Partner to the World

Taiwan is the world’s third largest exporter of fasteners, and though most of our fastener companies are small or medium-­sized, their little fasteners bring in a startling amount of foreign exchange. Taiwanese firms produced NT$130.9 billion worth of fasteners in 2020, NT$121.8 billion of which were exported, making these companies an important part of the global supply chain.

Doing yeoman’s work

Taiwan’s fastener industry developed after World War II. When the cost of labor and other factors led Europe and the US to begin transferring manufacturing to Asia, Taiwan­ese factories took advantage of the opportun­ity. They were helped by China Steel Corporation, which has been providing the local fastener industry with high-­quality steel products since its 1971 founding, and by their own unceasing efforts to improve. Together, these factors have earned Taiwanese fasteners a long-standing global reputation for excellence.

Kristy Chi, a senior industrial analyst with the Metal Industries Research and Development Center, explains that the development of the Taiwanese fastener industry began with companies like Chun Yu Works and San Shing Fastech, which built their businesses and even their own machinery from the ground up. Then in the trading company era the model changed, with businesspeople crisscrossing the globe seeking orders that they then hired factories to fulfill. Later, trading com­panies began doing their own manufacturing. In addition to winning large volumes of orders, these hybrid com­panies developed their own technologies and created a thriving Taiwanese fastener industry.

Chi, who has been following the fastener industry for a decade, used to wonder whether the industry would end up with a few big names dominating the business and competing through acquisitions. After working in the field for some years, she realized that there are so many different kinds of fasteners and applications that manufacturers have no need to poach each others’ business: they all have room to grow within their own niches. Taiwan’s small factories are nimble and flexible, which enables them to deliver a level of service that other countries struggle to match. For example, their willingness to produce experimental product samples according to customers’ needs has enabled them to forge long-term relationships with large European and American firms. Moreover, in contrast to larger companies, which tend to focus on high volumes, small companies target niche products and can outsource some processes to firms with different specializations. Taiwan’s fastener firms may be small in size, but they have made a bigger pie for all by being simultaneously competitive and cooperative.

“Plus, fasteners are a high-margin business,” says Chi. “Think about it. Even though no company in our SME-based fastener industry can compare with Foxconn or Taiwan Semiconductor in terms of headcount or size, our per-capita output value is several times higher than that of tech firms.” Taiwan’s fastener makers clearly punch above their weight.

Taiwan’s key fastener technologies encompass the methods used to transform steel wire into finished products.

Technology is power

Steve Wu, founder of Fastener Jamher Taiwan, left his former employer 22 years ago to start his own business. He says that Fastener Jamher, located in Southern Taiwan, was fortunate to be an early player in the rivet nut market. “In those days only a few companies were making them. There was money to be made, so the company quickly found its footing.”

In Fastener Jamher’s earliest days, it employed only five people. Wu spent his weekdays taking orders, providing quotes, and managing the factory itself, then used his weekends to complete drawings of dies and other tooling. He explains, “Customers give you drawings of finished products. You then have to work out step by step how to transform steel wire into that final shape, and turn that process into drawings. That’s how metal forming works.” Sales manager Linda Lin adds, “There are a lot of ways to make a finished product, but which approach makes the most efficient use of mater­ials and time? That’s our key technology.”

“Product quality and design are crucial,” says Wu. “My thinking is that you need tooling that is easy for technicians to adjust and contributes to stable product quality. That’s my definition of well designed.” There’s no doubt that this is one of Fastener Jamher’s strengths.

Among the company’s main products are weld nuts manufactured for the automotive industry. Because the finished nuts are mounted using robotic arms, any ­defects could bring a customer’s entire production line to a halt. Car makers therefore demand a defect rate of zero per million parts. “Every process has to be standardized and meticulously controlled down to the smallest detail. Every little bit of it is arduous,” says Lin.

Taiwanese fasteners primarily compete on the export market. But while other firms have chosen to establish factories abroad, Fastener Jamher has kept its base in Taiwan. “Rather than moving the company overseas,” says Lin, “we’ve made ourselves international through the strength of our products.”

Steve Wu (left), founder of Fastener Jamher Taiwan, enjoys talking shop with technicians on his factory floor.

The complex geometry of this specialty nut highlights Fastener Jamher’s die design and forging skills.

Service and more

E Chain Industrial, based in Kaohsiung’s Gangshan Benjhou Industrial Park, started life as a trading company, but went on to establish its own factory in 2008. This expansion enabled it to accept manufacturing orders in addition to the trading and purchasing services it already provided.

Speaking about the factors that led to this reinvention, general manager James Shiuan explains that when the company was exclusively a trader and broker, it lacked direct control over product quality and delivery times. There were occasional cases where products manu­factured correctly according to the engineering drawings were unusable. With the factory demanding payment even though the customer refused to accept the products, E Chain was left on the hook. To make matters worse, manufacturers began attending inter­national trade shows to get orders for themselves, leaving trading companies with less room to operate. Hoping to remain competitive and provide customers with better service, E Chain invested in its own manufacturing.

“Trading companies are service oriented. Manu­facturers are production oriented,” explains Chi. “E Chain is a service provider that expanded into manu­facturing to enhance its strengths. Our experience as a trading company gives us a better understanding of customers’ product needs.” In contrast to a manu­facturer focused only on production and delivery, “We’re willing to invest in expensive inspection equipment in order to assure quality on behalf of both our customers and ourselves, and we’re willing to go the extra mile in paying attention to whether customers’ drawings are feasible to manu­facture,” says James Shiuan.

Shiuan basically started over. Assisted by business consultant Kevin Lin, who has been with E Chain throughout the transformation process, he found a factory site, bought machinery, got up to speed on the technology and trained up staff. The company’s under­standing of customers’ needs helped it dial in manufacturing specifications like concentricity, strength of materials, and overall precision, all of which impact how smoothly customers’ own production lines run.

Most of E Chain’s clients are in Europe and North America, and are picky about quality. “European customers emphasize factory management. They believe that quality comes from management, not simply from final inspections of products. When manufacturing processes are tightly controlled, the resultant products naturally meet standards,” explains Lin.

The company makes a broad array of fasteners, with about 30% of its production going to the automotive industry, another 60% to the construction industry, and the remainder being a wide range of general mechanical fasteners. Its strategy for dealing with the international tiffs and economic cycles that impact the export market focuses on this diversity of products, as well as develop­ing bespoke products, providing services, and generally forging its own path. While the Covid-19 pandemic caused automakers to halt production and reduce their fastener orders, rapid growth in the US home renovations market led to increased orders for fasteners for the construction sector. Shiuan explains, “Our customers are pretty diverse and our products are largely tailored to their specifications, so our risks are widely spread.”

The fastener industry also sees opportunities in US President Joe Biden’s US$1-trillion infrastructure proposal. Shiuan, meanwhile, recently invested NT$200 million in a second factory to get into the global market for fasteners for electric vehicles. No wonder Lin says, “The Taiwanese fastener industry has never experienced a bad period in its 60-plus years of existence. There have only been pretty good times and really good times.”

Though considered traditional manufacturers, Taiwan’s fastener makers have a per-capita output value several times higher than that of tech companies.

E Chain Industrial was a trading company before it went into manufacturing. Its strategy for managing changes in the market has been to focus on bespoke products for its customers.

Business consultant Kevin Lin (left) has been helping James Shiuan (right) throughout E Chain’s transformation. E Chain’s history as a trading company helps it better listen to customers’ needs.

A Taiwanese solution

Taiwan’s biggest export market for fasteners is the US. Many German firms have also established purchasing departments in Taiwan even though Germany has a more than 100-year-old fastener industry of its own. Kevin Lin says the reason is that Taiwanese fastener makers deliver high levels of quality, technology, service and materials for a reasonable price.

Taiwanese business owners’ approach to doing business with the world is to focus on the client’s needs and not worry too much about the size of the order. “Taiwan­ese companies are willing to cultivate customers and grow with them, gradually establishing a long-term partnership.” Lin notes that Sumeeko Industries and QST Inter­national did that with Tesla, Inc., beginning their work with Tesla before anyone had heard of it. Chi likewise observes, “We are involved with all the innovations happen­ing in the world. You have your imagination, and we have our execution. If a customer can give us a drawing, we’ll help them bring their idea to life.”

Fasteners may be small, but they are essential to every­day life. They lock objects together, holding them with a reliability that inspires confidence. As such we can say they are symbolic of trust, mutual benefit, and Taiwan’s desire to partner with the world.

These small bits of hardware are crucial to securing objects to one another.