Easy does it for a assembly line maker
Engineering business poised to reap the rewards of a steady growth plan
SLOW and steady wins the race.
And after 20 years of diligently developing his products and establishing the business, Chaw Kamheng can say that now is indeed an opportune time for modular conveyor solutions provider Modu System (M) Sdn Bhd.
The company could have grown bigger a lot faster, of course. But Chaw is contented that he has put in place the right building blocks for the company’s long-term survival.
“I’m an engineer. We focus on making the product good. But the thing is, we can’t grow very fast,” he acknowledges.
Chaw considers himself more of an engineer than an entrepreneur. That stubborn belief in good quality has helped him grow the company not just in Malaysia but in the global market.
Now, in its prime, Chaw expects the company’s revenue to increase by 25% this year, mainly supported by its global business.
Chaw’s affair with engineering started in his student days and was solidified while working in Singapore.
Chaw, born and raised in Johor, moved to Singapore to continue his tertiary education. He harboured an interest in the construction line but he was given the opportunity to study mechanical engineering instead.
Upon graduation, he worked for a Swedishbased original equipment manufacturer technology provider in Singapore.
He climbed the ladder rapidly and within a few years, realised that there was not much room left for him to move up.
So in 1995, he decided to call it quits to set up his own conveyor systems distribution company in Singapore.
Chaw started at a good time. Demand for conveyor products in the region was growing with the economic boom of the mid-1990s. He brought products in from Europe and supplied them to manufacturers in the region.
Conveyor products were mainly imported from Europe at the time as there were no local or regional manufacturers.
However, the onset of the Asian Financial Crisis not long after forced him to relook his operations as customers started defaulting on their payments and the cost of importing products became unbearable.
The company almost disappeared, says Chaw. Modu was reduced from a thriving business with a staff size of 10 to an outfit with only one employee and more than S$400,000 in uncollected debt.
But Chaw was not about to be knocked down by the crisis.
He relocated back to Malaysia in 1998 to look for new customers here and to look for ways to develop conveyor products locally to keep costs in check.
Chaw started designing his own conveyor system and looked for suppliers to produce various parts of the conveyor line for him.
“It wasn’t easy. There are not that many man ufacturers for conveyor products in the with the Lord and there were none in this part of the world So no one had the expertise to produce th the products here. I ended up teaching our suppliers how to make what we needed,” he says.
Modu also sourced for the materials and machinery needed by its suppliers to manufacture the parts.
For the next 10 years or so, Chaw worked on designing and developing his own products.
“We continued to import products while developing our own. We produced more and more parts as we go along. But we started by producing a very narrow range of products so we could only serve a very limited group of his tomers,” he adds.
Eventually, Modu built up an impressive catalogue of conveyor solutions for various industries tries including food and packaging, pharmaceu-tical tical, automotive, electronics and electric and carton handling.
Chaw says it is not easy to produ uce a w range of conveyor systems such ass Modus
“You are covering all kinds of industries. You need to have an understanding of all the different manufacturing processes for different products and the limitations of the var rious industries so that you can provide them with h a suitable solution to automate as much of th heir processes as possible,” he explains.
His grounding in engineering h elped him focus on providing the right solutions for his customers. He is obsessed about providing “Swiss precision and Japanese qua ality”.
Chaw continues to keep a tight control over the supply of materials for his conveyor systems till this day.
He says 95% of their products a re sourced within 50km radius of its base in Shah Alam Selangor. That way, its suppliers w will be a to provide quick delivery and Mod du wou not need to keep large amount of i inventory.
The close proximity also enable es Modu to regularly inspect their su uppliers’ operations to ensure qualityy is maintained.
About 10 years ago, Chaw starte ed looking at export opportunities. H He notes that the availability of cheap p foreign labour here made it difficult t to implement more sophisticated conveyor and automation solutions.
Modu’s advantage on the global l stage,
he says, is its lower cost of production and its wide range of products. Modu is currently one of only two conveyor manufacturers in SouthEast Asia.
He set up offices in the UK, China, the United States and Australia to grow its market abroad.
Today, the company has an impressive portfolio of international clients including German multinational Bosch.
Chaw’s move abroad was also rewarded through increased sales. While its sales averaged about RM5mil from 1998 to 2005, Modu posted revenue of more than RM40mil last year, of which, more than 80% was from exports.
The export market will continue to drive the company forward, he adds.
However, Chaw does not dismiss the opportunities that are available in the local market, particularly with the Government’s drive to implement Industry 4.0. Modu expanded its offerings last year to include robotics in its conveyor systems to help manufacturers with automation.
He estimates that local revenue could double to RM10mil this year.
Modu is in the midst of building its new threeacre factory in Bukit Raja, Klang. Chaw says the new place, expected to be completed early 2018, will provide the team with a wider space to assemble and test bigger conveyor systems before they are sent out to customers.
“It is like constructing assembly lines,” he says.
Is he still interested in con- struction?
“Yes. Now that the company is stable, I am doing a little bit of small construction projects. Our new factory project is supervised by me,” he says proudly, showing off photos of the building coming together.
He hopes to make the workplace a more meaningful space at the new factory with more recreational spaces for his staff of 60.
He also hopes that this will make the engineering business look a little more interesting to younger talents.
He laments that not as many people are interested in engineering these days. People prefer to do business instead.
Chaw is still very much involved with the company’s product development and he continues to tinker about with his conveyor systems.
“I think I am stubborn, like the Germans. I believed that there was a future in this and so I stayed on and didn’t want to let go of the company even when it almost disappeared in 1998.
“Personally, I’m happy that I am still able to contribute in my middle-age. Some people who remain in corporate are at the top of their game and can’t move up anymore. But I can still developdevelop products and have the flexibility of run-run ning my own business. “I think my booming years are now,” the 49-year-old enthusiastically echoes the prime position that Modu is in at the moment.
Chaw says he has worked hard to prove the company’s capability to the industry and is optimistic that the company will have many more years to go.