Continental in Malaysia – All-round automotive supplier
As those of you with jobs that include frequent overseas travel can testify, each trip out of the country invariably attracts the interest and curiosity of the people around you. They are always curious where will you be flying to next, for how long, which airline, and so on. After that comes expressions on how lucky you are that your work sends you overseas and other speeches of the like.
Overseas travel is part of life as a motoring media, and one trip that I was a part of this year was a week-long visit to Germany in July. In the weeks leading up to the trip, conversations of the assignment with friends had a familiar pattern to it, and when they were told that the visit was under Continental’s invitation, the response that invariably follow would be, “Tyres ar?”
What follows is the same pattern of explanation where I explain that Continental’s business goes way beyond that of tyres. In fact, it was recently explained to us that the combined sales of passenger car and truck tyres accounted for only 27% of Continental’s global revenue in 2010, which totaled €26.0 billion.
Those of you unaware of Continental’s businesses beyond tyres need not think of yourselves as ignorant. It was something that this writer learned only after joining the motoring press and being invited to tour the Automotive Group’s plant in Seberang Prai in late 2009. The plant started operations in 1985 for the sole purpose of manufacturing meter clusters for the original Proton Saga.
Ownership of the plant has changed hands many times, and it was only in 2007 that it became part of Continental AG after the group bought over Siemens VDO. Today, with the exception of the Inspira, Continental supplies the instrument clusters of all Proton and Perodua models, but their business portfolio does not end there – the plant is export dependent since 1988, with approximately 70% of its output sold overseas to clients such as BMW, Audi, and the PSA Group.
It should also be noted that the products of this plant sit pretty high up the technological food chain. It makes electronic parking brakes for BMW and the PSA Group, key fobs for Nissan, and analog clock mechanisms for Mercedes-Benz. Mind you, we are not talking about a simple Quartz clock, but a very sophisticated GPS-linked self-correcting timepiece. So, if you drive your Mercedes E-Class across the Thai border, you can observe your dashboard clock winding back an hour aligning itself to Bangkok’s time zone.
We recently revisited the Prai plant together with a few media colleagues from other publications. Aside from a few new products, what we saw in there was essentially the same as what was shown to us when we were there two years ago. One variation of the agenda from our previous visit was a stroll through the plant’s R&D wing which designs instrument clusters for its clients. Seeing the designers at work reminded this writer of his childhood past time sketching instrument panels.
Despite suggestions that Malaysia has lost its competitive edge to its ASEAN neighbours, Continental’s plant in Prai shows us how it is done to have a competitive and profitable setup within our system. By virtue of being a net exporter, the plant has a Manufacturing Warehouse business license, which means its import of components and raw materials are duty free, giving it a huge advantage in cost competitiveness.
Although geographically far from the Klang Valley, the plant’s location at Seberang Prai is within touching distance of the Butterworth port, Bayan Lepas airport and North-South Highway giving it excellent accessibility via sea, air, and land transport. Being in the vicinity of electronic giants such as Intel, Motorola, and Agilent also means that Continental is supported by a vast network of ancillary industries that cater specifically for the electronics business. This makes the Prai plant extremely conducive for its business manufacturing automotive electronics.
Continental’s tyre business has a similarly large presence in Malaysia, with two plants producing various passenger car and truck tyres. Situated in Alor Setar and Petaling Jaya, the two plants are operated under Continental Sime Tyre Sdn Bhd (CST), a joint venture between Continental AG and Sime Darby Bhd. Originally formed as Dunlop Malaysian Industries Bhd in 1962, the company eventually became part of the Sime Darby Group and then merged into a JV with Continental AG in 2003.
In addition to the two plants, CST also operates Continental Sime Tyre Technology Sdn Bhd, which possesses ISO/IEC 17025 certified research laboratories. Distribution of tyres under CST’s umbrella, which also include Dunlop and Sime Tyres, is performed through a dealer channel of 1,200 tyre outlets nationwide.
