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Conflict between China and Taiwan: Tornos is in the middle

Tornos, a company with a long tradition, also produces its machine tools in Taiwan and China. It is ready to tear down the tents at both locations if necessary. The company recently opened a plant in Poland.

Michael Hauser has been the CEO of Tornos since 2011.

Gaetan Bally / Keystone

The machine manufacturer Tornos is based in the tranquil town of Moutier, but it also has production facilities in Taiwan, China and recently in Poland. The traditional company with a good 660 employees (calculated on a full-time basis) is more directly exposed to the currently most severe geopolitical upheavals than almost any other SME in Switzerland.

Ukrainian employees

In Taiwan, where almost 100 people are employed, the company is concerned about the conflict with China. The location in Poland feels the effects of the war between Russia and Ukraine, not only because some of the 40 employees there come from the Ukraine and have to worry about the well-being of their relatives at home on a daily basis. The plant also works closely with Eastern European suppliers, who until now have often maintained close relationships with Ukrainian and Russian business partners.

As for his employees in Taiwan, Tornos CEO Michael Hauser has the impression that despite everything, they “are not that concerned”. He attributes this to the fact that in the end it is business that counts and China will be careful not to destroy the industrial base on the island. “Even if China completely dominated Taiwan,” he adds.

Production expansion in Taiwan

In Taiwan as well as in China, Tornos produces machine tools that are cheaper than the high-performance systems from the main plant in Moutier. In the first half of this year, Tornos saw a significant increase in demand in the lower price segment. The company, whose main shareholder with a stake of around 48 percent is still the industrialist Walter Fust, is also expanding its location in Taiwan. Construction work has begun on a new manufacturing facility, the decision to do so well ahead of the recent sharp deterioration in sentiment between China and Taiwan.

According to Hauser, the investment volume is in the tens of millions. The head of the company considers the large and dense network of local suppliers to be a major advantage in Taiwan. In some cases, suppliers would install their components themselves in the Tornos machines, i.e. take over parts of the assembly. That, he says, is seldom the case elsewhere. In Taiwan, there is therefore no need to set up large structures in production, which helps to save costs.

Chinese lockdowns strain

In China, where Tornos has about the same number of employees as in Taiwan, the pandemic caused severe restrictions in production, sales and service in the first half of the year. Production stood still for a month. In addition, service technicians and other employees were forced to stay at home for weeks due to the government’s lockdown measures, especially in the Shanghai area.

Hauser, like other international business people, is still not allowed to travel to China. The experienced manager, who has been in charge of Tornos for almost 11 years, is happy that the company “can still move freely”. In the event that, contrary to expectations, this should no longer be the case one day, the company has made provisions. “We are also agile and flexible with regard to geopolitical risks, as an SME we can’t help it,” says Hauser.

In an emergency, the CEO is convinced that Tornos could quickly tear down the tents in both China and Taiwan and rebuild them elsewhere, for example in Thailand. “We don’t employ thousands at both locations, but only several dozen people.”

Persistent problems with suppliers

Tornos sales recovered in the second half of the year by a further 11 percent to CHF 94 million. In the past year as a whole, the increase was almost two-thirds to CHF 171 million. At the same time, the company had managed to return significantly to profitability after its business had been severely affected in the first year of the pandemic, 2020.

Tornos sees itself well positioned for the second half of the year with a “considerable” order backlog of CHF 63 million. Nevertheless, the company boss cannot be persuaded to make a concrete sales forecast even in the conversation. Hauser refers to the ongoing uncertainties in the supply chains. He still doesn’t know whether the required components will arrive on time and in the required quality. The problems begin with such trivial products as plugs and cables.

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