EDMUND A. ARAGA Vice-President

K.E.A. INDUSTRIAL CORP.

Very few Filipinos really spend time and persevere in works, like metal fabrication, that could have been the seedbed for the country’s manufacturing industry or it could just be the lack of government support that makes pursuing this kind of business less palatable.

One of the few metal fabricators that never wavered despite the country’s sad manufacturing state is K.E.A. Industrial Corp.

Edmund A. Araga, vice-president of K.E.A., together with sister Katherine and Alvin are pursuing their father’s goal to bring K.E.A to the world because of its quality works and innovation.

The company

K.E.A. was founded by the late Edgardo V. Araga, a BSBA graduate who pioneered and established his metal fabrication company since early 70’s at its original plant in Bangkulasi, Navotas.

K.E.A. was so successful then that they supplied almost all parts of the Isuzu Gemini car model before. Gemini had a very high local content of 70 percent. K.E.A. also produced parts for two airconditioning brands.

But the Philippine economy plunged into an abyss when opposition leader Ninoy Aquino was assassinated. This led the company to go bankrupt, forcing his father to migrate to the US in 1984, leaving behind the family business. But his father came home in 1990 with $10,000 and restarted his metal fabrication business.

As part of company evolution and development it was incorporated as K.E.A. Industrial Corporation in November, 1991 and relocated to its new manufacturing plant in Bacoor.

Its history did not end here, K.E.A. commits to produce quality products, provide prompt service with the clients fulfillment and the commitment of neverending research and development.

Its main expertise is in the field of fabrication of any types of metal products such as household appliance parts, electronic parts, and offer services to the automotive and motorcycle industry. The company is currently engaged in metal stamping and metal finishing works for mass production requirements.

For the past 25 years, K.E.A. has been supplying parts and components to some of the country’s motorcycle and car assemblers. These include Mitsubishi Motors, Honda Cars Philippines, Isuzu Philippines Corp., and motorcycles for Yamaha and Honda Philippines.

His father, who died of lung cancer last year, had set lofty ambition for the company: To make it known worldwide.

“Some of the machines he invented include serration machines and hydraulic presses that weigh 80 tons each. We have three of these machines, each costing R2 million had we bought them. We have an edge also in terms of design,” he adds.

Now, the three siblings who are running the business vow to continue their father’s legacy.

“We continue to enhance the operation from the approach in making the jigs to the procurement of machines,” he adds.

In addition, K.E.A. continues to undergo training for its people with the car brands for familiarization and ensure they meet the requirements. In turn, they benefited from the new technology.

“So, there was technology transfer from Japanese companies,” says Edmund. This has led to K.E.A. in building their capability to manufacture more parts for motorcycles and other car models being assembled locally.

K.E.A. now supplies parts for L300 and Adventure vehicles of Mitsubishi and Honda City of Honda Cars. It is also Toyota tier 2 supplier for Vios and Innova and motorcycles for Yamaha Mio and Honda XRM.

It supplies small and big parts of motorcycles such as the main stand, side stand and handle bars. For the automotive brands, K.E.A. is supplying the brackets that are attached to the chassis.

This homegrown Filipino company is now producing between 50 to 60 metal products to vehicle assemblers. Some of its metal products fabrication and services include metal parts stamping, tooling design and fabrication, jigs and fixtures fabrication, electro static powder coating, electro zinc plating, special machine design & fabrication, hydraulic shearing, general steel & special projects fabrication, and pipe bending, among others.

E-Vehicles The family invested using all internally generated funds for their business, which assets now reaching R70 million, including 250 machines on its 3,500square meter plant in Bacoor, employing 111 workers.

“We are one of the smallest in the industry,” says Edmund. But K.E.A. always positioned itself with an eye for new opportunities.

It is now eyeing to participate in the government’s modernization program of the old and dilapidated public utility vehicles such as the diesel-powered tricycles and jeepneys, the country’s foremost modes of public transportation. The family launched its e-vehicle project in 2014.

To prepare for this, Edmund said they are building a new second manufacturing plant in an 8,000-square meter property in Silang, Cavite in anticipation of the mass production of electric-powered tricycles. K.E.A. is investing additional R80 million for this new plant. K.E.A. is now offering three e-trike variants.

At present, the major parts of e-trikes are imported. For instance, motors are imported from China. The controllers and chargers are also imported from both China and Taiwan.

“But the body is ours,” says Edmund. The only hurdle now is the overall price of the e-trike which could still fetch a high of R315,000 per unit for the 6-7-seater variant because of the huge cost of the imported lithium battery, but which has a longer lifespan and shorter charging period. It has 10 units of these e-trikes that it deploys under a lease e-vehicle program serving the major routes in Bacoor City.

Based on its pay per use program for the lithium battery e-trikes, a driver’s take home is between R500 to R700 per day from gross earnings of R1,000 to R1,200 per day.

“It is not bad for someone working 8-5 hours a day. Our e-trikes have been running for two years already,” says Edmund.

“We have around five charging stations in Bacoor,” says Edmund.

So far, K.E.A. has already deployed 60 units including 10 of the lithium battery units. Some of its buyers are companies which are now conscious of the environmental impact on the use of diesel fuel.

Metal fab Actually, its push for e-trikes also started from their father who conceptualized the design of the sidecar at the back of the motorcycle, which is now the design of its e-vehicles.

The company applied for registration in 2012 with the Board of Investments and was approved under a pioneer status. It is also accredited with the Land Transportation Office as manufacturer, assembler, importer, dealer and supplier of e-trikes.

But Edmund said they are coming up with a new e-vehicle variant that can accommodate 3 passengers for R150,000 to R200,000 only using the lead acid battery by another local battery company Motolite.

According to Edmund, his company will focus on building e-trikes because this is where they see the most potential.

The only challenge now is education on the use of e-vehicles. He noted of the various safety issues of the conventional tricycles and the lack of standards.

“There is this resistance to change, that is the most difficult,” says Edmund. This is the reason that e-trike proponents are first partnering with local government units.

So far, K.E.A. deployed a total of 50 units of lead battery e-trikes and 10 evehicles with lithium battery in Bacoor.

While LGUs are all for the modern e-trikes, they have difficulty winning an argument with the existing conventional tricycle operators and drivers given the huge cost.

Conventional tricycles only cost R70,000 per unit or just half the price of the cheapest e-trike of K.E.A. This is the reason that industry players are lobbying for some support and incentives in order to make their units affordable to tricycle owners and operators.

“We can also tap financing from Land Bank of the Philippines, but we need for consumers,” says Edmund, who also serves as vice-president of Motorcycle Parts Producers and Exporters Association and Philippine Parts Makers Association.

The industry is hoping they are going to get some incentives under the Comprehensive Tax Reform Program because e-vehicles and even hybrid vehicles will be entitled to tax breaks, which should bring down prices of this environment-friendly vehicles to substantially go down.

K.E.A’s additional R88-million investments will be used for e-vehicle manufacturing and monthly salaries of R100,000 for e-trike workers.

With automation, the new facility can produce 100 to 200 units a month from the current 10 units. They will also need to create dealerships in the provinces, but that would entail additional financing.

The industry hopes to convert 30 percent of the 2 million units of conventional tricycles into e-trikes. There are at least 10 e-trike companies in the country.

This new e-trike model can seat three passengers and hopefully at a far lower price. This model can also run even on a 30-degree incline.

If they can produce 100 to 200 units a month, Edmund said this volume can help lower cost by about 30 percent.

Edmund hopes that with all the government support and scale, their latest e-trike model can be sold for R130,000 per unit.

Compared to other countries, Edmund said the Philippines is still far from competition. That is why K.E.A. is focusing on e-trike production.

But there is volume in the industry because more people are also taking tricycles than jeepneys. With growing demand, K.E.A. now operates six days a week and on two shifts.

“There is a huge potential because there are many cities and we are over 100 million Filipinos already. We have booming villages with many transportation issues, plus we have an advocacy for healthy environment,” says Edmund, who also works as unit manager of Sunlife.

He could only wish for the government to really make good its support to evehicle assemblers. Edmund, who is also vice-president of the Electric Vehicles Association of the Philippines, noted that there is a good indication the government is moving towards that direction.

According to Edmund, the ADB e-trike project failed to really take off because the very high price has discouraged takers. There was also no thorough study for the project.

Legacy In a way, Edmund said that his father’s wish for K.E.A. “to be globally known as one of the most efficient and effective manufacturers in the field of metal industry” is gaining headway.

“So, we are working hard to promote our e-vehicles,” says Edmund.

Indeed, his father’s wish is slowly gaining recognition. NASA scientist Dr. Max Schwandner II, visited the Cavite plant, and a European company is keen on buying a few units of its e-trikes for use in France. Some ASEAN countries like Malaysia also expressed interest in the K.E.A. e-trike.

“The NASA scientist came to check on our plant because he came to know our operation from a common friend through the social media,” shares Edmund. The NASA scientist also checked on the local condition and noted that the e-trike is a big help to the environment. He even suggested to Edmund to interact with solar power firms for the battery charging.

He also urged for further collaboration and hinted that its supply of battery could possibly come from Malaysia.

“We have lots of inquiries,” adds the 42-year-old Edmund, who finished marketing at San Beda College.

“Based on our observation, they are very impressed with what Filipinos can do because we are the leader in innovation in e-trike. I mean the proof of concept is working,” he adds.

Notably, the domestic industry players get such recognition even without enough government funding, and no research and development.

In contrast, he said, the Thai government concentrated on automotive manufacturing and they put focus on it. This resulted in most car companies investing in Thailand as hub for the ASEAN region.

“We should have a specialization, we should concentrate on e-trike and e-vehicles,” says Edmund.

Edmund cited that more young people with better earning capacity, and eventually this improved purchasing power will be extended to the provinces. This will fuel more demand for a better quality of living environment.

To serve this growing market, Edmund said “We always strive to be the best we can be. Demonstrate a passion for excellence in work by continuous training and improvement with a sense of urgency in doing the job with care, excellence and quality. We can only achieve these through teamwork with mutual trust and respect to everyone.”

Family

Working in a family business is all about compromise. Edmund, the youngest, submits to his brother Elvin, the eldest, and calls him his boss. Their sister Katherine is the administrator while Edmund is vice-president for sales and marketing and also serves as the corporate secretary.

“We have to work together as a family to sustain the business and for the next generation to appreciate the business,” says Edmund, who runs 21 kilometers on weekends and 5 kilometers three times on weekdays.

In fact, some of their workers grow up with the company and some of their children are already working at the same factory. Some of its workers are not even high school graduates but they learned the skills in metal fabrication along the way.

“We have 14 welders, including lady welders. We give them regular training,” adds Edmund, whose favorite past time is going grocery with his daughter on weekends and goes to the barber with his son once a month.

According to Edmund, K.E.A.’s management and employees are committed to deliver services through innovative systems that are of international standards that meet or exceed our customers’ requirements through ongoing continuous improvement to services and processes.

Innovation

K.E.A. aims to be consistent in providing quality products & services with innovation and global competitiveness.

As proof of their standards, K.E.A. is ISO Certified for the past five years and is on its next phase of certification.

“We always see to it that our processes are monitored and our training programs updated,” says the father 3 kids.

Edmund hopes to be able to supply some parts for the Mirage, which will be produced by Mitsubishi Motors Philippines as its entry into the government’s CARS Program. They have been advised of additional 10 parts, mostly chassis parts, that it may produce for Mirage out of the more than 2,000 car parts. He cited Yamaha for being very aggressive in its localization program.

Among the locally assembled vehicles, the L300 model has the highest local content of as much as 80 percent. However, this is already decades-old model that is long overdue for the muchneeded change. But it still remains very popular especially for the small and medium enterprises.

The industry is already petitioning the Department of Environment and Natural Resources to change the engine but retain this model because local parts makers are going to lose their businesses.

There is so much potential in the evehicle sector, but the challenge is just overwhelming. The Filipino assemblers have a chance to take this lead as the country hosts the E-Vehicle Summit in ASEAN this year.

The local industry is playing its role to the hilt with the assistance of the government. This is the time to bring Filipino innovation to the forefront at least in the ASEAN front.

And K.E.A. will be there standing tall.