The southern Taiwan city of Kaohsiung is securing its status as a world leader in yacht manufacturing.

In March last year, an inordinate number of luxury yachts could be seen in the waters of the Port of Kaohsiung in southern Taiwan. They were there as part of the four-day Taiwan International Boat Show, one of the biggest events of its kind in Asia, organized by the semiofficial Taiwan External Trade Development Council (TAITRA). The yachts on display were made by major shipbuilders including locally headquartered Alexander Marine Co., Global Yacht Builders Co., Horizon Yachts Co. and Kha Shing Enterprise Co., as well as companies from nations such as Germany, Italy, Sweden, the U.K. and the U.S. Kaohsiung is home to 22 of the 36 pleasure boat-makers in Taiwan and accounts for more than 80 percent of the local industry’s total output, according to the Taiwan Yacht Industry Association (TYIA).

Formerly part of the Kaohsiung-based Taiwan Shipbuilding Association, the TYIA comprises around 70 yacht builders and parts suppliers around the country, as well as the government-supported Ship and Ocean Industries R&D Center (SOIC) based in New Taipei City. The association became an independent group in 1983 due to members’ desire to differentiate themselves from those in the traditional shipbuilding industry. According to George Chang (張學樵), who heads the TYIA’s secretariat in Taipei City, the organization primarily focuses on developing new technologies and expanding overseas markets.
 

 

A Rising Tide

The 2016 Global Order Book released by ShowBoats International magazine ranked Taiwan the world’s fourth largest producer of megayachts—leisure craft measuring 24 meters and above in length—behind Italy, the Netherlands and Turkey. The publication cited 74 new building projects underway in Taiwan. This record ranking, up two places from 2015, highlights the local yacht industry’s growing international appeal, Chang noted.

The vessels and products made by Taiwan’s leisure shipbuilders are for the most part purchased by foreign buyers, said Kha Shing General Manager Howard Gung (龔俊豪), who doubles as TYIA chairman. Like other major domestic constructors of motor yachts, Kha Shing focuses on making vessels ranging from roughly 24 to 37 meters in length on the original equipment manufacturing model. It also maintains its own Monte Fino brand. “Building for foreign companies or filling custom orders secures stable profits,” Gung said, “while homegrown brand names add to our competitiveness.”

Though the number of products sold has seen ups and downs over the past three decades, the average price per boat has risen steadily, from around US$88,600 in 1986 to US$1.65 million in 2016, according to SOIC statistics. Last year, approximately 110 locally made yachts were exported with a production value of nearly US$180 million, up from US$144.6 million for roughly the same number of vessels in 2010.
 

 

Thomas Chen (陳明忠‬), head of the SOIC’s Yacht Industrial Department, said local builders have endeavored to add value to their products by shifting from smaller, inexpensive craft toward larger, high-end varieties. This move helped them survive a major industrial downturn during the late 1980s and early 1990s caused by such factors as rising labor costs and appreciation of the New Taiwan dollar.

Charting New Waters

Taiwan’s yacht industry dates back to the 1960s. At that time, several wooden boat-makers located near the Tamsui River in northwestern Taiwan started building small yachts for U.S. military personnel stationed on the island. “Wood eventually gave way to fiber-reinforced plastics,” Chen said. “By the mid-1980s, the industry was exporting more than 1,500 yachts a year.” Around this time, many yacht manufacturers began emerging in the south near the Port of Kaohsiung, which has a drier climate more conducive to shipbuilding than can be found in northern Taiwan.

Kha Shing, formerly a timber supplier to fishing vessel-makers, began building yachts in 1977 at Kaohsiung Linhai Industrial Park. Over the next 10 years, the company exported up to 94 boats annually and helped cement Taiwan’s position as a leading manufacturer of yachts in Asia.
 

 

In 1987, some of Kha Shing’s owners and managers founded a separate company, Horizon Yachts, in the same industrial park. While Kha Shing and many other local yacht builders focus on the U.S. market, which receives more than 70 percent of the local industry’s exports, Horizon primarily sells vessels to clients in Asia, Europe and Australia. According to TYIA, Horizon’s strategy has paid off, with the company now owning three firms that construct yachts of different sizes, as well as one that specializes in making hulls.

Assembling an Industry

Many of the yachts built by Horizon, Kha Shing and other TYIA members are equipped with components and accessories made by companies within the Kaohsiung boatbuilding cluster. One such supplier is Man Ship Machinery and Hardware Co., established in 1982 at the Linhai park. The company manufactures marine chandlery items including aluminum boat windows, stainless steel portholes and deck hatches.

Other area suppliers, such as Aritex Products Co., Hung Shen Propeller Co. and ZF Faster Propulsion System Co., also cater to the needs of domestic and international yacht-makers and are known for their technical competence and ability to create customized accessories and hardware. “Ships moving on the open sea are subject to harsh conditions and require components that can stand the test of time,” said Ching Huang (黃景靖), general manager at Man Ship Machinery and Hardware.

Building an oceangoing vessel is a complicated process involving myriad parts that must be precisely assembled by skilled professionals. “Electricians, engine specialists, carpenters and painters, among others, must cooperate to produce a great boat,” according to TYIA’s Chang. This is where Taiwan has a competitive edge, he said, as it possesses an extensive supply chain, firmly established industrial infrastructure and highly trained workforce.
 

 

With regard to interior design and decor, yachts are greatly dependent on carpentry, the SOIC’s Chen noted. “The furniture and appointments of pleasure craft aren’t like those for buildings. They have to be meticulously made to fit precisely in confined spaces and remain stable when on the water.”

As a rule, yacht furnishings are made on-site at shipyards. This means carpenters often labor within cramped, stuffy spaces for extended periods of time. In a bid to improve these conditions, the SOIC has proposed that shipbuilders and furniture business operators cooperate on a new model of working separately in their own facilities before the latter send finished items to be installed on vessels. This process, which Chen noted is used for many shipbuilding projects in Western countries, is made possible through digitally linked manufacturing platforms and computer numerical control turning centers, automated lathes that quickly churn out preprogrammed objects. Such automation and mechanization technologies will soon play a significant role in the making of Kha Shing yachts, Gung said.

Blue Skies Ahead

Kaohsiung’s pleasure boat industry cluster is robust and continuing to grow, thanks in part to assistance provided by various government agencies. For instance, besides technical support from the SOIC, the industry has benefited from port crane facilities constructed by the local government in 2010 exclusively for yachts. Gung said that in the past, local companies had to share such facilities with firms focused on making cargo and commercial transport craft. In addition, his and other companies have benefited from adjustments to the central government’s maritime policies.

 

Since the end of martial law in 1987, restrictions on coastal activities and access to the sea have gradually been reduced. For instance, revisions to the Law of Ships as well as Regulations on Port Services at Commercial Ports have greatly streamlined application procedures for people wishing to take their vessels out to sea with no intention of making port in another nation. Also, local governments and the Fisheries Agency under the Cabinet-level Council of Agriculture are currently constructing marinas and yacht moorings at fishing harbors around Taiwan. This is significantly contributing to domestic yacht development and operations, Chang said.

Taiwan is increasingly focusing on the potential of its lengthy coastlines and benefits of a strong shipbuilding and yacht-making industry, TYIA’s Gung noted. He hopes the popularity of pleasure boats continues to grow so that more people can experience Taiwan’s excellence as a manufacturer of marine craft.