Cutting-edge, to Be Precise
Originally saddled with a mountain of debt and housed in a corrugated metal shed, the Goodway Group has become the world's fourth largest precision machine tool maker, with a market value of NT$7 billion.
Cutting-edge, to Be PreciseBy David Huang
From CommonWealth Magazine (vol. 476 )
It's 12 noon sharp, and the lights temporarily dim above the assembly line that stretches out along the green anti-slip floor. In the half-light, 17 machine tools undergo automatic testing before being shipped out.
This is the Goodway Machine Corp. plant, Taiwan's largest maker of computer numerical control (CNC) turning centers and other machine tools.
Machine tools are so crucial that they are often called "the mother of industry." The versatile contraptions can cut, turn, drill, grind or mill parts for Mercedes-Benz automobile engines, cases for iPhones, or blades for wind turbines. Industry output is expected to top NT$1 trillion this year.
Compared to Taiwan's three other trillion Taiwan-dollar industries – the high polluting upstream petrochemical industry and the high energy consuming semiconductor and display industries – the machine tool industry is a modest consumer of water and electricity, and a low carbon emitter.
"The monthly electricity bill for both our companies combined doesn't even reach NT$2 million," declares Edward Yang, president of Goodway as well as Awea Mechatronic, a second machine tool maker under the same business group. Located in the Central Taiwan Science Park in Taichung City, the factory, shared by both companies, covers a floor area of some 50,000 square meters and boasts almost 400 employees, yet its energy consumption is comparatively low.
Unusually High Salaries
In 2000 Goodway introduced a pay-for-performance salary system that includes monthly, seasonal and year-end bonuses.
As sales department director Rebecca Hsieh points out, university graduates with a technical background start out with a monthly salary of NT$28,000. But after six years on the job, and including the various bonuses, Goodway technicians and R&D personnel easily make NT$60,000 to NT$70,000 per month. The machine tool industry allows university graduates to escape notoriously low starting salaries. In addition, the thriving machine tool industry is driving the development of related enterprises upstream, midstream and downstream.
Goodway's partners, around 200 in total, are all located within a 30-minute drive in the Central Taiwan Science Park or in the Taichung Industrial Park. "In half an hour, you can buy everything you need, all on the same street. That's what makes Taiwan's machinery industry so competitive," observes Eric Su, division director of Smart Systems & Robots at the Mechanical and Systems Research Laboratories, Industrial Technology Research Institute (ITRI).
As he points to a touchscreen display with an operating menu in traditional Chinese characters, Su explains, "The entire PC-based controller is made in Taiwan, from hardware design to software development. Whether you want a curved PET bottle or something more complicated like a Buddhist statue, with the software we developed, loaded into our machine tools, you can complete the whole mold."
Since machine tools are built according to customer design and specifications, they cannot be mass-produced in automated production lines. Therefore, Goodway employs 380 people, while Awea has almost 400 employees. "If you add the suppliers, a single machine tool can create more than 1,000 jobs," declares Yang.
Taiwan's machinery industry has developed from humble and difficult beginnings in corrugated metal sheds into the world's most formidable industrial cluster that has bred world-class precision machinery engineers.
From Huge Debt to High Market Value
Yang, who hails from a farming family, is a typical example of the self-made entrepreneurs who started their businesses in the early days of Taiwan's machinery industry. The 65-year-old still lives on the fifth floor of the old factory building in the Taichung Industrial Park, together with his 93-year-old mother. It is typical for the machinery industry in central Taiwan that the factory doubles as the owner's home.
Yang's mother checks every night whether her son's shoes are in the entrance to confirm that he has returned home.
Although born as the second child, Yang is the eldest son in a family with seven children. During his childhood the family had a farm plot of about 0.8 hectares. While Yang's father made a living as a carpenter, the children were in charge of tending to the fields.
But Yang was looking for a way to escape the hard life of farming, and he made the resolution to study with diligence. But when he passed the entrance exam for National Taichung First Senior High School, one of the best local schools, his family initially opposed his pursuit of further schooling. They eventually relented after he pledged to first work in the fields after school and to do his homework only after his parents went to bed.
Upon graduation from National Chung Hsing University in Taichung City, as a member of the Mechanical Engineering Department's second class of graduates, Yang first worked in a small factory. But while his boss kept promising pay raises and benefits, the boss's wife would always renege on the pledges. Yang decided he would be better off founding his own company.
He took out a mortgage at the local farmers' cooperative with the family land as collateral for a NT$500,000 start-up loan. That was 35 years ago. He believes: "If in this lifetime I can make a name for our turning centers, I won't have wasted my life."
In 1984 the United States imposed import restrictions on machine tools from Taiwan because they were too competitive in the U.S. market. Subsequently, Washington demanded that Taiwan and Japan adhere to a voluntary restraint agreement, which meant that they were forced to curb exports on their own account.
For Goodway, which had its major market in the U.S., this was a devastating blow. "We had already taken out a second and a third mortgage, but the market wouldn't rebound. Back then we were almost dead, and my family was upset," Yang recalls. "When our debt was highest, it stood above NT$100 million. The Goodway that you see today only became possible after we got a foot in the German market, the toughest market to break into."
Today, Goodway and Awea have a combined market value of about NT$7 billion.
From Menial Worker to Top-notch Engineer
Over the past 35 years, the owners of Taiwan's more than 10,000 machinery industry enterprises have not only built a globally competitive industry, but also created many high-quality jobs locally.
R&D manager Abner Yu, who looks back on a 30-year career with Goodway, leads a team of developers with university and graduate school education who constantly work on new models, such as their newly developed, cutting-edge multitasking turning center.
In automated machine tools, the power turret is the heart, while the CNC controller is the brain.
Using 3D CAD software Yu and his engineers demonstrate the parts and structure inside their newest machine tool. A simulation shows the power turret rotating 360 degrees at lightning speed, undergoing constant calibration. The work process, which originally required two separate machines, can now be done with a single unit, eliminating the need to move the mold from machine to machine. This helps the customer reduce costs and greatly increases efficiency. Such multitasking features are the latest trend in machine tool upgrading.
Those who have R&D ability, know how to apply advanced technologies and are able to make customized products will be the stars of tomorrow's precision machine tool industry.
Translated from the Chinese by Susanne Ganz