Infar Industrial Builds Success in Wrench Sector with Serious R&D

A few years ago, a Mexican buyer returned three defective wrenches to Infar Industrial Co., Ltd., thinking, albeit mistakenly, that the Taiwanese hand-tool maker was responsible for the problem. Living up to its "lifetime guarantee" policy, Infar did not hesitate to deliver three brand-new tools as replacement. "We found inconsistent specification numbers on the tools; but we still sent replacements to prove that we stand behind our guarantee," recalls Infar Chairman Ander Chen.

Founded in 1978, Infar was one of Taiwan's earliest entrants in the wrench sector. Today, the company ships most of its products, including typical wrenches, ratchet wrenches and sockets, to professional users like car mechanics, leaving only a minor proportion for do-it-yourselfers. Chen says that Hyundai Motor, South Korea's iconic carmaker, adopts Infar's wrenches as standard tools. "Infar is already the No.1 brand supplier of wrenches in South Korea, taking up some 50% of its wrench market," Chen claims. The company markets under the brands Infar and GearTech, which account for around 10% of its sales.

Infar has a globalized client base, with over 300 customers worldwide, including several big-name players.

Chen ascribes Infar's popularity in South Korea and other overseas markets to several advantages: "We have strong R&D and manufacturing capability, a long history, stringent quality control, punctual lead time, and efficient cost management."

Infar, according to Chen, is the first Taiwanese toolmaker to launch the 72-gear ratchet wrench. "We still hold many patents, including a mechanism enabling both clockwise and counterclockwise operation, and 10 unique devices for open-end ratchet wrenches. Also, our proprietary technologies significantly improve the precision and durability of the gears inside the wrenches," Chen says.

Conscientious R&D Program

Infar has a team of 12 specialists with an average six years of experience in operating CAD programs run the company's product research and development programs. Its laboratory, attached to the company's head office in Chunghwa in central Taiwan, is outfitted with advanced tools, including metal-image analyzer, torque analyzer, CNC machining centers and 3D graphics software. Such sizable investment in R&D has paid off: the durability its tools, Chen says, has been verified by SGS Taiwan, a branch of SGS Group of Switzerland.

Further proof of its R&D diligence lies in the fact that Infar holds some 60 patents registered in the United States and Europe. Each year the company budgets a sizable sum for patent applications and maintenance: "Last year alone we spent NT$8 million (about US$250,000 at US$1:NT$32) on both," Chen says.

Infar's R&D work is not exclusive to mechanical designs but also green concerns. Last year, the company introduced Taiwan's first wrench finished with trivalent chromium, a toxic-free metal developed to replace the poisonous hexavalent chromium. According to Chen, his company spent around six months on the toxic-free tool program after coming up with the ecological-tool idea around two years ago. "We have received orders from 10 customers despite the relatively higher prices of the green tools," Chen notes.

Green considerations aside, Infar's R&D program also focuses on factors such as lightweight, digitization, enhanced structure, and user-friendliness for women and elderly, Chen stresses.

Putting money where its mouth is, Infar motivates its employees to innovate: offering an appealing 15% of the profit from the sales generated by successful ideas as reward.

High Degree of Integration

The company has built a highly-integrated manufacturing capacity, enabling it to handle everything from forging to heat treatment and finishing, notably polishing and vibration electroplating. Also, the company offers packaging design service, and controls quality by "only outsourcing steel stock from CSC (China Steel Corp.)," Chen notes; while well-rounded manufacturing and R&D facilities enable the company to make virtually any tool ordered by buyers.

TPS (Toyota Production System) is introduced to manage the company's production at four in-house factories, which feature enhanced efficiency due to reduced waste, inconsistency, overload, lead-time and cost; while computerized enterprise resource planning (ERP) is used for product management, minimizing misplacement of workpieces during production or in inventory due to human error. The company runs three factories in Taiwan and one in mainland China.

Stringent QC

"Efficient production management and thorough quality control keep us shipping defect-free products. We haven't received any customer complaint for many years. I always tell my staff a QC oversight can cause major loss, incurring many times the cost of delivering a quality product," Chen stresses.

Also, efficient production allows Infar to assure customers of average 30-day lead-time. "Our buyers, most of whom are public companies, adopt the zero-inventory strategy to pare cost and tend to place urgent orders whenever their sales rocket," he adds.

Infar is also world-class in terms of quality standards, being ISO9001:2000, ISO9002 and TUV/GS approved, as well as meeting ANSI and DIN industrial standards as certified by TUV/GS. "Conforming to the JIS (Japanese Industrial Standard) is our next goal," Chen stresses.

Homing in on Japan

Having achieved considerable success in South Korea, Chen now zeroes in on the Japanese market, which is well-known for being "xenophobic" in a sense towards non-Japan-made products. "We aim to break into Japan this year, especially its southern prefectures of Kyushu and Shikoku," Chen says.

Chen believes that southern Japan is the home to Japan's heavy industries because of warmer temperatures than in northern Japan. "Accordingly, tool demands in the south is much bigger than in the north," he notes.

Like its strategy for South Korea, Chen's company will go to Japan with primarily professional tools. "I see that professional tools take up 75% of Japan's tool market, with DIY tools accounting for the remainder. That is a big difference relative to the European and the American markets, where DIY tools command 75% of the market stateside and 50% in Europe," says Chen, also the chairman of the wrench-industry committee of the Taiwan Hand Tool Manufacturers' Association. Infar ships 45% of its tools to Europe, 30% to the United States and 25% to Asia.

Chen says Japan has lost its competitiveness for its hand tools. "Today, steel costs are over 10% higher in Japan than in Taiwan; while a Japanese forging technician is paid about NT$130,000 (US$4,062) a month, compared with NT$40,000 (US$1,250) for a Taiwanese counterpart," he notes.

However, Chen says that Japan-made tools are still regarded the best in Japan, followed by ones from Taiwan, mainland China and India. "Taiwan is making headway. Although tools from mainland China and India are much cheaper than those from Taiwan, Japanese consumers now would buy Taiwan-made tools as the second option because our quality equals the Japanese but at better prices. Most of all, many Taiwanese manufacturers have added many innovative designs to products," he says.

Emerging Markets

Mainland China and Russia, Chen believes, are two emerging markets for professional tools because mainland Chinese and Russian workers are pickier about durability than their counterparts in the West, and likely due to necessity and their more modest environments. "The western pros usually own individual tool sets whereas their counterparts in mainland China and Russia share tools in many cases. So, tools used in mainland China and Russia, due to lack of incentive for proper care, wear out easier than in the West," he says.

Mainland China has dethroned Taiwan, since 2003, to take over the lead as the world's No.1 hand-tool exporter mostly for its low production costs. Chen believes the mainland China's competitive lead will narrow due to several factors, gradually turning the table in favor of Taiwan. "In 2000, I pictured two curves, one for mainland China and the other for Taiwan. The cost curve in mainland China will climb along with rising environmental-protection awareness, labor costs and renminbi value; while the curve in Taiwan will also rise but at a much slower rate. As the two curves near each other, mainland Chinese manufacturers will have to reconsider their position," Infar's chairman says.

Getting Ready

Preparing to cope with his projected scenario above, Chen has begun boosting the capacity at one of its Taiwan factories in case of swarming orders being diverted from the mainland to the island. In the meantime, Infar has been "actually adopting cost-cutting strategies over the past years, including opening a factory in mainland China put out low-end products, while, again offering tangible incentive, motivating the procurement staff to source quality but cheaper materials by rewarding 15% of any cost saved," he notes.

Infar Industrial Co., Ltd.

392, Sec. 6, Chang-Lu Road, Fushing, Chang-Hwa, Taiwan 506

Tel: 886-4-777-7671

Fax: 886-4-777-1971

E-mail:sales@infar.com.tw

http://www.infar.com.tw