Thursday, 31 March 2016

Having effective EEV policy key to sustainable mobility

The governments of advanced nations are aggressively working towards sustainable mobility in ensuring the generations to come inherit a world where transportation is safer, more convenient, accessible and most importantly, environmentally friendly.
As one of the few car producing nations, Malaysia sits on the tipping point in balancing the automotive industry´s economic interest and ensuring that mobility for the people is provided.
In a nutshell, sustainable mobility requires the effective placement of different transport modes in specific areas, through the development of new technological solutions and legislative framework to meet the needs mentioned above.
For example, public transportation must be made available in cities to alleviate traffic jams and reduce pollution, while cars frequent areas in which public transportation is not a viable option.
This creates the need for technological solutions for all vehicle types, making them more affordable, and less dependant on fossil fuels.
Current laws need to be revised to balance the economic needs of commuters, businesses and future generations.
The National Automotive Policy (NAP 2014) introduced a framework that makes Energy Efficient Vehicles (EEVs) a priority in the nations future vehicle design, manufacturing and after − sales activities.
Simply put, EEVs are defined as any vehicle that meets a set standard of fuel consumption and carbon emissions. An EEV can be any type of powertrain − internal combustion engines, electric vehicles, hybrids and fuel cells.
Since the NAP2014 was launched, numerous car models have received EEV status, allowing fuel efficient and environmentally friendly vehicles to be priced more affordably for consumers.
These vehicles range from entry level models, such as the Perodua Axia and Haval M4, to the luxury models such as the Volvo XC90.
The implementation of the EEV policy has also pushed for the involvement of Malaysians in advanced engine development and lightweight body design.
Research & Development programs, led by Malaysian companies, are now in motion to bring cutting edge sustainable technologies to consumers in the areas of fuel efficiency, safety as well as security.
As the EEV policy also promotes energy efficient processes, car manufacturers do not stop at producing energy efficient vehicles only.
The need to enhance competitiveness has led to numerous car makers developing new energy efficient factories, to ensure production costs are optimised.
It is important to note that the framework of the EEV policy looks beyond increasing the production volume of cars alone.
It is imperative, and inevitable, that the technology spin-off be applicable to the various modes of public transportation.
In the foreseeable future, all vehicles that roam our cities and rural areas − cars, buses and taxis − will be able to reduce emissions and depend less on fossil fuels.
A key example is the development of Malaysia´s first Electric Bus, which is expected to be in production next year.
The drive towards sustainable mobility is not just dependant on the Ministry of International Trade and Industry alone.
The implementation of accessible, yet eco−friendly transport will be a product of the entire machinery of government bodies, academia, industry as well as public participation.
This effort must look into a broad array of issues including fuel standards, power generation, environmental standards, technology acquisition, as well as education.
It is the writer´s hope that the NAP2014 be valued as a key component towards sustainable mobility, and that the governance and efforts strike the economic and social balance needed to place Malaysia on the global map.

Thursday, 24 March 2016

Focus on human capital development during downturn

The current economic uncertainty is not only unique to the automotive industry, but the Malaysian economy in general.
Economic downturns are a cyclical and we have learned that the activities carried out by companies in “survival mode” are key to wading the downturn, until the economy regains its momentum.
It is now timely for automotive businesses, be it OEMs or vendors, to implement strategies that ensure their products are manufactured at the most competitive cost and quality.
Improvement of in-process efficiency can be done through Value Added-Value Engineering (VA/VE) activities, waste reduction through Lean Production approaches, and labour optimization through mechanisation.
Businesses may also venture into activities that maximise their capacity utilisation. The depreciated ringgit makes exports a timely and viable option, and vendors also have the opportunity to venture in product diversification, such as consumer based products.
Imported consumer based products may no longer be a competitive option. This creates an opportunity for businesses to promote the use of local products as a viable option for consumers, which can allow increased production volume for domestic manufacturers.
Despite these strategies, companies must never undermine the most important resource – the people that contribute to the success of their businesses.
The need to reduce costs during economic slowdowns may pressure businesses to overlook the importance of talent retention.
While downsizing may allow for short term breathing space for a business’s cash flow, the impact of separation schemes affects the entire workforce, leading to reduced morale and lowered productivity.
Numerous high performing companies around the world have become examples of how the “humanization” of business operations lead to increased employee productivity and financial performance.
During an economic slowdown, it is the human factor that employees look for in their employers. It is therefore crucial that human capital development be made a priority, and downsizing as a last resort.
The importance for companies to focus on human capital development activities during slow economic times cannot be undermined.
As daily operations may slow down, businesses can take this opportunity to enhance the knowledge and skills of their workforce, preparing them for an increased performance when demands improve in the future.
Businesses often face problems in allowing time for their staff to undergo training, as the realities of daily operations force workers to focus on their results, rather than on personal development.
Top performing companies in the world take the opportunity in slow economic times to send their staff for training. This not only enhances their capabilities, but maintains work momentum so the workforce is always ready to respond to an increase in demand.
MAI has developed numerous programmes and initiatives to enhance the competitiveness of all stakeholders within the industry including OEMs, vendors, workshops, employees, students or anyone interested to be part of Malaysia’s automotive industry.
MAI has also developed a strong relationship with many local universities, an important knowledge resource that can assist the industry in dealing with technical issues.
All stakeholders are free to approach MAI should they have any issues to be highlighted.
In conclusion, businesses must strike a balance between survival and future goals. The critical mass that sways this balance is the ability to make difficult decisions with a human touch.
“Tough times never last, but tough people will always last.”

Thursday, 17 March 2016

EEV production hub will revitalise automotive industry

Strategic direction mooted by the NAP 2014 has since popularised the term “Energy Efficient Vehicle, or EEV, amongst Malaysian policy makers, legislators, business community and the public at large.
A foresight to create Malaysia as the EEV production hub for the region is an initiative to revitalise the existing 30 years longstanding local automotive industry into shaping a better automotive manufacturing and related businesses in the country now and into the future.
In management term is to create a new “S-curve” for the industry. EEVs are vehicles able to fulfil two essential criteria, namely; low or none emission propulsion satisfying the environmental greening initiatives and low energy consumption for a set distance travelled. Henceforth EEVs production shall demand high level of product technology, skilled and knowledge manpower, extensive R&D initiatives, more sophisticated production engineering, materials and processes.
Vehicles associated with EEVs are mainly efficient internal combustion engines (ICE), Hybrid electric vehicle (HEV), Plug-in Hybrid electric vehicle (PHEV) and full electric vehicle (EV.
Equally recognised as EEVs are those vehicles propelled by other energy sources such as; Compressed Natural Gas, Liquefied Petroleum Gas, Biodiesel, Ethanol, Hydrogen and Fuel Cell.
The internal combustion engines shall be qualified as an EEV having achieve lowest possible emission of harmful gaseous and better mileage gain per unit fuel used, both meeting the stipulated EEV qualifications. A similar rules are applied to HEV and PHEV.
On the other hand, being a completely non emission vehicle EV shall on qualifying as an EEV its electrical energy consumption per unit travel shall account for the CO2 emissions during the electricity generation process. Therefore, an EV by this definition is not completely carbon emission free given that most electricity generation is largely using coal and fossil fuels.
Malaysia, being a member of the United Nations “Harmonization of Vehicle Regulations (WP 29)”, currently adopts UNECE R101 to qualify all EEVs including EVs.
Since its inception NAP 2014 has produced some interesting outcome, in particular the interest shown in EEV production investments by the OEMs. Some total of RM11.5 billion in the manufacturing sector to produce EEVs has been approved up to the end of 2015. On the same token a total of RM2.6 billion has been invested in EEV related activities in the aftermarket sector. Some total of RM7.6 billion of the approved investment for EEV production has been realised to date with the expected full investment to be finalised by 2018.
The investment is expected to increase the local vehicles manufacturing capacity from 600,000 units to 923,000 unit per year by 2018 with the involvement of eight vehicle OEMs.
Domestic EEV sales in 2015 stood at 32.5 per cent of the overall vehicle sales, a marked increase from that were sold in 2014, which was 15 per cent of the total vehicles sales for the year.
Internal combustion engine EEV usage would be futile without the availability of quality fuel in the marketplace. In support of the EEV initiatives, the petrol RON 97 fuel with Euro 4 standard has been introduced throughout the country beginning September 2015. Meanwhile Euro 5 diesel was introduced earlier in 2014 with more than 50 petrol stations now operating throughout the country supplying to diesel propulsion EEVs.
In the meantime effort towards establishing battery manufacturing for EVs in the local scene is under feasibility study by industry experts. Plans are underway for local production of lithium powder, battery cells and battery assembly pack useful for the production of lithium based batteries expected to commence by 2nd quarter 2017.
Rapid development in many aspects of EEV ventures in the local scene is foreseen to change the mobility landscape of the Malaysian society not in a very far future.

Thursday, 10 March 2016

NAP, FTAs to drive automotive sector's competitiveness

The recent signing of the Trans Pacific Partnership Agreement (TPPA) has sparked debates and dialogue about the future of Malaysia’s economy. The automotive industry has not been spared of such discourse, mainly in questioning the ability of our local players to compete in the global automotive marketplace.
Malaysia’s 30 million population is too small a market for us to rely on an inward-looking economy to develop and expand the local automotive industry. It is important to embrace the change that is taking shape at the global stage – the world market is more open, consumers are more demanding, impact to environment is becoming more pertinent, etc. The underlying factor to be in control of this change is none other than to enhance competitiveness in all aspects, be it social, economic or governance.
In 2014, the third revision of the National Automotive Policy, NAP2014, was announced with extensive focus to enhance the global competitiveness of not just car and component manufacturers, but the entire ecosystem of the Malaysian automotive industry.
The grand design of the NAP2014 centralizes around three core thrusts – Incentivising investments, Technology development, and Market Expansion. The breadth of this policy covers all areas in the manufacturing and after market sectors, while the depth of the implementation cuts across the development of the supply chain, human capital and technology.
These three core thrusts promote an interdependence with global market forces to enhance domestic automotive players, towards becoming a greater force on the global stage.
Increased investments, from both domestic and foreign direct investments open up opportunity for local players to mobilize their talents and capabilities. Technology penetration is more efficient when our local talent work together with experts from around the world. Finally, market expansion is only possible when export barriers for local players are removed to create a level playing field.
The development of the Malaysian automotive industry must come hand in hand with our participation in the global economy, and Free Trade Agreements (FTAs) open up opportunities for such participation.
For example, it is noteworthy that Malaysia’s vehicle component sector has been fully liberalised – Malaysia’s vehicle component exports have risen from RM1 billion in 2005 to RM12 billion in 2015.
Another recent milestone was the introduction of Malaysia’s first electric bus, which will be soon be commercialized – a product of collaboration between Malaysian and Australian companies through the Malaysia-Australia Free Trade Agreement (MAFTA).
At the same time, we are fully aware of potential threats a liberalised market may pose to local players. It is important that the gradual liberalisation of the domestic automotive industry be supplemented with programs that enhance competitiveness of local players.
Six roadmaps were launched alongside the NAP2014 in order to ensure an effective implementation towards transforming the domestic automotive industry and to reach a level where its benefits trickle down to all levels of the society. These roadmaps, focusing specifically on Energy Efficient Vehicles (EEVs), chart a path towards Malaysia’s globalisation of the automotive sector – covering the development of human capital, technology, supply chain, after sales, environment and safety. The roadmaps also look beyond current demands of the automotive sector, but also future demands of sustainable mobility, such as the reduction of fuel dependency, new powertrain technologies and environmental protection.
To implement these roadmaps, numerous programmes and initiatives have been established to enhance the competitiveness of all stakeholders within the industry – including OEMs, vendors, workshops, employees, students or anyone interested to be part of Malaysia’s automotive industry.

Friday, 4 March 2016

Local automotive industry is here for the long haul

Automotive manufacturing was almost unknown in Malaysia industrial scene until as late as the end of 1970s.
That was 35 years ago where only a couple establishments existed assembling complete or semi breakdown units (SBUs or CBUs) of vehicles for the local market.
The need to industrialise Malaysia has led the country to formulate a vision with the objective of Malaysia becoming a developed nation by 2020.
Automotive manufacturing was selected as the key driver to achieve the vision providing upstream and downstream industrial spin-off, technology development paths, employment opportunities and manpower development direction for the nation industrious economy.
The local automotive industrial development journey was not short of challenges since its beginning.
The global economic downturn, triggered by the US high-interest rate policy, resulted in a massive collapse of world commodity trade that occurred between 1984 and 1986.
Malaysia’s overall export declined by 30% reflecting a sharp decline in tin and palm oil prices. The crisis has affected the new industries, especially the automotive sector, most of which had just began production. HICOM suffered a total operation loss of about US$100 million in the two years 1986 and 1987.
Upon recovery the nation economy began to excel to its greatest height. The general performance indicators of the Malaysian economy than were very favourable; high growth, low inflation and virtually full employment, with average GDP above 10%.
The onset of the next crisis, more known as the “Asian Financial Crisis”, which occurred in between 1997 to 1998 has significantly affected the nation heavy industry programme especially the automotive sector.
Before the industry was able to achieve full recovery from the “Asian Financial Crisis”, the “global financial crisis, triggered by the bursting of a speculative bubble in the US housing market took place in the year 2008.
Share prices on the local stock market fell sharply in the aftermath.
Although the magnitude of the collapse was far less than in the Asian Financial crisis, the local economy was nevertheless depressed and this affected the automotive sector.
The current economy slowdown, which has been partly caused by the collapse to effect the Malaysia economy.
The local economic sector has not been spared.
The economy crises, which have occurred cyclically - every nine years - were the biggest challenges that the automotive sector has to face.
Over the last decade, the need to be included in the global trade community, has pressure the sector to liberalise.
Most of top managerial echelons in the industry are now from the second generation whom have entered the automotive related employments some 20 to 25 years ago.
While many of the founder generation were either fully retired or remain lightly active in business establishments or playing advisory roles, with a few still having prominent roles in the industry.
The third generation that entered the workforce some 15 year ago are now the key players whom productivities and creativities will ensure the survival of the local automotive sector now and in the future.
Looking back the local automotive industry has been instrumental in building the nation and adaptability of the sector.
The task now lies in both the second and the third generations of automotive players to shape the future of the industry.
The industry is here to stay in whatever form or structure it may adopt as survival strategy and continue to provide the role it was intended historically.
However, for these generation to move forward let us be reminded that we cannot shape the future without understanding the historical inspiration of our automotive venture in the first place.