Have you ever wondered what makes your electronic devices work the way they do, and where they come from?
Chances are that at least one of the components in your various devices was made locally here in Malaysia.
In the 1970s, In the 1970s, the ‘Eight Samurai’ (National Semiconductor, Intel, Advanced Micro Devices (AMD), OSRAM, Hewlett Packard, Bosch, Hitachi and Clarion) began operations at the Bayan Lepas Industrial Park in Penang.
Since then, some 300 multinational corporations (MNCs) have started offices in Malaysia, creating an electronics and electrical (E&E) hub that has been likened to the Silicon Valley in the United States.
This is an important sub-sector for Malaysian exports.
In June 2018, E&E products (worth RM29.89 billion) comprised 38% of total exports, which was a significant increase of 6.9% from June 2017.
(Source: 25th Productivity Report 2017/2018)
Electrical goods here include electrical motors and generators, domestic appliances, wiring, lighting and others.
Meanwhile, electronics consist of computers and peripherals, electronic components and boards, communication equipment and consumer electronics.
Global trends in electrical and electronics manufacturing
The Electrical and Electronics Manufacturing Global Market Report 2018 revealed that the largest segment in the E&E manufacturing market worldwide was electrical equipment manufacturing, which had a market share of 55%.
This was due to the high sales volume and value of items manufactured, including switchboards, transformers, switchgears and other electrical equipment.
The second largest segment was electronic products manufacturing, with a market share of 31%.
In 2017, Asia Pacific held 55% of the market share.
Thus, it was considered to be the largest region in the electrical and electronics manufacturing market.
North America came in second (17%), while Africa held the smaller share (around 3%).
In the quest to improve plant efficiency and productivity, companies have begun automating and using robotics.
Sensors installed in machines have also improved the efficiency of factories, as they reduce potential breakdowns.
Global trends in consumer electronics
As more people connect to the Internet from all over the world, the sales of connected electronic products will continue to rise, the Euromonitor International projected in its Consumer Electronics Global Industry Overview (2017).
And as volume increases, retail value growth is expected, because consumers expect better quality devices for the price they pay.
The industry is expected to experience robust growth due to fast innovation, shifting market frontiers, premiumisation and shopping being reinvented as an online experience.
However, even with the popularity of IoT, people will continue to buy laptops and LCD TVs, as these mature product categories are important to them.
Nonetheless, these categories are being reinvented by manufacturers to make them more premium, in order to increase profit margins.
The report also mentioned that artificial intelligence (AI) will continue to be integrated into electronic devices, to help consumers simplify their lives.
The Malaysian scenario
According to the 25th Productivity Report 2017/2018, the E&E sector accounted for 36.7% of Malaysia’s total exports and 44.7% of Malaysia’s manufacturing exports in 2017.
In fact, it was the largest export earner (RM343 billion).
The top export destinations were Singapore, the United States (US), China, Hong Kong, Japan, Germany, Mexico, India and the United Arab Emirates (UAE).
Due to an industry-wide effort to transition from low value-added activities to high-value operations, the added value for E&E rose from RM62.6 billion in 2016 to RM67.7 billion last year.
This shift was necessary for businesses to stay competitive in the global economy.
The continued improvement and growth in the E&E sector – caused mainly by robust demand – has seen an increase of 5.8% in productivity to RM139,724 last year.
In addition, employment in the sector grew by 2.3% to 485,000 workers in 2017. This number constitutes 19.9% of the Malaysian manufacturing workforce.
Nonetheless, despite the positive developments, the Malaysian E&E sector continues to face challenges.
Among them are:
- Significant improvement for critical enablers to industry players
- A talent pool that lacks quality and experience
- Local companies that find it difficult to compete globally
- Focus in assembly activities results in lower value-add
- Lack of focus in E&E capabilities across a range of sectors
“The large local companies (LLCs) and multinational corporations (MNCs) are already highly competitive.
“However, a big push is needed to change the mindsets of the small and medium enterprises (SMEs),” says Datuk Seri Wong Siew Hai, the E&E Productivity Nexus Champion for the Malaysia Productivity Corporation (MPC).
MPC has been working to enhance productivity in Malaysia for the past 25 years.
Through this nexus, it conducts talks and workshops, and provides consultancy on how to improve productivity.
In the 2000s, MPC was actively involved in benchmarking and best practices. It evolved to look at competitiveness and innovation at the national level.
In 2017, the Malaysia Productivity Blueprint (MPB) was launched, to enhance productivity growth. Nine priority sub-sectors were established, one of which is E&E.
According to Wong – who also represents the Malaysian American Electronics Industry (MAEI) – SMEs need to be inspired, encouraged, and educated about needing to evolve, and to increase their productivity through automation.
“For these SMEs, there is always a mindset barrier towards Industry 4.0, and productivity improvement is expensive.
“They assume that they can’t afford it. Some don’t know how to start – they don’t know what they need to do.
“So, we are trying to encourage these companies to start small and take things one step at a time,” he tells us.
Igniting curiosity in SMEs
Datuk Seri Wong Siew Hai.
“To increase awareness among the SMEs, we are organising seminars and workshops to provide the necessary education and training.
“This year, we have already conducted several seminars and hands-on workshops,” Wong explains.
“In these sessions, we teach them how to start.
“Many SMEs don’t know where they stand, so they have to do some simple data collection in the first year.
“Usually, they don’t have proper processes for data collection – and while some might have already done some data collection, they don’t know how to analyse and use the data,” he elaborates.
He adds: “Different companies will have different requirements.
“So, they start by assessing where they are.
“Then, they have to decide whether they have the resources to do what they think is important.
Some companies will be willing to spend the required money, while some won’t. So, they will take fewer steps. But what is most important is that they are considering it.
The E&E Nexus has set its sights on four key areas:
- Enhancing higher Value-Added activities, especially in design and development
- Nurturing the talent pool
- Accelerating the Adoption of Industry 4.0
- Strengthening the development of SMEs
“In our up-and-coming seminars, we want to showcase companies that have already done it, including Malaysian companies and MNCs based in Malaysia.
“We want to show them that it works, and it will help them to improve quality and productivity and save money.”
Currently, there are three types of training available:
- Training for yet-to-be-employed engineering graduates
- Master’s programme for upskilling engineers
- Advanced engineering, which is a training programme to improve competency
Developing global managers
Talent development is important for any industry, including leadership programmes for senior leaders (middle managers and above).
However, local managers might encounter some problems when they want to become global managers.
“We have global managers, but their numbers are low. So, we intend to conduct training to help local managers become global managers – to help our leaders to take the next step.
“This programme will be targeted at middle managers, section managers and department managers,” Wong says.
“Also, in my consultations with Malaysian peers stationed in Shanghai, I discovered that there is a need for coaching and mentoring.
“This is because they might have a glass ceiling or threshold that they can’t break through. They are stuck in the same position for a long time and need to find a way to evolve to the next level,” he added.
There is room for growth and improvement among the SMEs and engineering community in Malaysia.
With timely and adequate intervention and development programmes by the MPC, far more can be accomplished on a global scale.
The Malaysia Productivity Corporation (MPC) has started a nationwide productivity movement across all segments of society to create higher levels of awareness and understanding of the importance and benefits of productivity at enterprise level, along with guidance on how to measure and track productivity. For more information on their Productivity Nexus, go to wayup.my. To learn more about MPC, visit mpc.gov.my.
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