Chapter 10 : Manufacturing

        Some of the products from the primary sector of industry, which includes agriculture (including forestry, fishing, and livestock farming) and mining, can be used directly. Others need to be processed or manufactured first. The transformation of raw materials into finished goods or products is called manufacturing.

When choosing an appropriate location to build a factory, the following should be taken into consideration: sources of raw materials, power and labor, distance to market, transportation, land, technology and government policy.

 

Taiwan's Manufacturing Revolutions.

        Manufacturing in early Taiwan was mainly processing agriculture and forestry products. Taiwan’s manufacturing kept changing under the Japanese and after the war. In the 1960s, food processing, textiles, and electronics assembly were the main forms of manufacturing. In the 1980s, electronics and information technology, chemicals, and heavy machinery were dominant.

       These transformations show that early on Taiwan manufacturing was mainly labor intensive, low-capital and low-technology, and that starting in the late 1970s technology- and capital-intensive industries started to dominate.

 

Features of Manufacturing Development

        With the intelligence and effort of the Taiwanese people, there was rapid manufacturing development after the Second World War. Below are the principal features of this development:

 

1. Manufacturing drives economic development

        Manufacturing creates a lot of job opportunities and provides income to many families. Manufactured goods not only supply domestic demand but are also exported. Exports bring foreign exchange—foreign money—into Taiwan. Clearly, industry is a big part of our current prosperity.

 

2. Factories tend to cluster               

Northern Taiwan is only one-fifth of the land of Taiwan. However, over two-fifths of the factories and workers of Taiwan are located here. Obviously, the distribution of factories and population is disproportionate. Generally, factories in the same industry tend to cluster together in the same area. This happens because individual industries require locations with specific conditions for their factories. Examples of this clustering effect are that the information technology industry is mainly located in Taipei County, Taoyuan County, and Hsinchu City; the petrochemical industry and iron and steel industry are mainly in Kaohsiung City and Kaohsiung County; and most food processing plants are in Taipei City, Kaohsiung City and their suburbs.

 

3. Overseas relocation of manufacturing

        In recent years, economic growth has made Taiwan richer and more expensive to live in. The cost of labor has gone up: it costs employers more money to hire employees. As a result, many labor-intensive industries, such as shoemaking and textiles, have moved to southeast Asia or other countries where the cost of labor is low. What remains in Taiwan is design, marketing and planning. In order to expand markets, some companies have invested overseas by setting up factories in foreign locations such as China. Increasing overseas investment indicate that Taiwan industry is gradually expanding internationally.

 

Industrial Parks

        The development of secondary industry in Taiwan has been rapid. Industrial parks have multiplied. According to the Industrial Development Bureau, by the end of 1995, there were already eighty industrial parks, and another eight parks under development.

        The industrial parks of Taiwan can be divided into urban and rural. Urban industrial parks, such as the Kaohsiung Linhai Industrial Park and Dawulun Industrial Park in Keelung City, have the following advantages:

        1. Close to markets.

        2. Close to where workers live.

        3. Convenient transportation.

Setting up urban industrial parks keeps residential and industrial areas separate. For urban dwellers, industrial parks keep pollution away from residential areas.

        Rural industrial parks, by contrast, have the following benefits:

        1. Increasing rural job opportunities and lowering urban migration. Puzih Industrial Park of Chiayi County is a good example.

        2. Lowering cost in acquiring factory land. The Yunlin Offshore Basic Industrial Estate is an example.