By QUINCY LIANG

With about 70% of the global market under their collective belt, Taiwanese suppliers of golf-club heads and shafts can afford to be roseate about their staying power as the global leaders in all segments of the golf equipment market. Such optimism comes despite a phalanx of would-be usurpers, Mexico foremost among them. Major local suppliers of golf equipment say these competitors fall far short of Taiwan in computer-aided design, high-end alloy manufacturing, flexible operation, Internet usage, and other competitiveness-enhancing areas.

Taiwan Exports of Golf Equipment and Accessories* Unit: US$1 million
	2001	2000	1999	1998	1997	1996
Export Value	287.02	338.4	364.6	386.6	484.7	471.6
Crowth Rate**	-15%	1%	-11.8%	-20.2%	-2%	-5.1%

*Including golf carts and vehicles, golf clubs, balls, and other golf equipment
** Compared with previous year.
Source:TSMA

 

Taiwan's golf equipment producers have come a long way in a short time. An industry founded on the export of items to Japan on an original equipment manufacturer (OEM) basis, the sector today supplies golf equipment globally to the top world brands on both OEM and original design manufacturer (ODM) bases.

Contract production orders have flooded into Taiwan in recent years as more and more international brands, seeking to cut costs, stop production and turn to outside suppliers. Callaway and Taylor-Made, two of the top three golf-club brands in the world, are among the latest big names in the industry to shutter their U.S. plants and order golf-club heads from Taiwan. Titleist, the third-biggest golf-equipment brand, also outsources club shafts and heads from the island.

Another piece of good news for the local golf equipment industry is that sporting goods giant Nike announced its entry into the golf equipment market early this year and is purchasing most of its clubs from Taiwan. Nike estimates that the new line will generate revenue of about US$100 million in the first year alone, creating lucrative business opportunities for local contract producers.

Most major club-head makers in Taiwan have seen a rapid recovery in demand since last December and expect sales to remain strong through the end of the year. Local suppliers of graphite shafts for golf clubs are experiencing similar gains as they consolidate their leading role in the international market. Thanks to technical advancements in prepreg cloth, a key material in graphite products, and cost advantages from their overseas plants, especially those in mainland China, they are supplying a growing part of global OEM/ODM demand.

According to statistics compiled by the Taiwan Sporting Goods Manufacturers Association (TSMA), Taiwan exported about US$287 million worth of golf equipment and accessories in 2001, down about 15% from the 2000 figure of US$338.4 million.

Facing intense competition from low-cost rivals in mainland China, golf equipment makers in Taiwan have been forced to move either upmarket or offshore. Local producers are boosting margins by developing higher-end products with innovative designs and advanced materials. Others are paring costs by moving production to cheaper sites, especially in mainland China, following those who have already crossed the waters.

Strong Enough

One of the major local OEM/ODM suppliers to big international golf equipment brands is Taiwan Strong Sporting Goods Inc. (TSSG). The company is one of the top three graphite and composite-material makers in Taiwan and, it claims, the first domestic maker of prepreg cloth and a key shaft supplier to all major golf club brands in the United States.

Taiwan Strong is also a major supplier of sport rackets sold worldwide under its "Madison" brand. Curtis Liao, general manager of Taiwan Strong, says that his company's expertise in composite materials is the key factor in winning overseas orders. He says his company produces about 250,000 golf-club shafts annually at its mainland Chinese plant and about 50,000 mainly high-margin shafts in Taiwan, where it has 100 employees. The mainland plant, with a staff of about 600 workers, concentrates on labor-intensive graphite products.

"Graphite shafts are steadily replacing their aluminum-alloy counterparts," says Liao. "The former weigh only about 60% as much as the latter and also have superior strength and shock absorbency." Liao says that his company's success in the graphite shaft business can be attributed to its self-production of prepreg cloth to assure quality and control costs, self-development of epoxy resin formulas, the use of industry-leading techniques, and abundant experience in the line.

In Taiwan, Taiwan Strong is one of the few prepreg suppliers with comprehensive technical capabilities. The company supplies both woven and uni-direction prepreg cloths. According to Liao, the most challenging part of producing graphite shafts is to ensure the proper balance of weight and the formula of resins used--skills, he says, his own company has mastered.

By processing both the raw material and finished products in-house, Taiwan Strong has become highly competitive in terms of both cost and quality. Thanks to these cost and quality advantages, Taiwan Strong supplies graphite shafts to all of the top golf-club brands in the United States. Such items are available in standard or custom specifications according to client requirements. In many cases, Liao says, his company even helps newcomers to the market work out specifications for their products.

According to Liao, the market for graphite golf-club shafts is mature and margins slim. "You need to achieve a certain level of production and development ability in order to survive in this competitive market," he says. "The former is necessary to cut costs and the latter to help a company develop new product applications."

True to these words, Taiwan Strong has been developing new products made from its graphite and composite materials, including graphite rollers and high-end graphite front forks for bicycles. Taiwan Strong is Taiwan's first supplier of the graphite rollers, which can greatly elevate a machine's efficiency and save energy. The company is also a prepreg cloth supplier to local aerospace companies.

Head-Turning Quality

Dynamic Precision Industry Corp. has grown steadily over the last three decades as a specialist maker of golf-club heads and components. Unlike most other local suppliers, the ISO9002-certified firm only makes golfing products, enabling it to develop its expertise in the line.

Established in 1973 with a capitalization of US$15 million, Dynamic currently has four factories in Taiwan and mainland China, as well as branch offices in Japan and Germany. The company employs about 300 people worldwide and has a monthly capacity of 300,000 club heads. Last year, it posted revenue of US$26.1 million.

Dynamic's Taliao plant in southern Taiwan produces stainless-steel heads for irons, composite heads for irons and woods, and protective metal plates for woods heads; its plant in Pingtung County manufactures stainless-steel heads for irons and putters; and its Dafa plant in Kaohsiung County turns out stainless-steel casting parts, titanium golf-club heads, and titanium casting parts. The company also makes stainless-steel heads for irons and putters plus metal plates for woods heads in Guangdong Province, mainland China. Dynamic prides itself on its expertise in materials processing, use of state-of-the-art production technology and equipment, and use of a comprehensive range of materials to provide top-quality products to global markets. The company claims that it does all of its processing in-house. Materials used by the company in its golf-club heads include stainless steel, titanium, and a number of alloys such as aluminum-bronze and other bronze-based combinations.

hanks to its reputation for high quality, Dynamic has successfully expanded into some the world's toughest export markets, including Europe, the U.S., Canada, Australia, and Japan, where most of its sales are concentrated. The company is a contract supplier to both Callaway and Taylor-Made.

High-Performance Graphite Shafts

Established in 1988, Paderson specializes in the production of composite-material golf-club shafts. In Taiwan, the company ranks as one of the top two shaft makers in terms of export value. "Unlike most local shaft makers that mainly produce on an OEM basis," says company president Patrick C. T. Hsu, "our company mostly supplies products on an ODM basis."

Hsu claims that Paderson has developed the world's most advanced metallic-fiber composite materials for high-end club shafts. The fibers used in the shafts are a combination of nickel- and copper-coated fiber prepregs on a graphite-fiber base.

Hsu says that his company is the world's first maker of Diamet (diamond-woven metallic-fiber) shafts. The Taiwanese company supplies its Diamet shafts to several world-famous brands such as Adams, Orlimar, and Dunlop.

"Products made with Diamet technology have several unmatched advantages over other kinds of shaft," Hsu indicates. "They provide both the benefits of graphite and steel shafts. They are made with a filament winding process and use nickel to give the weight and consistency of steel with the shock-absorbing qualities of graphite. The metals also allow for an unlimited combination of torque, flexibility, weight, and balance, providing a golf-club shaft that can fit any golfer's swing."

"The combination of nickel and copper increases the weight of the shafts without affecting performance. It also provides some of the consistency and feedback generally associated with steel shafts. "Due to these advantages," Hsu says, "we feel the Diamet series is the first line of graphite shafts that truly performs to the level of the best steel shafts." Steel-shaft clubs are the first choice of most skilled golfers and are preferred by over 99.9% of professional players, Hsu adds.

In addition to its Diamet series, Paderson uses high-precision machinery to crank out a full array of mid-range to high-end graphite shafts. Hsu says that his company uses imported computerized production equipment to assure the best quality and precision of its products.

"From the outset," says Hsu, "we aimed to become a high-end ODM maker in this line. Our commitment to this objective is seen in our large research team, which accounts for about 10% of our staff." Hsu adds that Paderson has the greatest number of patents for new materials, shaft design, and processing methods among golf-equipment makers in Taiwan.

Paderson has set up a subsidiary, Rapport Composite Co., in the U.S. to handle dealer programs and OEM/ODM services in that market. It operates one plant in Taiwan and one in mainland China, and plans to set up another plant in Taiwan in the near future to strengthen its development capability.

Paderson turns out between three million to four million shafts annually. The company currently supplies over one thousand types of golf-related product to major customers around the world, with half of its exports destined for the U.S. and the other half going to Europe, Japan, and Australia.

 

(QL, May 2002) Taiwan Exports of Golf Equipment and Accessories* 2001 2000 1999 1998 1997 1996 Export Value 287.02 338.35 334.37 386.56 484.72 471.56 Growth Rate** -15% 1% -14% -20% 2% -5% *Including golf carts and shuttles, golf clubs, balls and other golf equipment ** Compared with previous year Source: TSMA Caption 1: Graphite rackets, golf-club shafts, and hockey sticks made by Taiwan Strong. Caption 2: High-end golf-club heads supplied by Dynamic. Caption 3: High-quality golf shafts made by golf-equipment specialist Paderson.