Taiwan's small and medium-sized enterprises (SMEs) in aerospace manufacturing face a unique challenge: the high cost of obtaining necessary certifications.
To mitigate these expenses, many SMEs prioritize securing orders before pursuing certification. This approach, while financially pragmatic, raises concerns in an industry where precision is paramount. Albert Hung, General Manager of Min Chun Precision, underscores this dilemma, noting that recent Boeing mishaps underscore the critical importance of meticulous standards in aerospace.
Min Chun's Journey into Aerospace
When Min Chun decided to enter the aerospace supply chain, the company spent two years obtaining certifications without any orders. In an industry that prioritizes high precision and quality, certification should ideally come first, yet the reality is often more complex.
Before venturing into aerospace, Hung worked at his family's precision machinery parts processing company. He remarked that transitioning from general precision machining to aerospace involves numerous obstacles, including the challenge of exporting machine data for tracking purposes.
Reflecting on Min Chun's early days, Hung shared that the company targeted the aerospace industry around 2010 and began preparations. By 2012, they officially entered the industry but did not rush to secure orders.
Hung explained that while it seems logical to obtain certification before accepting orders, the costs involved mean that Taiwanese SMEs often secure orders first and use the revenue to cover certification expenses. Some companies even test the waters by taking orders and obtaining certification years later, which is problematic.
According to international management standards, certification should precede order acceptance, but in Taiwan, the reverse can occur. Min Chun, however, secured certification first, spending NT$200,000 to NT$300,000 annually for two years without any orders. Even in the first year of receiving orders, their revenue was only in the five digits.
Hung emphasized that traceability is crucial in aerospace. Every part and process, including time, location, and machinery, must be documented. The data accumulated over five years is substantial, and if issues like those recently experienced by Boeing arise, it is difficult to quickly retrieve records without early digital transformation.
Unique Challenges in Aerospace Manufacturing
Unlike common consumer electronics, aerospace products do not have standard specifications. Customers design and specify requirements, and suppliers evaluate their capability to produce and assess risks before quoting. Once an agreement is reached, an order is placed. The basic principle for aerospace products is First Article Inspection (FAI), where random samples from the first production batch are inspected to ensure all requirements are met.
Production then follows the FAI guidelines, and any necessary parameter adjustments require additional verification under aerospace regulations due to the need for traceability.
Discussing the current aerospace metal manufacturing market, Hung noted that Taiwan has about a dozen companies, but Min Chun focuses on large aerospace components, facing only 2-3 competitors locally. Globally, however, competition is fierce.
Examining global leaders Airbus and Boeing, Hung observed that Boeing, amid US-China tensions, prefers to avoid the Chinese supply chain. In contrast, Airbus closely collaborates with China, purchasing hundreds of aircraft and using Chinese components in return.
Taiwan vs. China: A Competitive Analysis
Comparing Taiwanese and Chinese competitiveness, Hung stated that the gap is minimal. Taiwan focuses more on quality, while China, supported by subsidies, can afford high-end equipment and secure substantial government orders, ensuring steady development. However, for advanced technology, Taiwan has an edge. For instance, Taiwanese aerospace leader AIDC manufactures everything from aircraft engines to wings.
As Taiwan's aerospace sector aims for the skies, navigating these certification challenges will be crucial for maintaining global competitiveness. The industry's ability to balance financial pragmatism with stringent quality standards will likely determine its future success in the international market.
