TWMA Chairman Bill Hong - A Legacy of Resilience


2009-10-20
TWMA Chairman Bill Hong - A Legacy of Resilience / Report by Greg Niederhaus Coming to the end of his 7 year stint at the helm of the Taiwan Woodworking Machinery Association (TWMA), Mr. Bill Hong is busier than ever. One would think a chairman to be up there in years and wisdom; perhaps a bit weary and grey at the end of a long career building and guiding his industry. On the contrary, Bill is full of vigor, yet his wisdom and actions certainly supersede his years. Just how a man of 39 years gets elected to lead an association of 280 member companies remains vague. What counts is what he has done for his industry during two 3 year terms (An extra year ensued due to organizational changes within the association). His accomplishments add up to a lot, and though he may be moving on he is doing his best to ensure that Taiwan's woodworking industry continues to flourish in challenging times to come. Hectic, but worth it. *********************** Sitting around a conference table made from the base of what must have been a huge Hinoki tree centuries old, Bill poured us more of that tea we had last time. No wonder the man gets so much done; that stuff packs a wicked punch. Bill loves his wood. All of the furniture in his office is custom crafted with traditional joinery from salvaged precious wood hundreds of years old. No nails, no screws, just raw skill and wood that can't be found anymore. This was an interview with no prepared questions; more like a friendly casual visit with a man about to embark on a hard earned vacation. Knowing that Bill is president of world famous BOARKE, we wanted to know just how much of his time has been dedicated to TWMA. "You have no idea..." was the gist of the answer. "Time is one of those things there never is enough of," he says matter-of-factly. In the beginning Bill needed to build up the relationship between the government and TWMA because frankly, "they will provide subsidies if they think you are valuable." That took a lot of energy during the first few years. So did making Taiwan's industry become more global. He was the former WTC (Wood Technology Club) chairman, and attending the numerous international conferences took a lot of time as well. Building relations with the government does not just include the central government. In Taiwan you've also got provincial and special municipality governments along with county and provincial municipality governments. "If you want to build relations with them, there are a LOT of meetings to attend." In fact, Bill was so active in this regard that President Ma Ying-jeou has come to BOARKE company headquarters to visit in person. "What this indicates," he says, "is that the woodworking industry has earned high regard in the heart of the government as an important entity for Taiwan, and that the industry has earned serious recognition internationally as well." His view on the economy ***************************** Could you tell us more about how the global recession is influencing the direction of Taiwan's woodworking industry? Bill said, "The impact it's had has been tremendous. This time has been different from crises in the past. The Great Depression was contained within US borders, and the Asian Economic crisis was also limited to the Asian sector. This time it's global, and consumer confidence around the world is suffering. Islamic countries are better off because their economies are more isolated and self reliant. Specific to the woodworking machine sector in Taiwan, around 80% of companies have taken heavy hits. 70% in Europe and 30 to 40% in China have also experienced reductions in production. Taiwan mainly produces mid to high-end products which suffer the most on the market. Reasons for this are that the rich industrialists are still spending money. They care very much about their image. They can afford top brand names. Next are those who indeed have orders. They need to buy machinery, but they prefer to get by with older machines until confidence in the economy is restored. This is the main reason orders for Taiwan's machines have diminished." "The impact runs very deep." ********************************** "About the future," Bill goes on, " The impact of this crisis runs very deep..." In about two years he believes that there will be two types of companies. Those who rise up will do so extremely quickly. Those who fall will be the ones who do not change. "If you don't adapt, if you lack heart, if you don't learn to cooperate and if you don't innovate… you will slip out of the big picture." He explains that if you look at Europe you'll see products that are still getting better. Manufacturers there are lowering costs by employing cheap labor from Eastern Europe. Also they are outsourcing components from Asia for assembly on their own turf. Quality remains high, but prices are getting lower. As for China, domestic demand is on a bigger scale and it is easy for companies to borrow money. Entrepreneurialism is rampant there and that sort of spirit is much stronger than in Taiwan. Taiwanese companies don't like to borrow money because they tend to be more conservative. These factors added together are why you will see rising levels of quality from Taiwan in the next two years. During the past two or three months some Taiwanese manufacturers have seen orders pick up. Not all of them have, but quite a few. If this trend continues another few months, "I dare say with confidence that those who are going to survive in Taiwan will skyrocket within 2 years. Those who don't will go down fast." --- Bill Hong Lot's of progress... new beginnings **************************************** What are some things you have done on behalf of TWMA that you consider most significant? "Up until 7 years ago, TWMA never got any government subsidization. During this period we have received in excess of four hundred thousand USD each year from the government." He explained that most of his goals for research programs have been implemented. Bill Hung has worked to streamline the woodworking industry in Taiwan on many levels, including working with the government in re-vamping the infrastructure of industrial zones, smoothing out satellite outsourcing, and establishing technical education programs. Another new thing from a man who appreciates the value of education is that each year the government will pay for 18 association members to earn their Master's degrees from Chaoyang University of Technology, so that when they re-enter the industry they bring heightened levels of credentials and expertise. Pool your resources *********************** As for the future, his main focus now is to provide guidelines for the woodworking industry. He encourages smaller companies to implement the following five activities: Re-vamp the internal structure of the company so that production can spring back effectively when orders do come in; use the down time to delve deeper into R&D; provide educational training to staff; expand facilities; and invest more into CRM or, Customer Relations Management. "After-sales service is important. Why not use your free time to pay your clients a visit and remind them that you are there to help if they need you?" He encourages companies to swallow some pride and learn concepts such as 'vertical integration' and 'horizontal integration'. Basically, with vertical integration companies eliminate outsourcing to lower costs and better control quality. Typically this is a wise move during long-term depressions, and since it leads to specialization, quality tends to improve. Horizontal integration is similar, but conversely involves expanding the product range. One way to achieve these goals is to merge smaller companies together under one roof. "Teamwork is largely about humility, and if companies learn to work together their chances of sharing larger markets in the future increase, while being part of an entity that can better compete with giants in Germany or Italy." Bill's legacy is essentially a call for mass integration of domestic manufacturers of woodworking machinery, plain but not so simple. He reasons, "If smaller companies want to buy 50 spindles each, for example, they'll get a certain price each. If seven of them place an order for a hundred grand US together, isn't it reasonable they would get a ten percent discount? They can then pass that ten percent on to the customer." Guidelines for this movement are on the drawing board. If you want to compete internationally, you've got to humble out and pool your resources. The days of "everybody is a boss" are gone. Bill's message to the masses of small businesses in Taiwan is a tough one. "R&D allows you to keep updating your products and stay competitive. Put yourself in a position where you can push down against the piranhas nipping at your heels while pushing upwards against the big boys. Vertical and horizontal integration will serve as power to both your right and left hands. If you are a company that does not want to change your ways, you will go down. Learn to cooperate and do it while you are still attractive. If you wait till you owe money, it will be too late. Work together and earn the right to be the boss. Don't just call yourself a 'boss' because you like how it sounds. The government won't inject money into non-benchmark companies, so learn to save your selves." "I believe that many of the things I have done for TWMA are unprecedented." Hopes for the successor **************************** According to Bill there are still weaknesses to strengthen, as one can only get so much done in a given amount of time. In terms of subsidies, 400,000 USD a year leaves lots of room for improvement. Regarding scholarly research, he'd like to see much more. "If you search online for journals about other industries in Taiwan like electronics, there is a plethora available. With woodworking we only have three years worth of content so far. Resources like this are invaluable to the industry." More company mergers also need to happen. He explained, "Many small companies are fearful of getting the short end of the stick, but innovative thinking can easily curtail the risks." He also calls for more education to strengthen industrialists' management skills. His last point was that more Taiwanese companies need to get more involved in overseas exhibitions and fresher markets. Make more technical and management education available, get industrialists to go abroad more to get involved in exhibitions and fresher foreign markets like Central and South America. Innovate in technology and management. Don't just watch and copy how people do it, innovate your own way. Cell phones always have new designs, so they sell well on the market. Do the same with machines. Merge your resources. If one company has a welder, another a milling machine and yet another has a spray booth, why not do the work yourself instead of hiring it out? Buy the equipment together and make the money together. It's all part of the job *********************** Mr. Hong wouldn't be where he is if he weren't a serious, wise and dedicated man. A couple questions we asked produced an awkward moment or two this time around, but Chairman Bill Hong was giving us straight forward answers. He even shared with us how he would run wfd if he were the boss. Very insightful, and we thank him. Indeed, his accomplishments on behalf of the industry are vast. His guidelines for a struggling industry though harsh, are realistic. His love for Taiwan's woodworking machinery industry runs deep, and his intent to continue support of the industry through actions as example are his next step. As he continues on to complete his EMBA and join forces with partnering companies in emerging markets, serious companies that aim to evolve should watch and learn. We asked if he had any regrets about the sacrifices he has made with TWMA and he said, "Absolutely none. It's all part of the job, and if you're going to do a job you should do it right."
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