Cosmo Machinery Moves Up Technological Ladder to Fend Off Emerging Rivals Leading bag-making machine

As globalization continues to take hold, established suppliers from developed economies seek to be more competitive by re-locating to emerging nations to cut cost-hence incurring inevitable technology transfers-which then upgrades the overall production quality, professionalism, and even helps to achieve economies of scale. The consequence tends to be that manufacturers and suppliers in emerging nations manage to stand up more effectively on their own. That spells intimidating news for, in this case, the makers and suppliers of bag making machinery in Taiwan. Again, the consensus in the industry is to build a wall of technology to keep out the lower-rung rivals, who generally have little option but to turn out relatively more rudimentary machinery.

Despite the increasingly intense competition from emerging players, Cosmo Machinery Co., a leading manufacturer of plastic bag making machine in Taiwan, has over the past five years, gradually taken steps to transform itself into a technology-based manufacturer via intensive investment in R&D. The company says it has been able to upgrade its know-how of machine software and hardware, with which to design customer-tailored machines to meet market needs from around the world.

The company Cosmo was founded 14 years ago as the Throne Machinery Co. Ltd. Due to the increasing market demand, it was restructured as Cosmo Machinery Co., Ltd. in 2000. At present, there are four categories of its product profile: (1) T-Shirt bag making machine; (2) Garbage bag (with core and without core) making machine; (3) Bottom-sealing bag making machine; and (4) Side-sealing bag making machine.

The company says 70% of its capacity handles self-developed plastic bag making machines, with the remainder turning out dyeing and finishing equipment and vacuum packaging machines on the OEM (original equipment manufacturer) basis. These machines can make bags made of OPP (oriented polypropylene), PP (polypropylene), HDPE (high-density polyethylene), LDPE (low-density PE) and PLA (polylactic acid) material. The company became CE-mark and ISO9001:2000 certified in 2006.

Dedication is the Key

Lu Li-Teng, general manager of Cosmo, says he has recognized that dedication to technology development will be a decisive factor for domestic manufacturers in this machinery field to stand out from the world arena. For instance, the company has adopted servo driven system in its products to develop state-of-the-art machines since its inception.

"Over the past few years, I have been traveling all around the world to look into the latest technological development and found that only producing well-designed machines can help Taiwan manufacturers evade mutually-destructive underselling when one tries to compete price-wise against developing nations, especially when the relatively high labor rates in Taiwan no longer allow labor-intense production," comments Lu. "It's easy for machinery manufacturers, especially those from mainland China and India, to move into the field to produce the conventional plastic bag making machines, but they have a long way to go before being able to develop fully automated, high-speed machines."

Servomotor-driven; PLC devices

Cosmo boasts all of its products are servomotor driven, rather than the conventional clutch brake, with Japan-made high-tier PLC (programmable logic control) devices that can boost production capacity with high speed, as well as operation steadiness and reliability. "In the past, we used domestically made PLC system but experienced a 30% defect rate; however, adopting Japan-made 'Omron-branded PLCs' a few years ago has helped us to lower such rate to only 1% to 2%," says Lu.

Lu says the quality of steadiness has won Cosmo high reputation from customers. "When designing machines, I always give first priority to customers' profitability, because I deeply believe it can help us secure continued inflow of orders and our growth should rely on customers' confidence," explains Lu.

Based on the specialization in controlling servomotor-driven system, Cosmo is capable of designing reliable plastic bag making machines with high stability.

To focus on the production of reliable products, the company has adopted a computerized graphic-drawing system with fully automatic production procedure. The company says it adopts a stringent inspection procedure in all production processes from design to fabrication and packaging.

Up to German Standards

Currently the company's plastic bag making machines have a capacity of 300 cycles per line per minute, which can compete with those made in Germany. The noteworthy is that, despite featuring German-like quality, the company's plastic bag making machines sell for much more competitive prices than those made in Germany.

The company says all of its machines are computer system controlled across the entire bag production process. The servomotor equipped in the machine serves as a standard attachment, which is user-friendly to adjust bag length and production speed. The machine will automatically stop when film feeding blocks or bags jam, and even when abnormal colors on bags are spotted scanned by the photo cell of the machines.

So far since its inception, the company has developed 16 models of plastic bag making machines in addition to six models of dyeing and finishing machines. To meet the requirements of the ever changing business arena, the company will speed up the pace of developing innovative products in the years to come.

The company says it has an in-house R&D team to sustain its fast development of innovative machines. With high capacity in integrating electric control systems into machines, the R&D team is capable of developing complex machines with strong performance to facilitate production of complicated plastic bags. "Of course, the development time depends on the complexity of the required machines," Lu explains. "Sometimes we have to spend nearly one year to complete the development of a reliable machine, which involves highly complicated design. Accordingly, we won't begin development work for the complicated machines unless customer place orders."

Backed by a dedicated in-house R&D team, Cosmo yearly introduces one to three new machine models. In 2008, the company will debut two new models, one is interleaf garbage bag making machine and the other is 3-line T-Shirt bag making machine. "We see a good market demands of these 2 machine models", says Lu.

Enhancing Marketing Clout

On top of placing extra emphasis on technological development, the company has also not neglected to hone its marketing prowess, a strategy generally agreed by savvy

business people to be equally important as offering technological innovation and ingenuity. After bringing onboard new customers from Eastern Europe by taking part in renowned international exhibitions such as the K Show held in Dusseldorf, Germany in October 2007, Lu has been convinced of the importance of enhancing marketing strength, hence resolving to strengthen after-sale services so that global customers may be served promptly and professionally. The company claims that five new customers met at the Dusseldorf K Show have already placed orders and are impressed by its machine design and quality.

"Our products have been distributed to more than 60 nations worldwide, but I believe there are still plenty of opportunities to be found in emerging markets," Lu says. "Besides, I believe good products should be promoted with the backup of a strong marketing team. At present, we have marketing specialists with different language capabilities, such as Turkish, Spanish, German, and English. This language diversity has made our team truly cosmopolitan and be able to communicate with customers from the Middle East and Europe. In the year to come, we are going to recruit two more marketing specialists to further drive our business development in emerging markets."

The company says it has set up overseas sales agencies in 10 nations to distribute its machines. "In the beginning of our establishment, we only focused on the development of T-Shirt bag making machines" explains Lu. "Over the past five years we started to work on other types of bag making machines, including those of interleaf garbage bag making machine and 3-line T-Shirt bag making machine. Having developed upscale models with higher margins has enabled us to easily establish overseas sales agencies; while we aim to further expand marketing networks in the future."

Believing that diversifying his customer base will help to assure sustainable growth in sales, Lu has set a goal to secure at least 10 new customers every year.

Economies of Sacle Creates More Profit

Thanks to the introduction of new types of machines and the enhancement in marketing strategy, Cosmo saw sales grow 30% year-on-year in 2006. But affected by the rise in the prices for such materials as iron and steel plates, the company saw a flat performance in its revenue in 2007, despite a 10% annualized growth in sales volume. "Although the prices for raw materials have been raised up intensively, we still keep the original price tag for customers to help them stay competitive. To help our customers stay competitive is to help us competitive.

Lu says the only way to stay competitive is to step up the pace of developing innovative products with strong performance. "Developing innovative products will not only help us secure our brand name in the global marketplace but also drive us to the top of the pyramid in this fieled," Lu states.

To realize the capacity to effectively meet the special requirements of new customers, Cosmo has mapped out a plan to move to a new production site, possibly near the present one. If the plant-relocation plan is materialized in the foreseeable future, the company will be able to streamline as well as boost production capacity effectively.

COSMO Machinery Co., Ltd.

No. 1-20, Alley 110, Lane 181, Sec. 3, Chia Yuan Rd., Shu-Lin City, Taipei Hsien, Taiwan

Tel:886-2-2680-6116, 2668-5886, 2668-4948

Fax:886-2-2680-6118

E-mail:cosmo886@ms64.hinet.net

http://www.cosmo886.com.tw