRAM 2

Estimates of expenses to be contracted out for the Ching-kuo fighter[Picture]

The F-5E fighter, the UH-1H helicopter, and the AT-3 trainer are all examples of aircraft coproduced by the Aero Industry Development Center with foreign aircraft manufacturers. （photo courtesy of the AIDC）

The F-5E fighter, the UH-1H helicopter, and the AT-3 trainer are all examples of aircraft coproduced by the Aero Industry Development Center with foreign aircraft manufacturers. （photo courtesy of the AIDC）

The F-5E fighter, the UH-1H helicopter, and the AT-3 trainer are all examples of aircraft coproduced by the Aero Industry Development Center with foreign aircraft manufacturers. （photo courtesy of the AIDC）

A photo of the Ching-kuo fighter in the assembly plant.

The upper photo is of workers using a digitally controlled drill to construct the frame of a fuselage.

The lower photo shows various drill bits used t o cut parts for different functions.

Workers at the AIDC making alloyed materials.

Process for Contracting Out Aircraft Parts[Picture].

Estimates of expenses to be contracted out for the Ching-kuo fighter[Picture].