Machinery exports grew 33.8 percent year-on-year to US$2.8 billion last month, the 11th consecutive month of growth, the Taiwan Association of Machinery Industry (台灣機械公會) said yesterday.
In New Taiwan dollar terms, exports rose 26.2 percent last month from a year earlier, the association said, but added that a strengthening New Taiwan dollar is affecting the machinery industry’s competitiveness.
Since the beginning of this year, the NT dollar has risen by 2.03 percent against the US dollar compared with the yuan’s 1.07 percent increase, a 6.11 percent decline in the value of the won and the 5.87 percent fall in the value of the yen, the association said.
Photo: David Chang, EPA-EFE
“When it comes to price competition with Japanese and [South] Korean exporters we are already about 8 percent behind. This is not a positive development for machinery industry exports and is casting a shadow over future development,” the association said.
Taiwanese machinery makers are vulnerable to a strengthening NT dollar because they face direct competition from other companies in the region, Ministry of Economic Affairs Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said.
“Some Taiwanese companies with products that are hard to replace, such as chipmakers, can pass on the exchange rate costs to their customers, but machinery makers have to compete on price with their Japanese and [South] Korean peers, and with the exchange rate not in their favor, their profit margins are cut,” Huang said.
However, the ministry has yet to see evidence of demand for Taiwanese machinery falling, he said.
“So far from our observations, orders are still strong,” he added.
In addition to unfavorable foreign exchange rates, the machinery sector is also facing shortages and higher prices of raw materials, the association said.
Logistical problems and lingering uncertainty about the COVID-19 pandemic are also challenges facing the sector, it said.
The association urged the government to prioritize vaccinations for machinery industry employees so that they can travel abroad to attend exhibitions, visit customers, and oversee the delivery and maintenance of equipment.
Machinery exports totaled US$18.56 billion in the first seven months of the year, up 28.1 percent year-on-year.
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