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By: Naguib Mohd Nor
President – Malaysian Aerospace Industry Association
CTO - MARA Aerospace & Technologies
CEO/Owner - Strand Aerospace Malaysia
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Update on Malaysia
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ASEAN – home to over 630 million people and a
thriving economy. It shows huge potential hailing from the
rising middle class in Malaysia, Indonesia,
Philippines, and Thailand.
The benefits of regional economic integration will far
exceeded its cost. For the aviation industry, the multiplier
effect is 13 fold. In other words, every $1 an airline spends
leads to a $13 increase in GDP. This will also fuel the
growth of job opportunities, as the aviation
industry heavily depends on a highly skilled
workforce for it to grow. Boeing estimates that
ASEAN will need 56,500 more pilots and 59,500
more aircraft technicians in the next two decades.
ASEAN citizens are the ultimate beneficiaries of the product
of regulations being liberated in ASEAN.
However, there are many things that still need to take place in
order for ASEAN to reap these benefits.
The Future is Asean
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Malaysian Investment Development Authority (MIDA) deputy CEO II
Datuk Phang Ah Tong says because of that, many big boys in the
aerospace industry are looking to shift their centres to Asia to cut
cost and that presents opportunities for Malaysia, which sits
strategically on the map.
Because of that, local champions can provide aerospace parts
and services throughout the whole value chain.
“MIDA’s role is to identify the gaps in the aerospace industry and
advise our local champions to fill in the gaps in the whole value chain.”
The recent commodities rout which hit the oil and gas (O&G) industry
had led to players in the ecosystem getting hurt as the number of jobs
are slashed and the revenue pie is shrinking.
Phang says some of the machinery makers for the O&G sector
can transfer their know-how and diversify into the aerospace
industry by collaborating with existing aerospace players.
“This is an industry that’s full of potential. Moreover, the barrier of
entry is quite high so business owners have to make conscious
decisions and efforts so that they can get into this lucrative
business.”
“It was a vision for us to tap into other sources of income and
going forward, aerospace will be a promising area on top of what
we have already achieved for electric and electronics.”
2016 is seeing a confluence of
OEM needs for wider supply
chain and Malaysian companies
needing to diversify into Higher
Value businesses such as
Aerospace.
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Latest News
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ICF’s 2015 data shows that the Aerospace Manufacturing and MRO industries are both showing strong
positive trends despite the global economic challenges. The latest information shows some effects of
the challenges faced which has reduced ICF’s RPK growth predictions by 1% from previous.
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Aerospace Industry & Cluster Outlook Summary
AEROSPACE INDUSTRY & CLUSTER OUTLOOK:
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Asia Aerospace City and Malaysia National Strategy
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EPP5
ENGINEERING
SERVICES
EPP1
MRO
EPP7
HUB FOR
OEMs
EPP8
SME
DEVELOPMENT
ECONOMIC TRANFORMATION PROGRAMMEAEROSPACE
BLUEPRINT
ETP and Aerospace Blueprint have the programs and initiatives that will
drive the industries development
Aerospace Industry as a key driver for RMK11 objectives:
1. Malaysia’s transformation into a high-income nation
2. Re-engineering economic growth for competitiveness
3. Harnessing talent
4. Environment and Resource Management
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PEMANDU ETP 2020 Target
EPP1 EPP5
Additional Revenue by 2020
RM 17.4 B RM 4.6 B
Additional Jobs by 2020
21,000 11,500
EPP7
RM 19.6 B
3,368
Asia Aerospace City anchors
many of the above EPP
targets. Projects such as the
Subang ES centre for EPP5
are already within the
Aeropolis.
ETP & Blueprint Goals
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STRATEGIC PARTNERS
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“ The much-coveted aerospace
technology could catapult Malaysia into
the big league of high-tech hubs.
Malaysia's strategic location, with its
modern infrastructure make the country
an enabler in Asia's aerospace sector. ”
Datuk Azman Mahmud
CEO, MIDA
25 Jan 2016, Bernama
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Recent Developments in Malaysia Aerospace Industry
Airbus Customer
Services
Malaysia Sdn.
Bhd started
operations.
Jet engine fan
casing
manufacturing
contract
awarded by
Rolls Royce to
UMW.
French
Aerospace
Industry
Association
(GIFAS) opening
a regional office
in Kuala Lumpur.
Tooling Supply
Chain handover
project between
a major OEM
and a local
tooling
manufacturer.
Expansion of
Spirit
Aerosystems
Malaysia and
CTRM.
ROLLS ROYCE /
UMWAIRBUS GIFAS AIRBUS / SDMK SPIRIT / CTRM
MAHB
Aeropolis:
Runway to
Success 2020
Development
MAHB
AEROPOLIS
Feb
2014
Aug
2015
Nov
2015Feb
2016
In
progress
In
progress
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Constant stream of enquiries
Regular UK aero
companies trade
events in Malaysia
Regular annual events connecting potential
players for business opportunities
exploration
Regular French aero companies
trade events in Malaysia
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European Companies Searching for Opportunities in Malaysia
AEROSPACE INDUSTRY & CLUSTER OUTLOOK:
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18768
9625
52734925
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
France Singapore Mexico Malaysia
Mo
nth
ly S
alar
y (R
M)
Country
Average Aerospace Technology Manufacturing Monthly Salary Comparison
• Malaysia is 7% cheaper than Mexico on average
• Aerospace Technology Manufacturing includes Salaries from Engineers, and
Technicians.
Source: Payscale Inc, Seattle, Washington, U.S.A
Currency Conversions Used
(1/2/2016)
Currency
Value of single
currency unit
(RM)
Euro (EUR) 4.51
Singapore
Dollar (SGD)2.92
Mexican Peso
(MXN)0.23
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Malaysia competitive in labor costs
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Contract Manufacturer
High Value Manufacturer
Contract
Manufa
cturin
g –
com
pete o
n
price
Mass
Producti
on
Complia
nce
Testing
Operatio
nal
Capacity
Producti
on /
Ware
housing
Proce
ss
Developm
ent &
Impro
vem
ent
Concess
ions
and Repair
R&T on
Mate
rials,
Proce
sses,
meth
ods etc
Mate
rial R
eview
& Impro
vem
ent
Autom
ation
Toolin
g
Technology
Engineering
Solution
Provid
er
Value-Adding
Product
Developm
ent Pra
cticin
g Lean
Manufa
cturin
g
Develop a
nd
Roll Out L
ean
proce
sses
Proto
type &
Complex T
ooling
fabric
ation
Proce
ss
valid
ation
Simple Toolin
g
fabric
ation
Value Stre
am
Mapping
Cost Down /
Value
Engineering
Contract
Manufa
cturin
g –
com
pete o
n
price
Mass
Producti
on
Complia
nce
Testing
Operatio
nal
Capacity
Producti
on /
Ware
housing
Proce
ss
Developm
ent &
Impro
vem
ent
Concess
ions
and Repair
R&T on
Mate
rials,
Proce
sses,
meth
ods etc
Mate
rial R
eview
& Impro
vem
ent
Autom
ation
Toolin
g
Technology
Engineering
Solution
Provid
er
Value-Adding
Product
Developm
ent Pra
cticin
g Lean
Manufa
cturin
g
Develop a
nd
Roll Out L
ean
proce
sses
Proto
type &
Complex T
ooling
fabric
ation
Proce
ss
valid
ation
Simple Toolin
g
fabric
ation
Value Stre
am
Mapping
Cost Down /
Value
Engineering
Transforming Malaysian Manufacturing
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Aerospace Clusters in Malaysia
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TIER 1s
TIER 2s
TIER 3s
TIER 4s
TIER 5s
OEMsHELICOPTERS
HELICOPTERS
Operators
MRO,
Servicing
Education,
Training,
Simulation
Logistic
Test and
Evaluation
Engineering
And Design
MULTI
-TIER
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Aerospace Supply Chain in Malaysia
CURRENT STATUS OF SEPANG AND SUBANG ECOSYSTEMS:
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Aerospace Cluster in Selangor StateCURRENT STATUS OF SEPANG AND SUBANG ECOSYSTEMS:
Ecosystems Selangor Total
MRO, Servicing 47
Standard Part Supplier, Trading 32
Others 27
Manufacturing 25
Operator 18
Education, Training, Simulation 15
Engineering, Design 12
Jigs, Tool Supplier 11
Logistics 9
Representative 5
Special Processing Shop 4
Assembly, Integrator 3
Test and Evaluation 2
Total 194
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UMW Aerospace Park
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11/27/14 BusinessConsul ngCenter 8
UMWYesterday,TodayandIntotheFuture………
Aerospace)Manufacturing)
Bicycles)
Automo5ve)Manufacturing)
ü Strongleanmanufacturingü Strongrecordofdeliveryand
performance
ü Largeautomo vemanufacturingcapacitytoleverageon:
ü HumanCapital
ü LandandSupplyChain
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A330NewEngineOp on
Boeing787Dreamliner
Trent7000
Trent1000
SingleSourceFinalAssemblyofEn reEngines
PrecisionAeroHardMetalMachiningManufacturingandAssemblyPark
(exampleparkconceptshown-Tunisia)
THE OEM REQUIREMENT
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Manufacturing this in Malaysia represents the following milestones for the country:
•UMW will be manufacturing Titanium Engine Fan Casing for Trent 1000 engines
•Through this UMW becomes Rolls Royce Tier 1 engine manufacturing company Malaysia
•UMW is targeting becoming a specialist in complex titanium and other hard metal manufacturing capability and also have new robotic welding capability
•Strategically this gives UMW the ability to develop an aero engine supply chain around the fan casing
UMW’s ENTRY INTO THE AEROSPACE INDUSTRY AS A TIER 1
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DEVELOPING OEM CLUSTERS
Fan Casing Factory
Supplier 7
Supplier 6
Supplier 5
Supplier 1
Supplier 2
Supplier 3
Supplier 4
Supplier 8 UMW Auto Diversification SME Program
EPP8 Aero SME Growth Program
Strong National Branding and Comprehensive Industry Support Solution
UMW Aerospace Hard Metal Manuf. Park
Foreign SME’s Entering Into Malaysia
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UASB Partnership is geared towards the following areas:• Hard Metal Machining - engine components, landing gear components, brakes etc.• Manufacture and supply aerospace components supporting UMW Aerospace (UMWA) Rolls
Royce Fan Case Manufacturing.
Figure below describes the proposed partnership model between UMWA and the partner.
UMW Advantech (UASB) – Searching for Partner!
PARTNER
+Partner will provide:
i) Capabilitiesii) Contractsiii) Certifications
UASB will provide:
i) Fundingii) Infrastructureiii) Manpoweriv) Training (Facilitate)
Proposed Partnership Model
UASB is the next UMW Subsidiary to Diversity into Aerospace. Currently it is an auto components manufacturer. In order to enter into the aerospace market as a hard metal machining company UASB seeks partnership with an established company.
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LOW-DENSITY
RESIDENTIAL
COMMUNITY
COMMERCIAL CORE WITH
INTEGRATED CONNECTION
TO LANDSCAPE
MIXED-USE &
RESIDENTIAL LOOP ROAD
HIGH-END, LOW-DENSITY
RESIDENTIAL COMMUNITY
AEROSPACE
INDUSTRY
CLUSTER
FAN CASING FACTORY
MEDIUM-DENSITY AFFORDABLE
HOUSING COMMUNITY
PRE-
PRODUCTION
FACILITY
Serendah Aerospace & Technology Park
460 Acres Of Aerospace
Park ~ 40 factories
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• Training Factory – Malaysia’s first Aerospace Manufacturing Training Centre
• Developed in partnership with RR
Asia Aerospace City – Serendah Manufacturing Apprenticeship
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Malaysia Airports Bhd - Aeropolis
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Integrated cargo network to stimulate
high value cargo trade
Aviation intensive businesses (eg.
Aero-manufacturing, OEM, MRO,
FBO)
Development of retail and commercial
activities to make an attractive
destination
MAHB Aeropolis Focus ClusterRtS2020: Expand & Diversify - Aeropolis
Help Malaysia become a leading
aviation business hub in the region
• Regional hub for private jet aircraft
services
• MRO and OEMs for helicopters
• Hub for aero-manufacturing services
• High-end MRO facilities
SUBANG AEROSPACE
KLIAAEROSPACE
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MAHB Aeropolis (Aerospace Belt)
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SUBANG
MASTERPLAN
KLIA
MASTERPLAN
Plot J
Plot B, O, R
PT 2
SSZ
MAHB Aeropolis (Aerospace Belt)
1054 Acres Of
Aerospace Park ~ 100
factories/component
repair centres
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Asia Aerospace City – Subang ES CentreENGINEERING SERVICES AND AEROSPACE TRAINING CENTRE - A REGIONAL DIFFERENTIATOR:
Asia Aerospace
City (AAC) Subang
Nexus: Hub for
Engineering
Services anchoring
EPP5
Manufacturing/MRO Component
Repair/Business Park
MRO
UniKL MIAT: To
Produce 400
aircraft
technicians/year
and Degree
Holders
AMIC relocation into
Subang, completing
the ecosystem with
R&T capabilities
Centre for MRO
related to rotary,
propeller aircrafts,
GA, driving EPP1
Manufacturing
Education & Training
R&T
Eng. Services
Tier 1 manufacturer
to OEM, part of
EPP7
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Asia Aerospace City’s
Professional Development
Centre has been running high
value Human Capital
Development programs in
partnership with the above
OEM’s for several years now in
the UK.
These programs are currently
being localized to the Subang
Nexus.
The aim of these programs is to
produce tailor made Human
Capital to Industry Specification.
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Professional Development CentreENGINEERING SERVICES AND AEROSPACE TRAINING CENTRE - A REGIONAL DIFFERENTIATOR: