Duty-free Term of ECFA Works for Taiwan's Machine-tool Firms

Taipei, Jan. 17, 2012 (CENS)--The cross-Taiwan Strait ECFA (economic cooperation framework agreement) works for Taiwan's machine-tool industry as some major products as CNC (computerized numerically controlled) lathes will be allowed duty-free shipment to China from the beginning of this year, said Bert M.H. Huang, president of Victor Taichung Machinery Works Co., a leading manufacturer of CNC machine tools, adding, however, that Taiwan's economy will not develop momentum until the second quarter.

Accordingly, Victor Taichung is conservatively aiming to generate annual sales reaching between NT$6 billion and NT$6.2 billion this year, with combined sales of the entire group, including operations in China, to reach NT$11.2 billion in 2012.

The ECFA enabled Victor Taichung to register NT$6.27 billion in 2011 sales, up 9.38% year-on-year, with sales for the entire group being NT$11.8 billion.

Despite the outstanding sales, Huang admitted that part of the earnings were diluated by the price hike of raw materials and key component, appreciation of the local currency against greenback, and rising labor costs last year, with the company predicting to see per-share earnings of NT$2.5 in 2011.

China's economy will recover sometime in the first or second quarter after undergoing macroeconomic adjustment for more than eight months, with investments in Taiwan to take off after the presidential election on Jan. 14, said Huang.

Most of the firms keeping production in Taiwan, rather than relocate to China, are those focusing on production of precision parts as ship engine, aerospace, automobile after-market and metal parts, which are harder to be replaced by those made in China and Southeast Asia.