Sunday, 9 February 2014
Automotive ecosystem plays vital role
THE early Malaysian industrial master plan was comprehensive, where projects were implemented within the realm of an industrialization ecosystem familiar to all industrialized countries.
Upstream projects such as Perwaja Steel and many petrochemical establishments in the east coast were to cater for the raw materials needs of the middle stream and downstream industrial activities.
The success of the automotive industry then has given the nation hope for the supporting upstream and the middle stream industries such as large foundries, forgers, large molds and diemakers and sheet metal producing mills to develop.
The development of these supporting upstream and middle stream sectors of the industrialization ecosystem are important for Malaysia to venture into other downstream industrial endeavors such as shipbuilding, aerospace and military hardware, and thus move the nation towards an industrialized country status.
Thirty years have passed and some unfavorable episodes, currency crisis for one, have led to the fizzling of the Malaysian industrialization ecosystem. Perwaja now remains as a major construction steel producer with little engineering steel being produced, while the middle stream industries have virtually retarded the industrial linkages needed for Malaysia's industrialization process.
In cognizance of the broken supportive linkages within the Malaysian industrial scenario, the NAP 2014 has re-examined alternatives available to remain productive and competitive within the automotive ecosystem.
Special focus is given by the NAP 2014 on crucial supportive sectors outside the automotive ecosystem, especially middle stream activities.
These engineering activities are crucial to the automotive industry and should these inputs continue to be imported, local parts and components will be rendered less competitive cost-wise.
The automotive ecosystem comprises original equipment manufacturers (OEMs) as the key players contributing towards producing end products for the market. The OEMs lead design activities by conceptualizing and visualizing new vehicle models as well as finalizing vehicle specifications.
It is customary that the OEMs themselves are involved in producing the body panels within their own establishments where they would have total control over production. In so doing, support for huge press dies fabrications and supply of steels sheet are crucial, while jigs and fixtures, automation and robotics are hardware needed in the assembly lines.
Continuous importation of these middle stream inputs will prove to be unfavorable, especially towards cost-reduction exercises.
Engine and transmission assembly are also the main activities in most of the OEMs, primarily due to design ownership of the power train. Except for special reasons, engine assemblies are contracted out to engine-manufacturing specialists.
The vendor community within the automotive ecosystem, in turn, supports the parts and components requirements by the OEMs, and are generally involved in the design and development of the parts and components, meeting the specifications stipulated by OEMs.
Fundamentally, the vendors are divided into four groups: Body and interior, power train, electrical and electronics and miscellaneous parts and components suppliers.
Flooring and insulation, interior fittings, dashboard and accessories, seats and upholstery are examples supplied by body and interior vendors. Power train vendors, on the other hand, supply engine components and parts, braking systems, exhaust systems, cooling systems, fuel systems, suspension and steering systems and transmission systems. Wire harness, battery, gauges and meters, ignition systems, lighting and signalling gadgets, sensors, charging systems and switches are supplied by the electrical and electronics group of vendors.
Parts such as wheels and tires, airbag modules, alarm systems, central locking systems, engine computerized management and control systems and assisted braking systems are supplied by the miscellaneous category of vendors.
Automotive manufacturing management now demands that vendors reorganize following the tier supply concept.
A typical example is a dashboard manufacturer. While the vendor itself is the dashboard manufacturer, at the end of its production line all the other "child parts" such as metering instruments, electronic gadgets, ventilation ducting, entertainment gadgets, etc, are assembled into the dashboards prior to dispatching to the OEMs.
The dashboard manufacturer is now classified as Tier 1 vendor while the components suppliers are in the Tier 2 and Tier 3 categories.
Once the vehicles enter the market place, the aftermarket community within the automotive ecosystem supports the vehicles' operations, providing safe and convenient mobility.
The automotive ecosystem is also supported by external organisations such financial institutions, insurance agencies, testing centers, engineering establishments and R&D organisations operating independently or in affiliation with OEMs, vendors and the aftermarket community.
Successful implementation of the NAP 2014 will enhance the competitiveness and business volume of the entire automotive ecosystem and indirectly encourage the advancement of middle stream industries, and perhaps upstream activities too, which are needed to further push the country's industrialization.