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This article first appeared in The Edge Malaysia Weekly on September 24, 2018 - September 30, 2018

FROM the Eight Samurai1 of Penang’s electrical and electronics industry to Volvo kick-starting Shah Alam’s automotive industry, the development of Malaysia’s manufacturing sector is inextricably linked with foreign direct investment.

As these foreign companies built their bases in Malaysia, they developed local supply chains to ensure the smoothness of their operations and to maintain costs. Over the years, these suppliers became huge producers in their own right, employing engineers, technicians and other workers in the thousands.

Down south in Johor, one company stands out for developing the state’s high-value manufacturing ecosystem.

Since 2003, Dyson Ltd has made Senai its global manufacturing hub. Over the last 15 years, the UK-based producer of high-tech home appliances has injected billions of ringgit into the economy by outsourcing its production to local contract manufacturers, some of which have grown into large, public-listed companies.

With its local partners, Dyson produces 15 million units that are exported to more than 75 countries worldwide. For instance, Angelenos (natives or residents of Los Angeles) make use of Malaysian-made Dyson bagless vacuum cleaners.

While contract manufacturing is a tested and proven business model, technology is not necessarily transferred. However, in the case of Dyson and its manufacturing partners, the sharing of knowledge, skills and technology is embedded in the partnership because locally produced parts and components have to meet Dyson’s high standards of quality.

“With our contract manufacturers, we design the production line, control procurements and production processes because almost everything we make is unique to us,” founder Sir James Dyson tells Malaysian journalists at a recent roundtable session.

The company takes pride in coming up with new solutions to everyday chores, such as high-powered hairdryers, bagless and cordless vacuum cleaners, and bladeless stand fans. These technological innovations require very specific and high-quality parts and components.

Dyson’s relationship with Malaysian parts and components manufacturers had started years before the company moved its manufacturing operations to Johor as it sourced plastic parts and components from Malaysian producers.

But when the company decided to move its production to Johor, it had to source a lot of other parts elsewhere as the local producers did not have the capability.

For example, as Dyson uses aluminium tubes in its products, it taught Malaysian producers to make the parts to its stringent specifications and quality standards, and also imported specific machines and tools to enable them to fulfil their contracts. Consequently, the skills and technological capabilities of local manufacturers improved.

“Dyson is very different; we develop and design every component in our products. How it is made is very important to us, so we control the manufacturers, we control the quality, purchasing and so on,” Sir James points out.

“We are not contracting out; we are heavily involved with the manufacturers and teaching them how to make each of our products as it comes out.”

Although making every product unique and cutting-edge has resulted in Dyson’s products being priced beyond the affordability of many, especially in the emerging markets, Sir James stresses that the process is key to maintaining the quality of each product.

“If we just outsource the production to, for example, a vacuum cleaner manufacturer in China, we might have a cheaper product but it would be a very much worse product, in my view. And I am not sure that they can do it either, not because they are incompetent but because everything we do is very specialised, very different and ground-breaking,” he says.

It is worth noting that Dyson has also developed and tapped Malaysian talent by setting up a research, design and development (RDD) centre in Senai, Johor.

Called the Malaysian Development Centre (MDC), it employs 1,200 people with 80% of the workforce being Malaysian. Most of them are engineers who test the hardware of Dyson products to ensure its physical and functional durability.

Although Malaysia is undeniably a lower-cost production centre than the UK, Sir James reveals that the quality of the local workforce and graduates was a key reason for Dyson’s shift to Johor.

To source local talent, Dyson partnered local universities to ensure graduates met the company’s standards, and co-developed programmes to cultivate the available talent in the country.

One such programme is the James Dyson Awards, which is open to university-level students and recent graduates studying product design, industrial design and engineering. Participants are required to come up with inventions that could be applied to improve people’s livelihood.

 

Electric vehicles powered by Dyson’s technology

Dyson’s perseverance in developing high-quality and technologically cutting-edge household products, coupled with its business acumen, is borne out by its earnings.

Last year, turnover jumped 40% to £3.5 billion, while its earnings before interest, tax, depreciation and amortisation grew 27% to £801 million.

Just under three-quarters of its growth came from Asia while continental Europe grew at a more sedate 21% and the Americas, 19%.

Not satisfied with its success in the household segment, Dyson is turning to other fields to make its mark, one of which is electric vehicles.

The company is investing £1 billion in the vehicle platform, and according to Sir James, an equal amount in battery technology. It aims to launch the electric car in 2020 and to give customers delivery of the vehicle in 2021.

Sir James reveals that his frustration at the lack of interest from the automotive sector to Dyson’s technology — to capture harmful particles released from diesel exhaust — prompted its venture into the sector.

Undeterred by the public apathy, Sir James committed the company to continue to innovate and develop new technologies that could one day provide the solution to global air pollution problems.

“I believe that electrically powered vehicles would solve the vehicle pollution problem so Dyson carries on innovating. These technologies, from high-capacity battery to energy storage systems and digital motors, power the Dyson hairdryers and cord-free vacuums.

“We’ve relentlessly innovated in fluid dynamics and HVAC systems to build our fans, heaters and purifiers … At the moment, we finally have the opportunity to bring all our technologies together to a single product.

“Rather than filtering emissions at the exhaust pipe, today we have the ability to solve the problem at the source,” Sir James said in a letter announcing the electric vehicle venture to Dyson’s 12,000 employees globally.

When asked about the progress of the electric vehicle project, he declines to divulge any information.

But how different will Dyson’s electric vehicles be from the likes of Tesla and other electric vehicles?

As Dyson has successfully revolutionised household appliances, can it weave its magic into electric vehicles? There was a time when nobody would believe that fans could be bladeless and vacuum cleaners could be cordless and bagless but Dyson changed that perception.

But more importantly, what kind of role would Malaysian companies play in Dyson’s latest technological ventures? Do we have the required skills and capabilities to become the company’s partner in its electric vehicle venture?

 

 

1 The Eight Samurai — Intel, AMD, Hewlett-Packard, Clarion, National Semiconductor (Fairchild), Hitachi, Osram and Bosch — are credited with driving the industrialisation of Penang

 

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