National Instruments – Helping Penang climb the expertise ladder

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From a temporary office to its current vast manufacturing and R&D facility, National Instruments is in Penang to stay – and grow.

In spite of the global economic crunch, National Instruments (NI) is growing smoothly in Penang. Starting from a temporary office in Suntech back in 2008, the US-based producer of automated testing equipment and virtual instrumentation software opened its mammoth manufacturing and R&D facility here in 2013 as part of its efforts to capitalise on emerging markets and tap into the state’s decades-long electrical and electronic (E&E) engineering expertise.

Recently, it launched VirtualBench, an allin- one instrument that combines essential engineering and testing tools into a single device, thus reducing clutter and cost. The device was born out of NI’s long-held philosophy of working closely with SMEs and understanding their needs, whether they’re in the developed or developing world.

Joel Shapiro.

“One of the big things we’re excited about is developing more and more of our products specifically with the aim of meeting local needs and marketing conditions,” says Joel Shapiro, head of NI’s Emerging Markets Marketing arm. “That’s what we see with VirtualBench, a product that developed from the needs of SMEs here in South-East Asia.”

He sat down with Penang Monthly for a quick chat about NI’s goals in Penang and working hand in hand with the SME industry.

Why set up an R&D plant in Penang?

We wanted to expand our operations and manufacturing capacity in an area that would really be able to serve our growing business in Asia Pacific. We’ve been established in South-East Asia for quite a while – we opened our first office in Singapore in 1994 and we’ve had operations in Malaysia since 1997. The interactions with the engineers that we’ve had for almost 20 years have been very impressive. The second reason really had to do with the talent pool of engineers available within Malaysia. We’re not just manufacturing; this is also a site for R&D. We really believe that having R&D and manufacturing together as we develop and manufacture products is quite important, so access to top engineers became a really big concern for us. It made a lot of sense to focus here in Penang.

Some MNCs have announced layoffs in the past year. But NI isn’t going through that, is it?

No, we’re not. We’re doing quite well, I think. Within the testing measurement industry it’s a tough market right now, but we’ve been able to gain market share quite successfully. 2013 was a record year for us for revenue, and then in Q1 of 2014 we had a record Q1 for orders placed.

Emerging Markets is the fastest-growing region for the company. We’ve seen a large amount of customer growth as more and more engineers graduate in this part of the world.

Does NI currently work with SMEs?

Yes, absolutely. We work with a wide range of SMEs to provide support and access to our tools. For a lot of SMEs, our products fit within their budget. They’re accessible.

A big part of our R&D and manufacturing being co-located is that there can be a kind of joint process while products are being developed. We have four R&D facilities globally that we say are tier one, and Malaysia is at the top of that tier.

How would you assess the local manufacturing industry?

I think it’s world class. Just on the drive down here, you see Intel, Bosch… world class companies that have clearly seen a lot of benefits in terms of manufacturing here in Penang, and we absolutely see that in the time that we’ve spent here.

Do you see any gaps in skills that need to be plugged?

I wouldn’t say gaps. One of our philosophies has been that we want to spend a lot of time investing in the employees we hire locally. One of the things we do is making sure that we perform a lot of cross-training and collaboration, and we bring expats to spend short assignments here in Penang to transfer knowledge. We also send engineers from Penang to Austin and Hungary to spend time with teams that have more established experience with manufacturing.

We have a philosophy of recruiting the vast majority of our employees from colleges and campuses, and then promoting from within. But at the same time, for special types of functions or skills, we want to hire from experienced areas. That’s where we’ve actually seen quite a bit of benefits from Penang – there is a huge amount of expertise in manufacturing and R&D that’s in the local economy already.

We’ve been developing VirtualBench for two years. From the very beginning, we’ve been talking to SMEs and engineers in emerging economies and here in South- East Asia. The excitement for this type of product has been through the roof. We’re expecting to see a huge ramp-up in this product on par with probably the most successful products that we’ve launched in NI history.

Shapiro with Aashis Mehta, marketing engineer manager of VirtualBench.

VirtualBench briefing.

NI also has close ties with Penang. Can you talk a bit about that?

One of our missions is to increase STEMs (Science, Technology, Engineering and Mathematics) so we work closely with different government institutions and different schools to bring modern ways of getting kids excited about education in those fields, with a hands-based approach, whether it’s working with schools at the high school or university level. We have a variety of programmes; the Collaborative Research in Engineering, Science & Technology (Crest), of which we were a founding member, is one here in Penang. The idea is to encourage more and more students to pursue degrees in engineering, and to ensure that the engineering curriculum in Malaysia is world class.

SMEs are the backbone of the economy. As more and more products become electronics-based, access to engineering tools becomes really expensive. If SMEs get access to funding, they don’t typically want to spend a lot of that on capital equipment that’s not going towards their actual design.

So we partnered with SME Corp to provide the kind of tools that engineers can use to prototype electronic systems and control systems as well as test them, along with training. We want to partner with government institutions and nonprofit institutions that already have a wide network of SMEs that they’re working with. If we can find the places that are already supporting them through a lot of different ways, we can add to that with our engineering tools.

What’s the end game of having this facility in Penang?

It is for the facility here in Penang to be at an equal level with our tier one R&D facilities in Austin and around the world, and we’re very much seeing that already in terms of the quality of projects being taken on. Over the next 10 years, we have a commitment to add 1,000 to 1,500 engineers here. I think at that point it will be one of our top two engineering facilities in the world, tied to our largest capacity manufacturing plant. The success that we’ve had starting in 2008 working at the Suntech building has shown nothing but optimism for reaching that goal.

Jeffrey Hardy Quah is deputy editor of Penang Monthly.



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