Thursday, 31 December 2015

Expect more competitive environment as new investments set in


Malaysia's automotive sector is set for an exciting 2016, after a stable performance this year. Although the appreciation of the US dollar against the ringgit resulted in consumers being more cautious in their car purchases, it is interesting to note that the Goods and Services Tax impacted the industry somewhat positively, as oiginal equipment manufacturers (OEMs) either reduced or maintained their prices from April onwards.
The automotive industry is expected to see a more competitive environment next year as new investments under the National Automotive Policy 2014 (NAP) set in, resulting in not just a higher production volume but also added-value to the automotive workforce, business owners, technology developers as well as the consumer.
Employment Opportunities and Career Enhancement in the Automotive Sector
The Malaysian Automotive Human Capital Development Roadmap (MAHCR) will further meet the ever-growing demands of the Malaysian automotive industry, which is constantly evolving in product complexity and process efficiency.
The roadmap focuses on two paths – meeting the immediate needs of the automotive industry and preparing for the future requirements of the industry. The manufacturing and after-sales sectors require a skilled workforce capable of product and process design, with quality cost and delivery in mind.
As of this year, Malaysia Automotive Institute (MAI) Human Capital Development programmes have created 14,319 new jobs through numerous efforts, such as Automotive Industry Certified Engineer (AICE), Industry Led Professional Certificate (IPC) and Apprenticeship programs. When combined with direct recruitment by the industry, the total of new jobs created is estimated at 23,000.
MAI has formulated a plan to create 25,000 new jobs in the automotive sector under the 2016 Budget.
The plan also comprises training for 10,000 existing workers, enhancing the competitiveness of more than 100 local vendors, upgrading 2,500 existing workshops and developing new entrepreneurs in sales, distribution, services, repair, manufacturing, remanufacturing and recycling.
The plan is in line with the NAP's core thrusts, including creating new jobs and entrepreneurs, career enhancement and improving existing businesses.
Creativity and Innovation requires Conducive and Collaborative Engineering infrastructure
As the NAP 2014’s 2020 target looms closer, it is important that the industry’s technological edge is strengthened in the key areas of engineering design, prototyping, product validation and process development.
The global automotive ecosystem has created the need for shorter and cost-effective product development cycles, and our local industry is not spared from the need to cope with this trend in order to remain competitive.
As technology acquisition is a challenge for the local community, MAI has embarked on the implementation of the MAI Intelligent Technology Solution (MITS). MITS is an ambitious project that will comprise an integrated technology solution for both the manufacturing and after-sales sectors, from product conceptualisation to vehicle after-sales support.
In the area of product and process development, the Design Engineering and Prototyping (DEP) programme will provide a platform through shared facilities of software and hardware to utilise the entire automotive community’s expertise in design and analysis. DEP has so far benefitted more than 100 parts and components manufacturers (vendors) and vehicle manufacturers like Perodua, Proton, GoAuto and others.

The after-sales sector will receive a technological boost through the implementation of two after-sales solutions, plugged into the MITS system.
These two solutions, namely MAI Garage Information System (MAGIS) and CarBengkel, will provide service centres, spare parts distributors and consumers with a single interface to meet their after-sales needs.
As we approach the age of Internet of Things (IoT) and Big Data, MITS will serve as a productive and cost-effective solution for OEMs and vendors to enhance the value creation process of the local automotive industry.

Thursday, 24 December 2015

Skills development ensures industry's competitiveness


Low oil price, USA interest rate issues and China recent lower growth rate have impacted the global economy for 2015 and the scenario seem to be continuing into 2016.
The current demand by the British government for the European Union (EU) to reform with a threat of the country resorting a referendum to leave the EU should the Union fail to adhere to proposed reform. The referendum may affect European economyand this may further impacted the global economy should the referendum proceeds next year and in favour British withdrawal from the EU.
While economic recovery seems promising in the USA, economic uncertainties in the other global economic influential nations such as China and the UK may prolong the global economic stagnation come 2016.
Although Malaysia is foreseen to be able to at least maintain its growth, the possible gloomy global economic scenario next year will in one way or another affect the nation’s economic performance.
Manufacturing sector, particularly automotive, may face a greater challenge should economic sluggishness took its shape in 2016. In this respect most advance countries will take a proactive initiatives to enhance the competitiveness of their industries in preparation for the forthcoming economic recovery.
The government recent RMK 11 announcement has given a higher emphasis on human capital development in the next five years plan is a move in the right direction. An allocation of RM1 billion in the next five years for the Skill Development Fund will enable the incoming younger workforce to receive skills and vocational education.
Malaysia Automotive Institute (MAI) has been active in providing bridging training programmes for newly graduated younger workforce to prepare them to enter the automotive sector. Programmes such as; “Automotive Industry Certification Engineering (AICE)” for university graduates, “Automotive Industry Graduate Apprenticeship” for university new intakes, and Industry Led Professional Certificate (IPC) skill training institutions graduates, are constantly pursued.
While Human capital Development initiatives are being intensified, automotive vendors quality enhancement programme were also implemented and will be continued into 2016.
“Automotive Supplier Excellence Programme (ASEP) is one of those programmes implemented to provide a structured framework for on-going improvement of the local vendors. The programme benchmarks the local vendors against one another and the best-in-class international companies in order to establish their respective level of competitiveness.
Another quality assurance management programme that have been aggressively implemented by the local vendors is the “Lean Production System (LPS)” to inculcate work cultures amongst vendors acceptable to the OEMs.
The concept of “interchangeability” of mating parts in components assembly developed in 1913 marked the beginning of mass production of automobile by Ford in the USA. The assembly and parts manufacturing has since evolved and various quality systems and practices were developed and introduced on the production line.
Toyota on the other hand introduced the “Toyota Production System” in 1930 to ensure its quality production is sustainable and has since became the leading lean exemplar in the world of automotive quality manufacturing.
Since 2011 MAI has help to develop the LPS practices amongst the local automotive industries and to date some 108 companies are now practicing LPS diligently to ensure their quality outputs.
Intensification of the LPS practices and LPS skill development amongst automotive workforce is crucial to further enhance the industry competitiveness. Further the concept of LPS must be introduce at the early stage of learning amongst the forthcoming automotive workers.
In this respect, while the nation economic uncertainty may prolonged into 2016 and beyond, aggressive training and education in the concept of LPS should be the focus by the automotive community in preparation for the forthcoming economic recovery.

Thursday, 17 December 2015

Automotive industry likely to see holistic growth this year


Malaysia's automotive sector is set to be an exciting year in 2016, after a stable performance in 2015. Although the appreciation of the USD resulted in consumers being more cautious in their car purchases, it is interesting that the GST implementation impacted the industry somewhat positively, as OEMs either reduced or maintained their prices from April onwards.
The automotive industry is expected to see a more competitive environment next year, as new investments under the NAP 2014 set in, resulting in not just a higher production volume, but added local value to the automotive workforce, business owners, technology developers as well as the consumer.
Employment Opportunities and Career Enhancement in the Automotive Sector
The Malaysian Automotive Human Capital Development Roadmap (MAHCR) will further meet the ever growing demands of the Malaysian automotive industry, which is constantly evolving in product complexity and process efficiency.
MAI has formulated a plan to create 25,000 new jobs in the automotive sector under the Budget 2016.
The plan also comprises training for 10,000 existing workers, enhancing the competitiveness of over 100 local vendors, upgrading 2,500 existing workshops, and developing new entrepreneurs in sales, distribution, services, repair, manufacturing, remanufacturing and recycling.
Creativity & Innovation requires Conducive and Collaborative Engineering infrastructure
As the NAP 2014’s year 2020 target looms closer, it is important that the industry’s technological edge is strengthened, in the key areas of engineering design, prototyping, product validation and process development.
MAI has embarked to implement the MAI Intelligent Technology Solution (MITS) to boost the capabilities of local vendors. This is an ambitious project that will comprise an integrated technology solution for both the manufacturing and after sales sector, from product conceptualization to vehicle aftersales support.
MITS will boost local product and process development through the Design Engineering & Prototyping (DEP) program, a collaborative platform that utilizes the automotive community’s expertise in design and analysis.
The after sales sector will be enhanced through the MAI Garage Information System (MAGIS) and CarBengkel applications. This will provide service centres, spare part distributors and consumers with a single interface to meet their after sales needs.
Bringing EEV awareness directly to consumers - Bigger role for MAI at Asean Autoshow
MAI has been involved in the ASEAN Autoshow (previously known as the NST Autoshow) since 2013, and we aim to elevate the quality and excitement of the autoshow by bringing in future trends, technologies and models, with a special focus on Energy Efficient Vehicles (EEV).
This will allow the local automotive community to gain direct exposure to the global automotive ecosystem on an annual basis.
Is now the best time to consider buying a car?
Since the NAP 2014 was announced, the automotive industry has seen an unprecedented level of consumer choices in car purchases. The industry saw an accumulated average reduction in car prices of 16 percent by the end of last year.
Although the momentum of this price reduction was impacted recently due the appreciation of the US Dollar, it is undeniable that the environment of car sales has changed to the benefit of the consumer.
We have seen competition among car makers through the numerous promotions given to the consumers in last year and this year, we expect next year to be no different.
Despite possible price hikes next year, the government does not control car prices, and carmakers are free to raise or reduce their prices to fit their business plans.
Nevertheless, consumers should not base their purchasing decision only upon speculation, but rather on the need for a new car.
It is best to also weigh in the indirect losses incurred from delaying their purchases, such as maintenance of their old car and used car depreciation.
They should also take advantage of promotions available in the current time period.
2016 – what can we expect?
The Total Industry Volume (TIV) for this year is expected to reach between 640,000 to 660,000 units by the end of this month. This indicates that the industry has managed to remain stable despite the challenging global economic climate.

It is important to note that the Total Production Volume (TPV) has shown a significant October year-to-date performance from last year.
TPV, which measures industry performance in terms of units produced domestically (TIV is a measurement of domestic sales) is an important measurement of domestic value added to the industry.

As mentioned, there has been much traction from local players to strengthen their in-house capabilities in product design, manufacturing and after sales. At the same time, we are pleased to report that a few OEMs are expected to begin their export programmes next year.
These export initiatives are expected to boost domestic production next year. MAI’s forecast for next year is a TIV of 680,000 to 700,000 and a TPV of 600,000 to 620,000.

Thursday, 10 December 2015

ASEP helps vendors maximise global competitiveness


Automotive parts and components manufacturers compete on a set of criteria to the satisfaction of their customers and some of the more critical ones are; cost or selling price, quality, logistic, responsive and R&D capabilities.
Quality and logistics are important criteria for most OEMs when assessing their vendors. Evaluation of quality will be much dependent on the quality systems, such as ISO/TS16949, being adopted. In addition the capability of a vendor in terms of quality is often assessed on the amount of rejects attained on delivery and the amount of rework undertaken within a defined volume produced.
Although the quantum of rejects and rework may vary from process to process, a world class vendors are considered to be in the order of 200 parts-per-million (ppm) in their rejects on delivery and 1.2 per cents parts are reworked. Quantity of rejects prior to delivery, or scrap, has also been taken into account to reflect the capability of the vendors.
R&D capability provides a clear indication of the personnel intellectual capacity within the vendor’s manpower structure which renders high confidence in the OEMs to procure their required parts from the vendor.
Above all the true benchmark adopted by most OEMs in selecting their suppliers is cost, and the cost competition is severe in any procurement exercises.
To enter the regional or global supply chain, it is necessary for the local vendors to ascertain their level of competitiveness through a benchmarking exercise against world class manufacturers. In this respect Malaysia Automotive Institute has taken the initiative to implement a programme known as “Automotive Supplier Excellence Programme”, or ASEP.
The Programme aims to assist the Malaysian automotive supply base to establish their levels of competitiveness through an established competency assessment framework. Thereon prioritised series of improvement projects are planned and implemented to raise the vendors’ capability to a globally competitive standard.
These aims are pursued through a three-stage process to ensure the use of limited resources in achieving maximum benefit for the vendors.
Stage 1 of the programme is to define the vendors’ performance criteria and was approached through a combination of surveys and workshops. It was determined that the benchmarking exercise shall examine 11 competency areas of the vendors, namely; management and Leadership, financial systems and practices, cost structures and analysis tools, global sourcing and marketing strategies, supply chain Integration, customer focus, new model introduction capability, manufacturing and quality, safety, technology investment, and people and performance.
Measuring of the vendors’ performance, based on the above performance criteria is carried out in stage 2 to determine their current performance levels and particularly where the gaps were in relation to global best practice.

Thursday, 3 December 2015

Competitiveness is key to survival in AEC, TPPA


Economic liberalisation and regionalisation of the ASEAN region through the formation of “ASEAN Economic Community (AEC)” is forthcoming upon the recent adoption of the “AEC Blueprint 2025” by the ASEAN Leaders at the 27th ASEAN Summit on 22 November 2015 in Kuala Lumpur.
The blueprint provides broad directions through strategic measures for the AEC from 2016 to 2025.
AEC will create a vibrant and competitive single market with over 622 million people having a GDP in excess of USD2.6trillion, thus transforming the region with free movement of goods, services, investment, skilled labour, and freer flow of capital. The pack shall become the third largest economic blockin Asia and the seventh largest in the world.
On the other hand Trans-Pacific Partnership Agreement TPPA,which is expected to come into effect in next few years years, will further liberalise the participating countries into the global economic sphere with bigger spectrum of market opportunities.
The TPPA negotiations that began in 2010 took five years to conclude in October 2015 and now awaiting for domestic approvals by various participating countries prior to its implementation.
TPPA, accounts for some 40 per cent of the global GDP, aims at providing market access opportunities for its member countries to improve their respective competitive advantage and thereby enhancing their competitiveness in many aspects of trades and productions.
While both the AEC and TPP promise better regional and global market opportunities and accessibilities respectively, market penetration by respective business entities will largely be dependent on the ability of the individual company to exploit the market potential.
In this respect competitiveness of the companies is key to successful exploitation of the business and market potentials promised by both economic agendas. Competitiveness in this sense is the ability of the companies to produce to the required volume with prompt delivery at lower cost while maintaining the best quality as required.
All agendas postulated by the National Automotive Policy, NAP 2014, launched early last year were centred at enhancing the competitiveness of the local automotive players in anticipation of the forthcoming economic liberalisation and regionalisation prescribed earlier.
Programmes designed and implemented thereon were guided by the NAP focusing on competitive enhancement on various aspects of automotive endeavours.
Automotive Supplier Excellence Programme, or ASEP, is one of those programmes implemented by the Malaysia automotive Institute (MAI) to provide a structured framework for on-going improvement of the local vendors.
The programme benchmarks the local vendors against one another and the best-in-class international companies in order to establish their respective level of competitiveness.
The benchmarking exercise examines 11 competency areas ofindividual company, namely; management and Leadership, financial systems and practices, cost structures and analysis tools, global sourcing and marketing strategies, supply chain Integration, customer focus, new model introduction capability, manufacturing and quality, safety, technology investment, and people and performance.
ASEP is designed to assist the local automotive supply base in achieving competitiveness and sustainability and is viewed as a unique opportunity for vendors to position themselves on the road to growth and a sustainable future.
ASEP implementation includes supervision and coaching by experts in areas of identified weaknesses within the respective vendors rendering assistance to the companies to formulate and to implement diversification strategies for their businesses.