Generation 2: Supporting the Trillion-dollar Machinery Industry for Taiwan

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Following semiconductors and panels, the machinery industry has become the third trillion-dollar industry for Taiwan. In the industrial transition process from precision machinery to smart machinery, G2 (“Generation 2”) has been a group of people who has played a critical role.

G2 is Taichung City’s Generation 2 of Machinery Industry Community formed by a group of second-generation family business leaders. This group of second-generation business leaders is driven on a mission to not only succeed the previous generation, but also to shoulder the task of leading their companies in digital transformation. Joseph Lin, the current Chair of G2 and Executive Assistant of SOCO Machinery Co., Ltd., accepted an exclusive interview with the MOST Center for Global Affairs and Science Engagement. He shared how G2 uses the open-source spirit to enhance cluster advantages for Taiwan’s machinery industry.

From banding together (in the echo chamber) for support to forming a mutually-beneficial ecosystem

In the past, it has been difficult for the machinery industry to break away from the stereotypical “grease monkey” image of sweaty, greasy factories. However, the Taichung City Precision Machinery Innovation Technology Park (TCPMITP) bears no resemblance to this image. Instead, it presents an image of bright and modern production lines. 

In the beginning of the pandemic in 2020, machine tool manufacturers help to establish the national mask production team. They not only played a key role in pandemic prevention but also demonstrated the industry’s unstoppable energy.

G2 was established in 2009. It started out as a dinner party for second generation companies in the TCPMITP. At that time, the world was caught in the financial crisis, and many companies faced operational challenges. Joseph Lin joked that in the eyes of the outside world, they were a group of ambitious rich kids who returned to the family business. In the beginning, it was difficult to exercise their skills and ideas. “That's why we in the 'second generation' group started having meals together to 'huddle for warmth' and share suggestions on operations.”, said Lin.

Gradually, more and more people joined G2. At present, it has exceeded 145 members, and their activities has expanded. In addition to regular meet-ups and exchanges, they also organize seminars and workshops discussing the latest industry trends and corporate governance to help their members develop their leadership.

Not only selling equipment, but also providing value-added services

G2's members mainly focus on the machinery industry. The members come from the upstream, midstream, and downstream segments of the machinery industry. About 30% are machine tool factories, 30% are component industries, and 20% are processing industries. According to Lin, in the past, the machinery industry assembled components and sold standard machines. However, in terms of cost, they couldn't compete with China in the price war. Therefore, the key became focusing on designing comprehensive solutions to meet customer needs; only then could they enhance the global competitiveness of Taiwan's machinery industry. 

SOCO Machinery Co, Ltd. makes a good example. The 42-year-old company is the world’s third-largest, and Asia’s largest, pipe cutting and bending machinery company. They specialize in processing equipment for metal pipe cutting, drilling, and bending. They also specialize in the work for high-profit customized vehicles, such as exhaust pipe processing for Boeing airplanes in the US and Ferrari sports cars in Italy. In recent years, SOCO has also made inroads into IKEA furniture and the fitness equipment industry. It’s hard to imagine that just five years ago, SOCO Machinery Co., Ltd. was suffering from a sharp drop in auto industry orders.

Lin said that SOCO Machinery has undergone two major transformations. In the past, the metal processing industry was mostly labor-intensive. However, SOCO upgraded their traditional cutting and drilling tools to smart lasers, and further integrated design data, remote computer control, and mechanical arms to help design new money-saving, labor-efficient production models for customers.

Lin provided more examples. To provide higher-quality service to the aerospace industry, Yeong Chin Machinery Industries Co., Ltd. (YCM) has not only continuously introduced new technologies to update their equipment, but has also developed and applied special precision machines. At the same time, YCM has integrated machine components and software development to reduce the component scrapping rate and thereby improve flight stability. As another example, Hai Lu Jya He Co., Ltd. (HLJH), a metalworking and oil processing manufacturer and supplier in Taiwan, is one of the few domestic manufacturers to have both their own production technology and multinational technology cooperation. In the post-digital transformation world, HLJH has transformed their business model to provide customers with real-time monitoring of oil consumption. The company uses the Line social media app, integrated into their customer relationship management system, to more actively recycle waste oil. HLJH has become a provider of solution services and as a result doubled their annual turnover.

Relying on marketing and production to inject vitality
Lin said that the machinery industry must transform from traditional products and equipment vendor to solutions provider. The front end must undergo digital transformation: Using innovative technologies within organizations, transforming organizations and processes, and doing systematic client data analysis. Most importantly, the key to all this is “talent” – and to attract talents into the machinery industry will have to depend on “marketing”!

Lin isn’t afraid to say that, after 2000, the job market had very rose-tinted glasses for the electronics industry; talents were attracted by its magnetism. The traditional previous generation believes that “marketing” means printing exquisite catalogs of company products for customers to peruse. However, “marketing” today is about helping the outside world learn about the company and the industry to order to inject a continuous stream of vital new talent. 

Lin cited the example of the Victor Taichung Machinery Works Co., Ltd., which was established more than sixty years ago. Earlier this year, the company collaborated with the Youtuber who goes by “Imserious” (metal sculpture artist Syu Ting-Ruei). He introduces CNC machine tools through vivid unboxing videos, thus demonstrating to the world how the machinery industry has been reborn. This video has also been used as a teaching video by many vocational instructors. In addition, many companies are also collaborating with universities to cultivate young talents and strengthen links between academic R&D and industrial innovation.

As a member of the corporate second generation, Lin is most often asked if he has any disagreements with the older generation about corporate governance. Joseph Lin considers himself lucky. His father (Chih-yuan Lin, President of SOCO Machinery) is very open-minded. However, in the planning of a new system for the company, his team did encounter some phase-in issues for employees and the corporate culture. In such cases, executives and employees have to listen to and understand each other to achieve a win-win. “This is also a part of marketing. It’s not just external; it has to be internal, too.”

Joseph Lin emphasizes that the spirit of G2 is “openness.” Any question may be asked at their gatherings. Peers can compete with each other, sure, but they can also cooperate with each other. He hopes that the machinery industry created by the second generation of entrepreneurs will create a mutually-beneficial ecosystem and connect with national policies and local energy to make central Taiwan the global capital of smart machinery.


 

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