Secret to success: Doing your best at what you do best

Teh Yong Khoon

By Poh Heem Heem

Faces of industrial Penang: This special series looks at the local talent behind industrial Penang. From CEOs to strategists, managers to engineers, technicians to operators, academicians to support service staff, it explores the passion and drive of these individuals, whether in contributing to a greater Penang or living out their dreams in their beloved home state. First in line is Datuk Teh Yong Khoon.

A proficient machinist by training, Datuk Teh Yong Khoon has actively pursued his passion in mechanical engineering since he was 13. He started out working part-time at his late father’s workshop in between school and homework. Today he is the chief executive officer of Eng Teknologi Holdings Berhad. His is a local tale of a Penang company making it big.

Datuk, do tell us a bit about Eng Teknologi Holdings (Engtek).
Engtek started in 1974 as Eng Hardware Electrical. It was my late father’s (Datuk Teh Ah Ba) dream. He was a Chinese Physician who tried his hand at entrepreneurship in his interest area of mechanical engineering. He started off “reverse engineering” Taiwanese products, making AC/DC converters for the fluorescent lights used by hawker stalls.

What was his big break?
The break came through opportunities presented by AMD and subsequently Intel. The two multinational corporations (MNCs) were already established in Penang by then and they were seeking support from local engineering and metal fabrication vendors.

What enabled Engtek to leapfrog in terms of size and growth?
That was due to my father’s desire to succeed, which translated into products of high quality and a reputable company. We also benefited from a time when many MNCs were willing to teach and transfer technology know-how to local supply partners. Coupling the drive and determination with an enabling environment, we were able to grow in a very short span of time.

You speak strongly of larger companies acting as champions of small and medium enterprise (SME) growth. How does this affect you personally in terms of the way you do business?
The business scenario is constantly changing. In the early years, local vendor development was a key priority. Today, it is “cost focus” within an increasingly globalised supply chain network. Because Engtek had the opportunity to grow within a supportive environment, we try and do the same for our local supply chain companies who exhibit growth potential. In 2008, we worked with the Penang Skills Development Centre (PSDC) to formalise the mentoring process under its SME Business Coaching Programme. A small group of large local companies – Pentamaster, Dynacraft and ourselves – came together under this platform and offered to adopt smaller enterprises and coach them with no financial cost implications to develop into globally competitive players.

An important part of Engtek’s future, its senior leadership and its technical personnel, were shaped by this process; and we would like to do the same for our local supply chain. The five key elements we picked up which we still apply in our processes today are: T – technology; Q – quality; D – delivery; R – response and C – cost. Over time, we have fine-tuned these processes and have added two more elements ourselves, B – business ethics and E – environment. Under the coaching programme, we transferred the know-how related to these critical elements to the adopted SME, and this company has progressed notably from an annual sales turnover of RM5mil to approximately RM50mil today. I am a strong proponent of local vendor development and will continue to create opportunities where possible to enable smaller companies to grow.

When did the company consider regional expansion?
The first thought of regional expansion crossed our mind in 1996. We had built a strong reputation in precision machining for Hard Disk Drive (HDD) components and we were requested by Fujitsu to support their operations in the Philippines and subsequently China. We were ready for this challenge as internal businesses had stabilised and were reflecting cyclical patterns.

Our first international operation was in Dongguan, China. We started with 14 machines and one engineering manager from Penang. Today, we run in excess of 250 machines at full capacity and no longer have local staff servicing the operation.

The next international presence was in the Philippines in mid-1997. We seconded three Malaysian staff in the initial stages and in 1999 we began operating in Bangkok. Again, we only seconded one Malaysian engineer to assist in the start-up operations.  In 2003, we acquired a Singapore-based company and incorporated it as Altum Precision Sdn Bhd with manufacturing operations in Johor.

Tell us about your expansion strategy.
Our initial regional expansion was driven by the HDD industry. We placed our factories nearest to our customer assembly plants and had a natural advantage over competitors because our proximity meant faster response time. It was also cost-effective as labour costs in Malaysia were beginning to rise.

Just before the year 2000, Engtek farmed out its core HDD business to its regional plants. In Malaysia, we began to look into other industrial product sectors to diversify its product and customer base.  It was at a stage when organic growth was too slow to be an option.

For the Penang plant, we went into water heater products. These new product lines contribute approximately 15% of group sales; but over 95% of sales for the Penang plant.

Why water heater products?
It was a product that was feasible, could leverage off our core competencies and required less manual dependencies. More importantly, it allowed us to mitigate single industry risk.

What is your staffing strategy in relation to maintaining your international operations?
I try to maintain as much of the local culture as possible. This means taking in and developing local talent. From Engtek headquarters in Penang, we select and identify technical expertise and key talent ready for a larger job scope and second them overseas to facilitate the “export” of knowledge transfer. However we don’t send them in large numbers. While technical competence is crucial, trust and respect for local culture is equally important. My father used to say in direct translation from a Chinese proverb, “If you want to use somebody, you have got to trust him. If you don’t trust him, don’t use him.” This has shaped our business culture at Engtek of relationship building, trust and mutual respect for business partners.

What are some key differences you observe between the Penang plant and the other operations in terms of talent pool?
The talent pool supporting each operation has distinct attributes. The Malaysian workforce is technically competent and has good work ethics. The employees in our China operations are very talented, easily trainable and highly driven. In the Philippines, we have a much larger number of female machinists and engineers compared to our other plants. Our Philippines operations also have the capacity to build the workforce ahead of demand. This is because the country has less industrial companies as compared to our South-East Asian countries, and supply outstrips demand.

How do you take advantage of these varying strengths?
We have begun to rotate key talent and redistribute our overall talent pool. Key Malaysian and Chinese talents are sent to the Philippines and Thailand at the managerial and engineering head level. The talent pool from the Philippines is being trained to be sent to Malaysia, mostly on a project basis as engineers and administrators who specialise in Enterprise Resource Planning (ERP) and Information Technology (IT) systems. These strategies also provide temporary reprieve from the skills shortage that Penang industries are facing.

What are some of the life lessons shared by your late father which affected you as a person and a leader?
My father always said that we should do what we know best and take that to the highest level we possibly can. There was no middle road. Engtek has managed to stay focused on its core competence and all new business ventures for the group revolve around this philosophy.

What are some of your greatest personal challenges?
I grew up in a typical Chinese Malaysian family as the youngest son, and always felt I had to live up to my father’s expectations. I took it upon myself to work twice as hard to prove my worth and was determined to carve out success for the company.

What do you like about working in industrial Penang and living here?
I am a home grown Penang boy. This will always be my home. I like the work-life balance which is unique to Penang.

If given three things you can change about working and living in Penang, what would these be?
One, less traffic congestion and building density; two, knowledge elevation of the people in order to support high value-added (HVA) industrial and service sectors; and three, strive to maintain the traditional Penang culture of being warm, friendly and industrious.

What is your message to the people of Penang?
I want to stress to the younger generation the importance of a solid education. To fully realise your investment in education, grooming and self-conduct are critical. The ability to articulate your thoughts, to inspire and to motivate your colleagues; and walking the talk are critical elements which will set the leaders apart from the rest.

Poh Heem Heem is the senior manager for Special Projects & Consultancy at the PSDC.