PENANG’S INDUSTRIAL GROWTH is anchored in its promoted sectors, especially the electrical and electronics (E&E) and machinery and equipment industries. The knowledge and technological spillovers from foreign direct investments (FDI), along with domestic investments, have spurred the growth of local firms, many of which have grown into local large companies (LLCs) with advanced capabilities. One of these is UWC Berhad.
Decades of transformation and capabilities diversification have positioned UWC as a major LLC in Penang, under the leadership of Dato’ Ng Chai Eng and Lau Chee Keong, the company’s co-founders and executive directors. It is an integrated engineering support service provider with exposure in the semiconductor, life science and medical technology industries. It was incorporated in 1990 as a supplier of wire cut machines and later ventured into the business of mould-making and metal stamping services. It also manufactures precision machines and box build assembly.
Matin Ng, deputy CEO of UWC Berhad.
UWC’s revenue has recorded a compounded annual growth rate of 30.2% annually, from RM76.3mil in 2016 to RM219.1mil in 2020. It joined the ranks of Forbes Asia’s 200 Best Under A Billion list last year, alongside several other Penang-headquartered companies such as Mi Technovation, Pentamaster and Uchi Technologies. Its market capitalisation has since crossed the one-billion-dollar mark.1
“UWC is expected to grow in the trajectory of expanding global semiconductor market, especially with the developments in 5G, Internet of Things applications, and electric and autonomous vehicles,” says deputy CEO Matin Ng.
Local Companies Compete Globally
Many Penang-based companies in the semiconductor, semiconductor-related and E&E industry are not only competing locally, they are going head-to-head as well with Singaporean and Chinese firms. Local companies benefit from FDIs through constant upgrades to meet the standards required to become an approved supplier to global industry giants.
Although cyclicality is a commonly cited challenge in the E&E industry, UWC believes that the increasing digital adoption and expenditure for electronics and devices will continue to drive growth for the industry for the next three to five years, at least. “Local industry players must continuously innovate, move up the value chain and expand their growth beyond the current levels,” says Ng, “and local companies have to seize business opportunities and widen market access availability through free trade agreements, including the Regional Comprehensive Economic Partnership.” All this they are to do while standing strong against stiff competition that are emerging in the globalised supply chain.
In view of the growing approved manufacturing FDIs recorded by Penang in recent years, UWC is however optimistic that these FDIs will further enhance the state’s supply chain ecosystem. From its end, the company is keen to capture opportunities in the local supply chain as well as from overseas businesses.
Penang certainly has the fundamentals in place for a conducive and thriving business environment, but for the industry to be truly digitally connected, telecommunications infrastructure needs to be bettered. UWC also proposes that end-to-end connectivity for public commute between the Island and mainland be strengthened and streamlined to attract more talents to work in the Batu Kawan Industrial Park where the company has been based since 2018.
STEM Workforce and Automation Drive Growth
The Mobile Bending Robot.
UWC has an estimated 1,000 employees, of which 700 are locals. Half the company’s workforce are degree holders, while 30% have a minimum skills certificate. But the shortage of talent supply, especially in the engineering field, remains a pressing problem for Penang and Malaysia. The percentage of STEM graduates from Penang’s public universities has reduced visibly, from 50.7% in 2008 to 41.2% in 2017.
Local firms are in competition with MNCs to recruit talents since most graduates are inclined to work for the latter instead. But local companies have a much deeper rooted presence and this provides talents, especially Technical and Vocational Education and Training (TVET) graduates, with more opportunities to scale up the career ladder, says Ng. “These graduates have much to offer the E&E industry. But sadly, their skills are underappreciated; this is partly due to the overall branding of TVET education. Its rebranding is definitely in order.”
UWC has set up the UWC Education Centre at Politeknik Seberang Perai to ready a sustainable talent pipeline to meet market needs. It is a participating organisation of the Malaysia Meister Programme (known previously as the German Dual Vocational Training). Participants of the programme are offered job placements at member companies, while they hone their skills at the Penang Skills Development Centre (PSDC). In collaboration with Penang Youth Development Corporation and PSDC, UWC has also set up a scholarship fund for eligible students enroled at PSDC.
UWC’s key focus continues to be in automation. Covid-19 and the series of MCOs have assured the company of its decision to automate and adopt Industry 4.0 transformation early on. Cloud computing and system integration were already being used to remotely monitor manufacturing activities and when the pandemic hit, these processes became vital in reducing social contact at the workplace through work-from-home practices, all the while ensuring that productivity is still on the increase. “Despite operating at minimum capacity during the MCO last year, UWC was able to maintain a quarter-on-quarter growth,” says Ng.
The Mobile Bending Robot.
To be sure, the adoption and adaptation of Industry 4.0 processes are dependent on challenges of varying difficulties and types; the requirement of customised off-the-shelf software in a high-mix-low-volume operation and the need to upskill workers with new machines and processes are just two examples. UWC is committed to increase its software-manufacturing processes integration and robotic processes in product inspection, welding and product traceability.
To narrow the knowledge gap between suppliers and UWC, the company also pursued a supplier development programme (SDP) to train identified key suppliers according to required specifications. This is in line with the UN’s Sustainable Development Goals 8: Decent Work and Economic Growth, and 17: Partnerships to achieve the Goal.
UWC’s track record reflects a focused manufacturing dynamic and high growth velocity. It aims to continue to provide more technological possibilities, and to increase its business value internationally over the long term.
1 As of March 16, 2020, the company’s market capitalisation is around
Lee Siu Ming is a senior analyst at Penang Institute, and believes in the Latin phrase Audi alteram partem, loosely translated as “Listen to the other side".
Ong Wooi Leng heads the Socioeconomics and Statistics Programme at Penang Institute. Her work lies in labour market analysis and socio-economic development.