Not as simple as using machines

  • SMEBiz
  • Monday, 16 Sep 2019

Too complicated: Some manufacturing processes entail too many details, making manual labour a simpler option.

MANUFACTURERS have been put in the spotlight in recent months as the call for automation grows ever stronger and the task of obtaining foreign workers become ever more challenging.

Manufacturers have expressed growing interest in automation and adopting new technology. But Corlite Packaging Industries Sdn Bhd managing director Toh Pe Kun points out that it really is not that easy.

“We try to automate so that it can help with replacing workers. But it is hard to automate everything, ” he says.

For its corrugated plastic boxes, for example, Toh notes that the orders are too small to automate the process. Investing in machinery, in this case, is really not worthwhile.

“When you automate, you are dealing with orders of more than 1 million products. Our orders are a few hundred, or thousands, maybe. And they are not very regular orders. So it’s hard to afford automation.

“And if they change the model or design at the next order, then we can’t use the same machine anymore, ” he adds.

Additionally, its products require a lot of customisation and too many small parts, making nimble hands not just a cheaper, but often, a quicker way of making them. The job is labour-intensive.

Corlite currently employs about 200 people, of which more than half are foreign workers.

One of the challenges to automation is to increase orders, which means aiming for a bigger market. In most cases, this means exporting their goods.

“But it is hard to export, depending on what products you make. Our products, which are boxes and containers, are hard to export because they are bulky. If we want to export, we can export the corrugated plastic sheets. But China is very competitive in their pricing for plastic sheets, ” he says.

Corlite is certainly not alone in its dilemma. A lot of SMEs find it tough to automate their processes.

For Corlite, it is moving up the value chain with its latest investment into a new machine that will produce bubble guard sheets. This will be more suited for the export market with little copycats in the region.

But Toh highlights that such an investment is not accessible to many companies. It managed to secure a grant from the Malaysian Investment Development Authority to partially fund the RM12mil machine. Even then, it wasn’t a simple process.

The new machine has a capacity to produce 400 tonnes a month, bringing its total capacity to 1,200 tonnes a month. However, it is only currently utilising 300-400 tonnes a month.

There needs to be more incentive for SMEs to invest into technology and automation to get the businesses up to speed.

At the FMM-MIER Business Conditions Survey briefing in August, the Federation of Malaysian Manufacturers (FMM) president Datuk SohThian Lai noted that manufacturers were hoping to see more of such incentives in the upcoming budget to encourage companies to embark on more R&D to spur innovation, improve efficiency and be more cost effective.

“Two years ago, when we carried out a survey, the implementation rate for a lot of these IR4 technologies was very low, about 30% to 35%. Today, in terms of implementation and the intent to implement has increased.

“We’ve been talking about automation since 10 to 15 years ago. Automation is a prerequisite of IR4. At least now, the industry is starting to realise (the importance). We need to improve, otherwise, we will be wiped out by neighbouring countries, ” he says.

Soh adds that Malaysia should focus more on high technology and high investment-type manufacturing to reduce dependency on labour-intensive production.

Manufacturing constitutes about 23% of Malaysia’s GDP.

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