Congratulations to CHUN ZU MACHINERY INDUSTRY CO., LTD Successfully Listed on the Gretai Securities Market - After 40 Years, What You Don’t Know About Chun Zu
If you are familiar with Taiwan’s major fastener forming machinery plants, you won’t miss out on Chun Zu Machinery Industry Co., Ltd. You have probably heard about Chun Zu Machinery’s high-quality products and its good reputation, and you may have even heard that Chun Zu Machinery (4544) was successfully listed on the Gretai Securities Market on December 24, 2012. What you may not know about Chun Zu Machinery, is how it managed to become the first fastener forming machinery plant to be listed on the Gretai Securities Market after 40 years of ups and downs.
Upon the celebration of Chun Zhu Machinery’s 40th birthday, Fastener World is honored to interview Chairman Bruce T. Sun, and talk about the philosophy upon which Chun Zu Machinery was established, its corporate vision, its strategy and marketing plans, as well as the benefits it has gained by being listed on the Gretai Securities Market. What is even more important is his views regarding the future development of the industry as well as his insight on the future of the economy, which shall serve as a forecast and indicator for the rest of the industry. During the International Fastener Show in Tainan in April of 2013, Chun Zu Machinery will introduce the CBP-85S, which includes many innovative improvements and designs that will provide a completely new experience for attendees.
The Birth and Growth of Chun Zu Machinery
“Chun Zu Machinery was formerly the Machinery Production Department at Chun Yu Works & Co., Ltd. The equipment that it produced was not only used within the company, but was also frequently requested by foreign customers. With the increase of its outside orders, the Machinery Production Department eventually became a spin-off…” When we arrived at the office, Chairman Sun was in the middle of writing a draft for this interview, which shows how Chairman Sun’s personality resembles Chun Zu’s “Lion” trademark, maintaining a firm grasp on the big picture and waiting for the right time to make a move, but also maintaining an attitude that is humble, upbeat, and positive.
Origin of the Name “Chun Zu”
When the company was first established, it intended to partner with another Japanese company, which is why it took one word from “Chun Yu” and another word from “Japan” (pronounced as “Zu Bon” in Chinese languege) and formed the name “Chun Zu.” Although the Japanese company backed out of the partnership for personal reasons, Chun Yu continued with its plans and schedule. Eventually, Chun Zu Machinery was officially established in 1973 with a 51% investment by Chun Yu and the other 49% invested in by Chun Yu and Chun Zu employees in the form of employee stock.
Chun Zu Taiwan
Chun Zu is located adjacent to Chun Yu in the Gangshan District of Kaoshiung. Chun Zu’s factory occupies an area of 20,860 square meters, with 8,530 square meters of acutal factory facility space as well as 200 employees. Its main products and services include multi-stage screws, nuts, metal parts formers, thread rolling machines, as well as mold production.
Chun Zu Shanghai
In response to the market development, like most other fastener companies, Chun Zu Machinery chose to enter the China market by setting up a factory in the Qingpu District of Shanghai in 1999. Chun zu’s Qingpu factory occupies an area of 5,615 square meters, with 9,025 square meters of actual factory facility space as well as 210 employees. The Shanghai facility’s goal was to continue the experience and technology created by the Taiwan facility.
Chun Zu’s Taiwand and Shanghai facilities complement each other, and thereby increase Chun Zu’s market share and expand Chun Zu’s reach to all corners of the globe. Chun Zu now services more than 50 countries on 5 continents. This shows that the establishment of the Shanghai facility was truly a major milestone for Chun Zu Machinery.
Operation Strategy: Machinery, Equipment, and Employees are the Core Values
Chairman Sun says that: “Machines, equipment, and employees are our important assets. Over time, the value of machines and equipment decreases, but the value of employees increases.” Chun Zu’s core values are “Customers, Dedication, and Innovation.” The practical embodiment of these values include: One. Enhancing the quality and technological superiority of machinery and equipment, decresing the amount of wear and tear of molds and wires, increasing competitiveness, and creating value and profits for customers; Two. Decreasing employee turnover, thereby facilitating the accumulation and passing-on of experience and technological knowhow.
Machinery and Equipment
Chun Zu allocates more than 30 R&D personnel to its fastener forming machinery plant, which can not only provide basic machinery and equipment models, but also support customers in the research and development of special customized equipment. Machinery types range from one-die-two-blow to six-station, and seven-station formers. In terms of product specifications, for bolts the maximum cut-off diameter is 41mm and the maximum cut-off length is 450mm; the maximum stroke for the main slider is 620mm, and the maximum forging load is 730 tons. For nuts, the maximum cut-off diameter is 48mm and the maximum cut-off length is 180mm; the maximum stroke for the main slider is 460mm, the maximum forging load is 1,000 tons, and the maximum production speed is over 400 finished products per minute.
Chun Zu Listens to Customer Needs and Provide Service from Technical Staff at the Customer’s Location
When customers purchase equipment, “performance” is always their key concern. In order to allow customers to even more effectively benefit from our products, Chun Zu provides technical service personnel (consists of R&D as well as technical troubleshooting personnel who are exceptionally experienced) on-site at customer locations. In order to earn the trust of customers, the company can sign NDAs with customers for on-site services, and special tools design.
Strict Quality Control Standard through Monitoring Production and Delivery Times
Chun Zu Machinery implements strict Total Quality Management (TQM) systems and promotes the Zero-Defect Movement. Chun Zu has been awarded the Superior Product Technololgy Award by the Ministry of Economic Affairs and accredited by ISO 9001. Chairman Sun insists that “although equipment production and delivery times vary, it is critical to control the duration from ordering to deliverly of mechanical equipment to within 6 months in order to ensure stable mechanical operations.”
Three Major Features of CBP-85S: Breakthrough in Structure, Automation, as well as Safety and Environmental Protection
The new CBP-85S product that is going to be introduced at the International Fastener Show in Tainan has excellent mechanical rigidity, which enhances stability during operation, decreases defect ratios and increases equipment durability. The CBP-85S includes customized mold technologies, forging force monitoring, dimension inspection, as well as devices that ensure product quality. It has a brand new outer casing structure, and its large operation space increases comfort and safety for the operator.
Employees
Decreasing employee turnover rate is helpful for the retention and passing-on of experience and technology. How should companies retain employees? “Pay! ” Chairman Sun says with a smile. This should be done through a healthly corporate structure and material incentives as follows:
Employee Stock Ownership Plans (ESOP) and the Gretai Project have Strong Motivating Effects
The employee stock options successfully stengthened employee loyalty during Chun Zu Macihnery’s establishment, resulting in its sales skyrocketing and its talents being retained. The successful Gretai Securities Market listing in 2012 also serves as a strong incentive for employee retention. Chun Zu’s successful Gretai Securites Market listing has brought about more transparent financial operations, healthier corporate policies, as well as: 1. A structure that allows for both long-term and short-term planning, 2. A boost in operational efficiency, 3. Even more channels for raising capital, 4. Flexible ways to use its captial, 5. Higher employee retention and better ability to attract talented workers, 6. A better corporate image, and 7. Better ability to attract potential customers, etc.
Fair and Just Performance Evaluation System
The employee performance evaluation system is an important part of Chun Zu’s corporate structure, and it aims to take into consideration the employee’s perspective. Bonuses are a form of award, yet an unfair awarding system that results in unfair or unjust evaluations could become couterproductive. In light of this, Chun Zu implements a three-level performance evaluation system to avoid any possiblity of unfair evaluations for personal gains.
Continuing Development for 2013 & Forecasted Breakthroughs in the South American Market Within the Next Six Months
Since establishment, Chun Zu had been selling all of its products to foreign countries. It was not until 1985 that it started to deploy its sales in Taiwan and opened for domestic sales. Currently, domestic sales account for around 30%, and foreign sales 70%.
Forecasting Market Trends Along Its Way
Chun Zu machinery has always been able to maintain an annual revenue level of about NT1.3~1.4 billion. Even in 2007, its worst season in history, its revenues were still around 1.1~1.2 billion NT. The next year (2008), its revenues were back to its usual level. The financial crisis of 2009 resulted in serious recession and although Chun Zu was affected, it quickly got back on its feet. Furthermore, from 2010 to 2011, it grew by 20%. In 2012, Chun Zu grew by another 3% and saw its revenues reach 2.0 billion NT. Chun Zu has clearly shown its ability for maintaining strong and steady growth.
In 2013, some developing countries enjoy active economic growth, but most economic powerhouses are still in a state of financial struggle. Therefore, the company cannot over-optimistically expect to surpass its 2012 revenue level, but conservatively aim to maintain the same level of growth from last year.
Looking at the global market, Chairman Sun believes that Europe will maintain its current growth levels while the United States and Japan are showing signs of recovery. Currently, the N-11 countries have become the new battleground for global fastener as well as peripheral product manufacturers. Countries such as Brazil, Mexico, and Argentina, etc. will be important markets to develop in 2013.
At the end of our interview, we came back to our core topic amid Chairman Sun’s hearty laughter. The key to success is the ability to provide product combinations that meet the different needs of different markets. For example, demand from developing markets are primarily for basic models, whereas for developed markets, the bulk of the demand comes from the need for high-end models. In summary, “Listneing to customer needs” is critical for success.
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