TRW Automotive Factory Opens

TRW Inc, a global Tier-1 supplier to the automobile industry, officially opened its 30th manufacturing facility in Asia at Bukit Beruntung, near Rawang, Selangor, today. The brand new plant, which has a total investment of RM67 million, was set up for the purpose of supplying brake and chassis modules to Proton for installation in the new Waja model. It commenced production earlier this month.

Explaining the reason for choosing the Bukit Beruntung area for its factory, TRW Automotive ASEAN Managing Director Mike Lahner said that the location is excellent because it is adjacent to the North-South Expressway, enabling quick and direct connections to the Proton factory in Shah Alam, KLIA in Sepang and Port Klang. It is also in the same neighbourhood as Perodua, which TRW hopes will become a future customer, and would also be strategically located if Proton City becomes a reality.

At this time, the Bukit Beruntung factory is geared towards producing 50,000 modules annually – the number being identical to the initial volume of Proton Wajas to be made annually, the national carmaker being the factory’s only customer.

“This is our third operation in Malaysia and brings TRW’s total investment here to RM152 million since our first plant was established in Penang in 1984,” said Mr Lahner. “We plan to make this new factory a world-class facility and utilise lean manufacturing concepts for maximum efficiency,” he added.

Mr Lahner said that the factory’s operations are unique in that suppliers such as TNT, ATS, Johnson Controls and Castrol Industrial have offices on-site. This concept is conceptually similar to a relatively new trend in the automotive industry with the most significant example being the new GM’s ‘Blue Macaw’ plant in Brazil where a number of Tier-1 suppliers have established their own mini-operations within a gigantic automobile factory.

Major supplier
TRW is among the nine Tier-1 suppliers which were commissioned by Proton right from the beginning of the Waja project. In developing the new model, Proton had decided to go for modular construction which also meant that suppliers would be given the responsibility for developing certain areas of the car. Such an approach is now being taken by many manufacturers as it reduces cost while increasing quality through more efficient installation processes.

In the case of TRW, the company was responsible for the design and supply of front and rear foundation brake components, actuation devices, and ABS componentry. TRW’s Traction Control technology will also be incorporated in the ABS units supplied for the Waja.

TRW’s involvement actually came through the Light Vehicle Braking Systems divsion of LucasVarity plc, which was the company originally given the contract in September 1997.
It was the first total system design and manufacturing contract won following the merger of the Lucas and Varity braking businesses in 1996 and at that time, LucasVarity said it was commissioned to provide such systems for “three models of the car to be built by Proton” in 2000. Last May, LucasVarity was acquired by TRW Automotive for US$7 billion, which led to the present relationship with Proton.

Meeting LMCP
Adhering to the government’s Local Material Content Policy (LMCP) which aims to reduce imports of raw materials and also avoid the establishment of ‘screwdriver operations’, the factory is sourcing up to 60% of its materials, including the castings, from Malaysian suppliers; in the medium-term, the company is aiming for up to 72%.

“Proton made it very clear that meeting the LMCP was a significant condition,” Steve Lunn, TRW’s Senior Vice-President (Operations), told AUTOWORLD.COM.MY. “Apart from that, we were also expected to take on the role of technology partner and ensure transfer of technology over the long-term. In that respect, we plan to bring to Malaysia some of the world’s most advanced products available.”

Long-term plans
“This business represents an important first for TRW,” noted Mr Lahner. “It is our first braking system business with Proton and an ideal opportunity to establish this product line in the ASEAN region. It also demonstrates TRW’s commitment to expanding its manufacturing and technical capabilities in the region.”

Mr Lahner confirmed that TRW’s long-term strategy includes using Malaysia as a hub to export automotive systems to other countries and other TRW factories. “But this will only occur in two or three years time,” he added.

Like everyone else in the auto industry (except perhaps Malaysia’s national carmakers), TRW is eagerly looking forward to AFTA in 2005 and to the regional opportunities it promises. Mr Lahner said that the company is already looking at regional aspects and has applied for AICO benefits which allow duty-free exchange of components between ASEAN countries.

“We made the application about six months ago and it’s being processed. At the same time, we are also studying CEPT (the Common Effective Preferential Tariff scheme which is the basis for the AFTA) to see if its suits our business plans in the long-term,” he revealed.

TRW Automotive operations in Malaysia (the head office operates under the name of LucasVarity (M) Sdn Bhd) is also the regional headquarters for its Automotive Chassis Systems operations in ASEAN. Besides the other two plants in Malaysia which produce electronic components (JB) and steering/suspension units (Penang), TRW also has two factories in the Eastern Seaboard Industrial Estate at Rayong in Thailand.

As a global automotive company, TRW does business in 30 countries and employs some 170,000 people (of which 50 are at the new Bukit Beruntung factory). Last year, its sales were US$17 billion, of which US$11 billion came from automotive business (TRW is also a major supplier to the aerospace and defence industries).