The Machinery and Equipment (M&E) subsector is an enabler for the economic progress of all other subsectors and has been of strategic importance throughout the global industrial revolution. It is one of the most innovative economic subsectors as it combines key technologies of the future such as electronics, robotics and software integration. All in all, the subsector is a key player in IR4.0, as it cuts across all economic segments, especially the primary manufacturing and services sectors.
In Malaysia, the M&E subsector is dominated by locally-owned SMEs who mainly produce in small batches (instead of mass production) and provide customised solutions for bigger manufacturers. A large portion of these SMEs are largely risk averse and tend to stick to traditional methods of business management, which does little to contribute to the productivity of the subsector in today’s business environment. This needs to be challenged as more developed nations are becoming increasingly competitive by adopting new technologies and business methods.
M&E is typically a labour-intensive subsector, where the workforce needs to be equipped with both technical and management skills so that they can truly understand the intricacies of the processes involved. With the increase of automation in the subsector, SMEs will require fewer workers to produce the same output, with better control and fewer defects. Upskilling the local M&E workforce will increase their income, raise the subsector’s productivity levels and reduce the nation’s dependence on low-skilled labour. In 2018, the subsector recorded significant productivity growth at 1.1% as compared to -1.0% in 2017.
To uplift productivity, the Malaysia Productivity Blueprint (MPB) has identified three (3) broad challenges that need to be addressed at sectoral level with regards to MPB pillars namely, workforce, technology and industry structure. The MPB initially identified four (4) M&E sectoral initiatives to boost productivity from large enterprises and SMEs, which led to the establishment of M&E Productivity Nexus (MEPN).
MEPN is led by Mr. Mac Ngan Boon, President of Machinery and Engineering Industries Federation (MEIF). This nexus aims to address Machinery and Equipment sector productivity challenges through implementation of four following initiatives:
- Set up partnership between government and industry associations to up-skill existing employees;
- Set up Centres of Excellence for skilled professionals to share industry expertise and develop new technologies;
- Update domestic product standards to be at par with international standards and enforce compliance; and
- Set up more product testing facilities to ensure standards are met.
The Nexus has set up 4 workgroups to plan, monitor and execute the projects under these 4 initiatives. Leaders and Subject Matter Experts have been appointed in each of the workgroup to advise, recommend and support the champion based on their expertise in projects implementation to expedite the implementation of the 14 outlined projects (Figure 1 and Figure 2).
Figure 1: The Machinery & Equipment Productivity Nexus is spearheaded by Industry Associations to raise the Productivity of the sector
Figure 2: MEPN 14 projects for 2019-2020
Projects in action
Machinery and Equipment Productivity Nexus through Work Group 1 has initiated the networking dan inked MoU with TVET Institutions namely Universiti Teknikal Malaysia Melaka (UteM), German Malaysia Institute (GMI), Negeri Sembilan Skill Development Centre (NSSDC), Kedah Industrial Skills and Management Development Centre (KISMEC) and Selangor Human Resource Development Centre (SHRDC) on 22 July 2019. The MoU is aimed to establish MEIF’s Strategic Partners who are willing to collaborate with industry and come out with programmes that are tailored to industry needs in addressing technical skills gaps among students, existing employees as well as the TVET trainers.
Through this partnership, MEPN in collaboration with HRDF have established Industrial Skills Framework for the industry. The framework which covers 38 job areas and 138 job titles provides a common reference for skills and competencies required in M&E industry. This framework also will help guide individuals make the right decisions on skills development, employers to recognize skills and invest in skills training for their employees, and training providers to design program that address the sub-sector’s manpower and skills needed.
Inline with the first initiative to up-skill existing employees and enhance the implementation of Industry 4.0, Overall Equipment Effectiveness (OEE) for Smart Manufacturing training programme has been designed and introduced to the companies. This 6-Day training programme has been successfully conducted in December 2019 at Selangor Human Resource Development Centre (SHRDC), attended by 8 M&E companies. The participating companies have been provided a set of training kits (hardware and gateway) for productivity improvement project at their respective workplace and expected to present their project results by Mac 2020.
Based on the result of the environmental scan study among M&E industries in 2018, the M&E industry players do not fully comprehend the scope of productivity. Thus, there is an urgent need to further propagate and drive greater productivity understanding among SMEs. In helping SMEs to enhance operations related productivity improvement, MEPN is currently rolling out the Enterprise Level “Deep Dives” and Intervention programme using productivity assessment tools namely Productivity Gain Measurement (ePGM) and Business Excellence Framework. We are targeting 20 companies to be assessed and embarked in productivity improvement intervention.
Collaborations amongst MEPN through MEIF, MIDA and SIRIM will witness the establishment of Malaysia Machinery Innovation Centre (MMIC) in the first quarter of 2020. MEIF continuously providing feedbacks on proposed setting up of MMIC as catalyst for development and adoptions of technology for industries.
The MEPN has been compiling a repository of companies in the M&E and Engineering Supporting Services (ESS) industries that exhibits the capabilities to grow into regional or global market for their future export market and sustainability. This will be the first attempt in grooming them to become the world class players that represent Malaysia as the key contributor to the regional hub for the high technology and specialized M&E and Engineering Components production and Services Supply Chain.
MEPN with the support of MISI4.0 has developed and documented the Directory of Malaysian System Integrators to bring together 19 key players amongst local system integrators in the industry. The directory act as promotion catalyst for industry players in searching for quality and reliable system integrators for total solutions and the related services. It expected to help at least 100 local Malaysian SMEs to find right partners for Industry 4.0 implementation
Regulatory delays in inspection and their associated approval by regulators lead to unnecessary delay and added cost to business for M&E. The MEPN will need to identify the most significant pain points for priority streamlining in order to achieve better process efficiency for ease of doing business. Among other industry issues that undergo the streamlining process through Reduced Unnecessary Regulatory Burdens (RURB) are substandard product importation and local production; issuance temporary permit to overseas mobile crane affecting local market; too many safety cards issued by regulators; and SIRIM’s Certificate of Approval (COA) process for steel products.
As a voice of industry, MEIF continuously bring forward issues through engagement with MOF, MITI and agencies to reinstitute Buy Malaysian First policy and Malaysia Brand National Mark. Such effort is expected to stimulate domestic economic growth and help companies to expand marketing network improving the local requests.
Call to Action
M&E Subsector contributes the important linkages with all subsectors including ESS and Electrical and Electronics, hence the growth performance of this subsector in addressing productivity challenge will significantly provide spillover effects to other industries as well. As a member of MEIF, TEAAM members are encouraged to participate in all MEPN initiatives and programmes. Lets prosper together!!