Malaysian molder Lee Huat Plastics Industries Sdn. Bhd. is investing in electric presses and creating a subsidiary focused on industrial design, in a bid to move into more sophisticated manufacturing and make itself more competitive against low-wage countries.
The Shah Alam-based firm has spent 10 million ringgit (US $3.09 million) in the past year on 21 electric injection molding machines from Korea and Japan - its first all-electrics. Lee Huat also plans to add three blow molding machines in June, as part of a broader update of systems and capabilities, said Chief Executive Officer Callum K.S. Chen.
``The customers didn't ask for these machines,'' Chen said in a May 26 interview at the ASEANPlas show in Singapore. ``But we felt that for you to keep moving, you should move up and not down. How much cheaper can you be than a low-cost country?''
The company wants to move into new, more high-value markets, such as medical, and also shift toward more work involving industrial design, he said. Lee Huat currently is focused heavily on housewares and consumer products molding.
Chen said family-owned Lee Huat has formed a new subsidiary to focus on industrial design and product development. The operation, Halo + Agency Sdn. Bhd., was launched by Chen's son, Clement Chen, an industrial designer, and S. C. Wong, the former design manager in Malaysia for Japanese electronics manufacturer Sharp Corp. of Osaka.
The new company will start with four or five industrial designers, and intentionally is being located apart from Lee Huat offices, to help Halo establish a different corporate culture than the manufacturing-oriented thinking of Lee Huat and its 300 employees, Chen said.
``We don't want the manufacturing mind-set to trap them at Lee Huat,'' he said. ``There's nothing wrong with Lee Huat, but we want them to be totally separate, totally different, and to think in the longer term about market development, brand building, and look at the whole range of collaborating with other companies,'' such as product launches, Web sites and developing intellectual property, he said.
Halo + Agency will borrow a technique from U.S. Web giant Google Inc., letting its designers spend 20 percent of their time on their own projects and ideas. If those ideas show promise, the company may fund them, he said.
Lee Huat needs to change from its model of making components for others to taking on a higher, more lucrative place in the supply chain, such as handling complete product design, Chen said. He was a founding chairman of the Malaysia Plastics Design Centre in Petaling Jaya, which works to develop designs for plastic products to help create Malaysian brand names. This year Chen stepped back into the role of MPDC chairman.
``Right now we are OK, but five years down the road, I challenge my team. Five years down the road, as our costs continue to escalate, how much more effective and how much more efficient can we get?'' he said. ``If we do not move away and separate ourselves, we will not be effective later on. This is the direction. That is why it is so important for them to think differently.''
Part of that also involves equipment upgrades. He said the firm has put in clean room manufacturing and is getting ISO 22000 certification, which includes certification in hazard analysis critical control point, or HACCP, a system for reducing risk in food processing and other manufacturing. The privately held company does not disclose sales.
Twelve of the electrics are from South Korean press maker LS Cable Ltd., with servomotors and other components from Japan; nine are from Toyo Machinery & Metal Co. Ltd. They range from 220-350 tons. The company also has 26 hydraulic presses and nine blow molding machines. The electrics help the firm cut cycle time and reduce defects, he said.
``We are now moving away from the low end,'' Chen said. ``We are moving to the middle and upper end.''