SINGAPORE — Eager to lessen dependence on the sometimes-fickle customer base of multinational original equipment makers, Malaysia's plastics industry leaders plan to help firms step up efforts to design and develop proprietary products.
Taking their cue from government officials who are encouraging such an approach, the Malaysian Plastic Manufacturers Association early last year created, as a separate, limited liability company, the Malaysian Plastics Design Centre in Petaling Jaya with the aim of helping processors develop their own brands.
``Less than 10 percent of [Malaysian] plastics manufacturers now have proprietary products,'' according to MPMA Vice President Geannie Tan. ``The government wants us to create a pool of designers, to be more creative. This is very, very new to the Malaysian plastics industry,'' she said in a March 23 interview at MPMA's ASEANplas booth.
The Malaysian government last year offered MPMA a subsidy of 1.5 million ringgit (about $395,000 at current exchange rates), to underwrite the cost of setting up the center. It has released about one-third of those funds so far, said Tan, who also is finance and administration manager for a group of companies, Lam Seng Plastics Industries Sdn. Bhd., that perform injection molding, blow molding and extrusion.
The design center, referred to as the MPDC, occupies the first floor of the association's three-story headquarters in Petaling Jaya, near the capital of Kuala Lumpur. MPMA President Callum Chen, who also heads MPDC, last fall hired Australian-trained industrial designer Noel Ha to manage the center. Ha has hired two local designers who are due to start work in May. MPDC has purchased a Unigraphics software station and hopes to be ready to start doing real business by June, said Tan.
She claims three companies already have indicated interest in paying the center for design services. MPDC expects to charge a fee up front — of perhaps 5,000 ringgit ($1,315) or so — to founding members, who then would receive a discounted rate on subsequent services.
``We have not received much reaction yet from the industry,'' she admitted, noting the need to market the concept.
``We plan to organize design contests,'' added an MPMA spokeswoman, ``and we may have to tie up with a renowned design house.'' She said the MPDC already has talked with two German design houses.
``We need to get our small and medium-sized company members to change their mind-sets,'' said Tan. ``They are used to just taking [someone else's] molds and pumping out parts.''
But that can leave Malaysia's custom processors vulnerable to multinational OEM customers that have displayed a propensity for bolting to lower-cost countries such as Indonesia and Thailand.
One Asian plastics industry consultant is somewhat skeptical, but believes the concept has merit — provided it follows a certain tack. Kelvin Fahey, managing director of Canberra, Australia-based Sira International Corp., said the housewares sector, in Malaysia and elsewhere, already applies that strategy to some degree.
``Proprietary lines mainly are confined to the consumer-goods sector,'' he said, suggesting that it is more difficult to design successful original brands in such sectors as industrial, construction, automotive and appliances. ``I would suggest that in many [such] cases, Malaysia is going against the tide.''
However, Fahey added, ``If they put their emphasis in designing tooling, that would be an area where they could potentially have some comparative advantage.''
He said Malaysia will not be able to stem the tide of certain subassembly and manufacturing operations — for footwear and toys, for example — leaving the country for lower-cost areas such as Vietnam and Bangladesh. But firms such as Mattel Inc. may wish to keep their tooling operations in Malaysia, with its more highly skilled labor base.
``That's working smart,'' he said.
The design center is not the Malaysian plastics industry's only creative initiative to address market challenges. MPMA is progressing, albeit slowly in the face of the crisis, with plans to create a 150-acre industrial park for its members on the country's less-developed east coast.
The group signed a memorandum of understanding about the project last October with the Terengganu state government, Tan said.
The objective is to provide MPMA's 900 member companies the chance to acquire land, labor and raw materials at a reduced cost, to enhance their international competitiveness. Tan said that some 30 member companies already have agreed to purchase 120 acres in the park, which will be managed by the association.
The state government, for its part, has committed to provide an additional, adjoining 50 acres — 40 acres for a hostel for the park's workers and 10 acres for a training center — plus the necessary buildings.
Tan said the plan is to create a business network within the park, to broaden the portfolio of services that participating companies can offer to customers. For example, she said, if one firm in the park did silk-screen printing, then others could tap into that service and would not have buy such equipment themselves.
The site is being graded, but there is no timetable set for breaking ground. Tan and her MPMA colleagues insist the project will go forward, but acknowledge that ``the timing is not good right now.''