Building a Robust Local Ecosystem with PAC


The health of the local semiconductor, electrical and electronics, and automation ecosystem is a vital factor in long-term sustainable growth for ViTrox and the country. Precision metal fabrication is an essential part of the automation ecosystem, where fabricated metal components are mission-critical to automation machines. Therefore, ViTrox and other parties jointly established an associate company, Penang Automation Cluster Sdn. Bhd. (“PAC”) in January 2017 and commenced its operations in October 2019.

There are 3 key objectives in setting up PAC:-

  • To build and manage the local supply chain ecosystem to support local large companies (“LLCs”) and multinational companies (“MNCs”)
  • To support and fund the cluster development
  • To develop and elevate local small and medium-sized enterprises (“SMEs”) capabilities to become best-in-class SMART SMEs and world-class standard

PAC is a gated facility with a total of 17 industry lots fully occupied as of 31 December 2023. The whole cluster currently provides 311 career opportunities, and more will be employed in the near future, targeting 350 and more workforces. The core competency of PAC is manufacturing high-precision metal fabrication components, modules and systems. PAC specialises in precision tooling, computer numerical control (“CNC”) machining centres, sheet metal, structural fabrication and metal surface treatment.

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With the existence of the PAC ecosystem, ViTrox worked with all SMEs in the cluster to shorten the fabrication lead time by implementing the VJIT programme. Besides, any rework tasks from ViTrox can now be supported and expedited by PAC. From a product quality perspective, PAC helps to reduce ViTrox’s incoming quality assurance (“IQA”) workload and resources with its outgoing quality assurance (“OQA”) services and Ship-to-Stock (“STS”) programmes. This has indirectly improved the lead time for manufacturing use at the customer end.

PAC can also support ViTrox for any special inspection requirement using our coordinate measuring machine (“CMM”) machines with a maximum size of 3mLx1.5mW. From 2019 to 2023, PAC possessed 71 machines comprising electrical discharge machining (“EDM”) and CNC for machining and sheet metal operations. The entire PAC cluster has the strength of approximately 160 machines currently. Design development is one of PAC’s key expertise, where they can work closely with ViTrox’s R&D team for design improvement, which indirectly helps to save lead time and costs.

The SME cluster aims to enhance local SME capabilities to meet world-class standards, supporting the higher value chain ecosystem championed by LLCs and MNCs. PAC’s collaborative efforts play a pivotal role in attracting high-impact foreign direct investment and fostering long-term economic growth across various technology sectors and industries in Penang and Malaysia, particularly in semiconductors, electronics, aerospace, medical devices and automation.

There are 5 key aspects through which SMEs benefited from joining the PAC cluster.

Technology
  • Joining PAC enables SMEs to access government grants, leading to the acquisition of new high-technology 5-axis CNC machines and turn-mill machines.
  • Implementation of the Industry 4.0 Smart Manufacturing V-ONE solution to CNC machines in PAC and some legacy CNC machines of the SMEs enhances the operations.
Legal Requirement Compliance
  • PAC guides cluster SMEs in complying with legal requirements from the Department of Environment (“DOE”) and the Department of Occupational Safety and Health (“DOSH”), providing support during audits.
Knowledge and Skill Development
  • PAC facilitates in-house training by pooling cluster employees together, fostering the development of knowledge and skills among SMEs.
Entrepreneurship Opportunities
  • Many SME leaders in the PAC cluster, though new to company management, have valuable opportunities to learn from experienced partners in PAC. This exemplifies the development of young leaders within SMEs in the metal fabrication industry.
Sales
  • SMEs leverage the PAC ecosystem to expand their customer base, enjoying the privilege of increased sales opportunities through collaboration within the cluster.

In the metal components supply industry, sustainability poses a significant challenge, particularly in responsibly managing waste and pollution generated by business operations. PAC has taken a proactive stance in addressing these challenges by committing to strict controls on wastewater and air pollution resulting from its operations. Below are some ESG practices implemented in PAC.

Environmental ESG

Air pollution control

  • Deploy an industrial air scrubber system to filter air and treat hazardous contaminants before release into the atmosphere, effectively reducing carbon emissions and ensuring air quality.
  • Comply with requirements outlined in the Environment Quality Regulation 2014.
ESG

Noise monitoring

  • Implement noise monitoring practices, particularly during activities involving air guns, to manage and mitigate potential noise impact on the environment and surrounding areas.
  • Provide personal protective equipment (“PPE”) to ensure the safety of employees exposed to high noise levels.
ESG

Sustainable supply chain resilience

  • Support local SMEs through the Industry 4.0 Smart Manufacturing Facility, emphasising regulatory compliance with entities such as the DOE and DOSH.
  • Conduct coaching and training programmes for SMEs within supply chain clusters to enhance their work performance.
  • Engage in upscaling initiatives and proudly maintain ISO 9001 certification, contributing to sustainable and high-quality manufacturing practices.
ESG

Wastewater management

  • Implement industrial wastewater treatment systems to treat and discharge wastewater, aiming to prevent adverse effects on the environment, human health and the integrity of the company’s processes or products. This is especially critical when wastewater is reused.
  • Conduct routine monitoring of water quality, covering essential parameters such as pH levels, fluoride content and Color/Apparent Density Meter Index (“ADMI”). This proactive approach ensures the ongoing assessment and maintenance of high water.
Social ESG

Collaboration with the Penang Green Council (“PGC”)

  • Seek guidance from PGC on effective environmental management techniques and facilitate green-related certifications, aligning with its dedication to responsible and sustainable practices.
ESG

Community engagement

  • Providing internship opportunities for students to support educational development and strengthen the bond with the local community.
  • In 2023, PAC received many visits from educational institutions and shared their experience in metal fabrication engineering requirements and industry needs. Through these on-site visits and two-way communication, PAC helps education institutions establish the right direction and set appropriate expectations for training resources tailored to industries. Among the visits we received were from Jabatan Pendidikan Politeknik dan Kolej Komuniti (“JPPK”), University of Ubudiyah Indonesia (“UUI”), University of Kuala Lumpur and ViTrox College.
ESG

Employee welfare programme

  • Organise welfare programmes for employees’ well-being; which includes comprehensive medical and insurance benefits.
  • Foster an inclusive and equitable environment, ensuring equal treatment for all employees, with a commitment to providing adequate and comfortable hostel accommodation to reinforce our dedication to the holistic well-being of the workforce.
  • Organise festive gatherings, a durian feast and free vegetarian lunches sponsored by generous shareholders.
ESG

Safety and health measures

  • Implement audiometric monitoring and preventive measures to detect and address potential hearing-related problems among individuals exposed to occupational noise hazards.
  • Conduct employee awareness and training to ensure its employees are well-informed about environmental stewardship and sustainability practices. Training programmes cover topics such as waste reduction and pollution prevention.
Governance ESG

Core values

  • PAC places a strong emphasis on its core values: Devotion, Harmony, Integrity, Transparency and Ethics (忠,和,廉,明,德).
  • These values are seamlessly integrated into both the recruitment process and employee performance appraisals, fostering a culture of trust and commitment within the organisation.
ESG

Engagement with customers

  • Seek feedback and insights through customer satisfaction surveys to improve customer satisfaction and establish trust and value for customers; identify areas of improvement such as quality, delivery time, competitive pricing and customer services. This promotes a collaborative and transparent approach to improving overall operational efficiency and customer relationships.
ESG

Governance framework

  • Adopt Anti-corruption Policy as an integral component of integrity management to proactively combat corruption, embezzlement and abuse of power within the organisation. This policy underscores PAC’s commitment to maintaining the highest ethical standards in all aspects of its operations.
  • Adopt Environmental and Safety Policy to ensure a safe and sustainable work environment. As part of PAC’s policies, the proper management of scheduled waste is prioritised, emphasising compliance with regulatory standards.

With ISO 9001:2015 certification, PAC demonstrates a strong commitment to quality management systems. Customers trust in the consistency and high standards of products or services, leading to increased customer satisfaction and loyalty. PAC received testimonials and recognition from its stakeholders: “Customers prefer PAC because of the cleanliness of the production floor which is rare in comparison with others within the industry. Contributing to the environment does make business sense.”

ESG ESG

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