• Madani Sahari

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.

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