Optimistic outlook: Industry insiders predict a good year as US demand grows, China remains steady and the S Korea-China trade pact has less impact than expected.

The production value of Taiwan’s machine tool industry is expected to increase by 10 percent to more than NT$1 trillion (US$31.7 billion) this year from last year on the back of growing demand from the US and steady demand in China, the Taiwan Association of Machinery Industry said in a report in the Taipei Times after the TIMTOS 2015 exhibition.

“We could have reached NT$1 trillion [in production value] last year if the unstable political environment in Thailand and the dramatic depreciation of the yen had not impacted the industry,” association chairman Hsu Hsiu-tsang told reporters on the sidelines of the opening ceremony of the Taipei International Machine Tool Show at the Taipei World Trade Center.

The nation’s machine tool exports rose 5.8 percent annually to US$3.7 billion last year, Hsu said, adding that exports would continue to grow this year.

Hiwin Technologies Corp chairman Eric Chuo gave a more conservative outlook, saying machine tool exports would be flat or grow slightly from last year.

“I am cautiously optimistic about the industry this year, as the US market is still growing and the Chinese market is growing steadily, but we need to keep an eye on European and Turkish demand this year,” Chuo said.

Taichung-based Hiwin produces linear guideways, ball screws and industrial robots. The firm’s revenue is forecast to increase by a double-digit percentage this year from last year, due to growing demand for key components in industrial automation and growing orders from the US, Europe and Japan, Chuo said.

Tongtai Machine and Tool Co Ltd is more upbeat about its business outlook this year because of a recovering US economy and strong demand from the automobile and aviation industries. The Kaohsiung-based company expects its automotive segment, which accounted for 40 percent of its total revenues last year, to be its main growth driver this year, citing a significant improvement in the quality of its machine tools for the automobile industry.

The company also said it is to acquire France’s PCI Scemm, a Saint Etienne-based maker of high-productivity horizontal machining centers, for about NT$200 million, as the Taiwanese firm aims to ramp up its automotive component manufacturing capacity.

Chuo said he expects the China-South Korea free-trade agreement to have a limited impact on Taiwanese industry because the tariff reductions on machine tools imported from South Korea are smaller than expected.

The relatively small reductions demonstrate that China is determined to develop and protect its machine tool industry, Chuo said.

Taiwan’s machine tool makers have to develop high-end machine tools if they are to remain competitive, Chuo said.

Victor Taichung Machinery Works Co president Bert Huang said that although the China-South Korea trade pact might have a limited impact on Taiwan’s machine tool industry, he hoped Taiwan signs a free-trade agreement on goods with China to enable Taiwanese manufacturers to see tariff reductions.