A ball screw is a kind of transmission mechanical component in which a steel ball moves between screw and nut to convert the sliding contact of the traditional screw into rolling contact.
The ball screw system is composed of a screw, nut, steel ball, fixed piece, wiper, return pipe, dust seal, lubricating nozzle, and adjusting gasket. Mainly used in the aviation industry, ship machinery, conveying and handling machinery, smart machinery, and medical equipment, and other industries.
According to industrial production statistics from the Ministry of Economic Affairs, the output value of Taiwan ball screws market in 2018 was NT$12.91 billion, a sharp increase of 46.7% from 2017, mainly due to the steady growth of the global economy and strong demand for overseas machinery and equipment. In 2018, Taiwan's ball screw demand market was NT$5.83 billion, an increase of 40.4% compared to 2017.
The first half of 2018 continued the manufacturing boom that began at the end of 2017, coupled with China’s incentives for industrial upgrading and the steady recovery of the European manufacturing industry. Enabled the transmission component industry to grow substantially, especially the linear slide and ball screw are the key to automation components, showing a state of short supply. Until the middle of 2018, with the US-China trade war intensifying, China's manufacturing industry has gradually slowed down due to uncertain prospects and investment, and many private and even state-owned enterprises have begun to lose money. Under the circumstances, orders for capital goods and peripheral automation have shown a cliff-like decline. For Taiwan machinery manufacturers whose focus is on the China market, the impact is very severe.
Declining ball screw demand and increasing inventory
The downstream application industry of the ball screw has been affected, and the upstream manufacturers have also encountered bottlenecks. According to data released by the Statistics Department of the Ministry of Economic Affairs, the output value of Taiwan's ball screws reached a historical high of 1.31 billion in August 2018 and was subsequently hit by the US-China trade war. After a short period of pulling goods, the annual growth rate in December was negative growth, and the output value fell to NT$710 million. However, due to the growth in the first three quarters, the annual output value was NT$12.9 billion, a record high, a 46.7% increase over the previous year. After entering 2019, production capacity is still affected by the slowdown in manufacturing investment. In addition to major application industries such as industrial machinery or machine tools (approximately 42.3%), the high-tech equipment industry and automation related demand has also fallen at the same time, causing inventories to continue to rise. In April this year, the inventory has accumulated to 950 million NTD. These accumulated standard inventory products have caused price cut competition.
Comparing the export value of the ball screw market in the past two years, it can be found that whether it is the growth of the ball screw output value in the first half of 2018 or the decline in the second half of the year, it is closely related to China's import demand. The export value in October 2018 was as high as 1.6 in December, the annual growth rate reversed to a negative value. Under the influence of the US-China trade war, Taiwan’s ball screw industry, which accounts for more than 50% of exports to China, has suffered even more economic impact obvious.
As early as before the US-China trade war, the global manufacturing and sales layout of the benchmark ball screw manufacturers had been scattered in various important regions to meet the needs of customers to be close to local needs. Take THK, which has the largest market share, as an example. There are 35 manufacturing bases in the world, in Japan, Europe, America, China, and other Asian blocks. The target application industries are different for different blocks. For example, the target market in Taiwan is for the machine tool industry, while the electronics industry in the United States and Japan account for a larger share, and the application of general machinery in Europe is relatively large. The effect of these scattered manufacturing and application industries makes Taiwan the largest market share. One’s the global layout of HIWIN is also oriented towards multiple regions and multiple application industries. At present, in addition to China, the United States, Japan, South Korea, and other countries have a production base, and Europe also has branches for sales and services. Even so, the US-China Trade War friction still caused a big impact.
The migration of the manufacturing supply chain indirectly affects the layout of the ball screw
The US-China trade friction has affected the company's orders, production capacity, or operations, and the impact mainly comes from rising raw material prices, loss of orders or customers, and exchange rate fluctuations. Manufacturers have or plan to adopt relevant measures, such as adjusting operations or purchasing supplies. Strategies, transfer orders through existing production lines to decentralize exports, and change investment, relocation, or service-based strategies. Therefore, the component supply chain, it is bound to make corresponding adjustments passively.
For the machine tool industry, which accounts for the largest proportion of ball screw applications, DMG MORI has assessed that it will produce vertical machining centers in India and start selling them locally at the end of 2019, and will sell the excess capacity of the Tianjin plant in China due to reduced demand to India; Mitsubishi Electric moved the production lines of EDM and laser processing machines from Dalian, China back to Nagoya, Japan in September 2018; Tsugami also brought the production line of automatic lathes back to Japan; Okuma also plans to invest in a new plant in Taiwan in response to European and American orders, it mainly produces vertical machining centers and lathes.
Most of China's machine tool manufacturers that have established factories to produce will adopt local sales or even export to countries outside the United States to avoid tariff issues and diversify risks by shifting to target markets. Under the impact of this wave, the first markets that received attention were Southeast Asia and even Taiwan itself. For example, WELE plans to expand its investment in Taiwan to purchase land and build new factories in early 2019, and GOODWAY Machine is also planning to increase its investment in the factory by about 2 billion NTD.
For the end customer’s manufacturing base or sales market conversion, ball screw manufacturers will also make adjustments accordingly. For example, they are optimistic about the potential of Indian machinery and equipment investment and the automotive industry in the future. THK's plant in India has started construction in 2019 as LM the production base of linear slide rails and vehicle parts will initially be assembled and sold from Japan. HIWIN is also purchasing land in Suzhou, Taiwan, and Japan to expand production capacity in the future to meet the needs of various industries.
Regardless of the subsequent development of the US-China trade war, it is certain that funds will gradually be withdrawn from China, and will be dispersed to Southeast Asia, Mexico, India, and even return to mature manufacturing economies depending on the end application industry, until the new global division of labor is balanced, this two to three year adjustment period has been the most severe test for Taiwanese machinery manufacturers in recent years.
Product development strategies and trends
In addition to using the strategic layout of the production and sales side, in response to the uncertainty caused by the US-China trade war, it is also necessary to rely on the functions and technology of the ball screw manufacturers' products to ensure their standing in this changing environment. In recent years, the demand for high-speed, high-precision, and high-quality processing has continued to increase. Especially in application industries such as aerospace aviation, automotive industry, mold manufacturing, optoelectronic engineering, and instrumentation, to achieve high-speed or precision processing, in addition to strengthening the design of the structural rigidity of the machine equipment, it must also have a high-speed spindle system and the high-speed feed system can achieve the high speed of the material cutting process.
The ball screw is an important related transmission component, and it is also technologically advanced in the direction of high precision, high speed, high load, and low noise. To overcome the high temperature generated during processing, the thermal deformation of the screw will affect the accuracy, and there are many suppressions. Innovative products with temperature rise or cooling and customers' production equipment are also moving towards intensive engineering, energy-saving, and lightweight. How to effectively maintain product performance and reduce the volume and extend product life through heat treatment has also become the key development of the ball screw industry trend.
Systematic integration enhances product value and breaks free of trade barriers
The global manufacturing industry is affected by the trade friction between the United States and China. In addition to slowing down investment and production, it is also actively seeking a more stable production environment and market. This phenomenon existed before the outbreak of the trade war. In the past, the manufacturing industry transferred production lines to other ASEAN countries with lower labor costs to share political and economic risks. The trade war only accelerated this supply chain transfer. On the other hand, customers the end will also require nearby production. Under the trend of shortening the supply chain to reduce the impact of tariffs, the existing supply chain will inevitably cause great damage, but the restructuring of the global manufacturing industry will also create many new winners.
In the short term, it will not be so easy to relocate China’s production lines, especially for more complex supply chains. The factories originally located in China will seek ways to increase their competitiveness, such as from automated production to the development of higher value-added products. For Taiwan’s ball screw industry, entering the China market through the demand for hardware equipment upgrades is the current way to maintain market share. This method can also squeeze out lower-grade China products and strengthen its market positioning. Also, for production lines that have been transferred or planned to be transferred, follow-up production and sales are determined by observing the target market and supply chain of their end products or the investment layout of related production equipment (such as machine tools and rubber and plastic machines) and the adjustment of service bases, such as the above-mentioned recent investment plans of THK in India and HIWIN in Japan, for the supply chain of production equipment, in addition to providing products that meet customer needs, replacement of spare parts and after-sales service are also priorities that need to be considered.
In recent years, in aerospace, automotive industry, mold manufacturing, optoelectronic engineering and instrumentation, and other application industries, the demand for high-speed, high-precision, and high-quality processing has been increasing. To achieve high-speed and precision processing, in addition to the machine equipment, to strengthening the structural rigidity, it must have both a high-speed spindle system and a high-speed feed system to achieve the high-speed material cutting process. The ball screw is an important related transmission component, and its technology is constantly improving in the direction of high precision, high speed, high load, and low noise.
The current downturn in the global manufacturing industry is the time to eliminate the weak and stay strong. Taiwan’s ball screw industry originally had a good foundation. Perhaps some low-end products cannot avoid strong price competition, but they are enhanced with high-quality products and system integration services value, the demand for the middle and high-end market is also relatively advantageous.
What is a ball screw?
The ball screw is a transmission mechanical component in which the steel ball moves between the nut and the screw, which converts the sliding contact of the traditional screw into rolling contact, and then converts the rotary motion of the steel ball in the nut to linear motion. The ball screw has the characteristics of high positioning accuracy, long life, low pollution, high-speed forward and reverses transmission and conversion transmission. Because of this feature advantage, the ball screw has become the positioning and measurement system of the precision technology industry and the precision machinery industry. One of the important components.