Principle Of Management
"Malaysia To Be Major Hub For MRO - Based on
Malaysian Aerospace Industry Report (AIR)
2011/2012 a...
About AIR (Aerospace Industry
Report)
 Published biennially by the Secretariat of the
Malaysian Aerospace Council (Malays...
About MiGHT
 MIGHT was established as an independent, industry-driven
non-profit organization in 1993 and was formally
in...
 Today, three main roles for MIGHT in developing high
technology industries for Malaysia continues on being a
consensus b...
Industry Outlook
 Throughout the implementation of the Blueprint,
the council has shown its commitment in realising
the p...
 Since then, a numerous strategic national programmes have
been implemented to catalyst the development of the four
prior...
Concentration developing area
for aerospace-related activities
across Malaysia
Market Synopsis of The Malaysian
Aerospace Maintenance, Repair &
Overhaul (MRO) Sub-Sector
Sector Overview
 The approximately USD$ 46 billion global aircraft
Maintenance, Repair and Overhaul (MRO) market
witnesse...
Malaysian Market
 The Malaysia aircraft
maintenance, repair and
overhaul (MRO) sector has seen
massive growth in recent y...
Malaysian Aerospace Industry Size
 Malaysia is targeting to capture 5% of global MRO
market by 2015; capabilities higher ...
Growth Rate and Forecast
 The Global MRO market is growing exponentially. A six year analysis
indicates that the market w...
 Hence, with fiscal pressures mounting, legacy airlines are forced to look
outside the box for a solution. Malaysia Airli...
 2012 has been a good year for Malaysia in terms of FDI
(Foreign Direct Investment) as well as Domestic Direct
Investment...
Employment
 In total, the aerospace industry currently employs
approximately 65,000 workforces of which the commercial
aviation is t...
 Such an organization will help in developing the quality of the
manpower in the field, help the students to get an inter...
Centre of Attention for MRO
Investments.
 Since the Malaysian government started to promote
Malaysia as a new hub for Maintenance, Repair and
Overhaul activities,...
 Malaysia’s MRO industry, not unlike the global
composition, can be divided into three main
categories and a smaller grou...
 With companies such as Rolls-Royce’s civil aviation
unit as well as the largest local MRO, Malaysia
Airlines maintenance...
Ideal MRO Locations
Due to the geographical nature of the country, one
single location will not be able to serve the entir...
2. Senai Airport
 Senai has the ability to service Singapore at the same time
maintaining a significantly lower cost, whi...
MAJOR DOMESTIC PLAYER
 Over the last 40 years, MAE has been
delivering total maintenance, repair
and overhaul solutions (MRO)
solutions ranging...
 SR Technics (Zurich, Switzerland) has moved a step
closer to making Malaysia its hub for
maintenance, repair and overhau...
 With the new facility, Malaysia will become
the base for its regional customer service
and distribution centres serving ...
 Airod was established in 1976 as the first and only in-country facility to
support maintenance, repair and overhaul of a...
Sepang Aircraft Engineering
 At the KL International Airport (KLIA), Sepang Aircraft
Engineering (SAE) was established an...
Composites Technology
Research Malaysia (CTRM)
 Composites Technology Research Malaysia Sdn. Bhd. (CTRM) was
incorporated...
Major Foreign Players
GE Engine Services
Malaysia
 General Electric decided on Malaysia as the regional hub for its
aircraft engine MRO activit...
Eurocopter Malaysia
Sdn Bhd
 A wholly-owned subsidiary of Eurocopter
(EC) Group, Eurocopter Malaysia (ECM)
was incorporat...
Honeywell Aerospace
Services (M) Sdn Bhd
 A subsidiary of Honeywell Aerospace LTD, established in
1998 in Malaysia, mainl...
Malaysian Aerospace
Community
End of Presentation
Thank You
Malaysian Aerospace Industry Report 2013/2014 - An Overview for Aerospace MRO Industry
Malaysian Aerospace Industry Report 2013/2014 - An Overview for Aerospace MRO Industry
Malaysian Aerospace Industry Report 2013/2014 - An Overview for Aerospace MRO Industry
Malaysian Aerospace Industry Report 2013/2014 - An Overview for Aerospace MRO Industry
Malaysian Aerospace Industry Report 2013/2014 - An Overview for Aerospace MRO Industry
Malaysian Aerospace Industry Report 2013/2014 - An Overview for Aerospace MRO Industry
Malaysian Aerospace Industry Report 2013/2014 - An Overview for Aerospace MRO Industry
Malaysian Aerospace Industry Report 2013/2014 - An Overview for Aerospace MRO Industry
Malaysian Aerospace Industry Report 2013/2014 - An Overview for Aerospace MRO Industry
Malaysian Aerospace Industry Report 2013/2014 - An Overview for Aerospace MRO Industry
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Malaysian Aerospace Industry Report 2013/2014 - An Overview for Aerospace MRO Industry

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Malaysia To Be A Major Hub For MRO - Based on Malaysian Aerospace Industry Report (AIR) 2011/2012 and 2013/2014.

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Malaysian Aerospace Industry Report 2013/2014 - An Overview for Aerospace MRO Industry

  1. 1. Principle Of Management "Malaysia To Be Major Hub For MRO - Based on Malaysian Aerospace Industry Report (AIR) 2011/2012 and 2013/2014." Group Member: Muhammad Faizal Reefear Eapear Mohd Yusuf Muhammad Syafwan Norakilah Nuramanina
  2. 2. About AIR (Aerospace Industry Report)  Published biennially by the Secretariat of the Malaysian Aerospace Council (Malaysian- Government Group for High Technology) to disseminate information on the industry in an integrated, cohesive and non-biased manner.  AIR is expected to create awareness among industry players, both local and foreign, and among the Malaysian public on the aerospace industry.
  3. 3. About MiGHT  MIGHT was established as an independent, industry-driven non-profit organization in 1993 and was formally incorporated as a company limited by guarantee on 15th October 1994.  Between 2004 and 2010, MIGHT operates under the purview of the Ministry of Science, Technology and Innovation. In 2011, MIGHT was transferred to the Prime Minister’s Department under the Science Advisor to the Prime Minister.  Under the patronage of YAB Prime Minister of Malaysia, MIGHT is governed by a Board of Directors, helmed through the joint-chairmanship of a prominent private sector personality and the Science Advisor to the Prime Minister.
  4. 4.  Today, three main roles for MIGHT in developing high technology industries for Malaysia continues on being a consensus building think tank, built through a membership program which remains as MIGHT’s main platform to build linkages.  MIGHT also takes on the role of nurturing high-tech industries via catalytic interventions programmes when the need arises.  MIGHT also acts as a key interlocutor, bringing together policy and technology nurturing to advance high technology interests in Malaysia.  Programmes and activities will include building strategic partnerships and alliances, technology acquisition and nurturing, capacity building as well as strengthening the growth of these sectors through policy interventions and flagship programmes.
  5. 5. Industry Outlook  Throughout the implementation of the Blueprint, the council has shown its commitment in realising the potential of the aerospace industry.  One of the crucial decisions made by the Council was the rationalism of the industry in 2001 where four main focus areas were identified as follows: 1. Maintenance, repair and overhaul (MRO) 2. Parts and components manufacturing 3. Avionics and System 4. Global Centre for Training and Education
  6. 6.  Since then, a numerous strategic national programmes have been implemented to catalyst the development of the four priority areas which include: 1. Transforming of Subang International Airport to Malaysia International Aerospace Centre (MIAC) to become a regional MRO hub. 2. Endorsement for a locally development Unmanned Aerial Vehicle (UAV) System to support military surveillance operations. 3. Intensification of aerospace Research and Technology activities through the establishment of Aerospace Malaysia Innovation Centre (AMIC) 4. Development of earth observation satellites – TiungSAT and RazakSAT. 5. Implementation of two aerospace projects under the economic Transformation Program (ETP) as part of the business Services National Key Economic Area (NKEA).
  7. 7. Concentration developing area for aerospace-related activities across Malaysia
  8. 8. Market Synopsis of The Malaysian Aerospace Maintenance, Repair & Overhaul (MRO) Sub-Sector
  9. 9. Sector Overview  The approximately USD$ 46 billion global aircraft Maintenance, Repair and Overhaul (MRO) market witnessed the strongest year–on–year growth of about 10% during 2008–2009.  Driven by an increasing fleet of newly acquired aircraft worldwide, shortage of trained and experienced professionals, and a need to cut aircraft maintenance and operational costs, MRO market holds out a various of opportunities for players in the technical services outsourcing business.  Leading players across the world are consolidating and adapting to the market dynamics.
  10. 10. Malaysian Market  The Malaysia aircraft maintenance, repair and overhaul (MRO) sector has seen massive growth in recent years.  Despite very stiff competition from Singapore to become the MRO hub of choice in Asia, Malaysia is determined to carve out its place under the sun.  Observers say the recent crisis in the aviation industry caused by soaring fuel prices, and the current global economic downturn, is shifting the balance of cost- effectiveness in Malaysia's favour.  In June 2008, an Aerospace & Defence consultant from Frost & Sullivan said Malaysia has the potential to capture a higher market share in the aircraft MRO industry with its existing infrastructure and available facilities.  The recent downturn, which has seen the worst and is picking up, has forced global players to take a hard look at their cost structure.  This strategy is slowly shifting down stream activities to geographies that offer cost effective infrastructure and human resources.
  11. 11. Malaysian Aerospace Industry Size  Malaysia is targeting to capture 5% of global MRO market by 2015; capabilities higher up the MRO value chain are necessary in order to close the gap.  The overall industry performance for 2012 recorded turnover growth of 9.4% compared to 2011, contributing 3.23% to the country’s GDP (Growth Domestic Products).  The RM30.3 billion turnover is contributed by the vibrant airlines activities particularly the low cost carriers, the expansion of aerospace manufacturing businesses and the positive development in the airport sub-sector.
  12. 12. Growth Rate and Forecast  The Global MRO market is growing exponentially. A six year analysis indicates that the market will grow from USD$46 billion in 2010 to USD$52 billion in 2013.  Outsourcing of MRO work has been developing slowly but steadily over the last 20 years or so. With the recent damp market coupled with the Icelandic volcanic ashes, it has become extremely important for Airline operators to outsource its maintenance work, and get leaner in terms of operational cost.  This industry has fast become extremely lean in terms of cost structure. One of the main cost drivers has always been MRO. Instead of maintaining an in-house centre that caters exclusively to internal requirement, it has become a norm to outsource MRO.  Setting up an MRO is a costly affair, and if it is solely for internal consumption, it becomes a very expensive cost centre. Initially legacy airlines tried to spin off their MRO centre as an independent centre catering to internal as well as third party requirement.
  13. 13.  Hence, with fiscal pressures mounting, legacy airlines are forced to look outside the box for a solution. Malaysia Airlines has already converted its MRO into an independent centre, MAE (MAS Aerospace Engineering).  But market forces, mainly driven by the AirAsia model will eventually ensure MAE will become less of a MAS subsidiary and more of an independent organization.  This offers a multitude of opportunities for potential foreign investors in Malaysia in the near future as there is a huge vacuum for a dedicated MRO service provider in the country for all domestic and regional airliners.  Though Singapore is a major competitor, Malaysia offers a lower cost base for all segments of the MRO sector. In the long run this will be a major boost for building the competency and capacity in the country.  Based on these facts, Malaysia is well positioned to capture a sizable chunk of the market due to a vibrant hinterland fast developing in the region.  A point in case is the manner in which Indian private airlines sending its aircraft over to Malaysia for heavy maintenance due to a paucity of such service providers in the country.
  14. 14.  2012 has been a good year for Malaysia in terms of FDI (Foreign Direct Investment) as well as Domestic Direct Investment (DDI).  According to MIDA, a total of 11 projects were approved in 2012 with investments totalling RM2.3billion, representing 30% of the total investments of the transport equipment industry.  From this investments, 61% or RM1.4 billion were DDIs which indicates that the special aerospace industry incentives package approved in 2010 has not only attracted quality FDIs, but also encourage local players to expand their businesses.  In them of job creation, the approved projects are expected to make available a total 2,739 employment opportunities mostly in the aerospace manufacturing sub- sector.
  15. 15. Employment
  16. 16.  In total, the aerospace industry currently employs approximately 65,000 workforces of which the commercial aviation is the largest employer with 23,300 peoples (42%), followed by MRO sub-sector at 10,500 (16%) and the aerospace manufacturing sub-sector at 6,400 (10%).  The Malaysia MRO ‘big three’ companies employs more than 5000 various skilled employees; 1. MAE - 3,500 employees 2. AIROD - 1,700 employees 3. GE Engine Service - 500 employees  Supported by over 20 other companies bringing total MRO employee to over 7,000. These numbers are expected to increase at the rate of 15-20% annually for next 5 years.  Though there are many Aviation Maintenance Schools set up in the country over the years, there is still a major gap in terms of an internationally acceptable quality school.
  17. 17.  Such an organization will help in developing the quality of the manpower in the field, help the students to get an international exposure, and allow the domestic companies to set up operation in foreign lands so as to be closer to the market itself.  This is the route Singapore has taken so far. There is major shortage worldwide for License Aircraft Maintenance Engineers (LAME) and associated technicians, and it will be some years before the shortage is addressed.  The single aisle as well as wide-body aircraft market is already shifting to Asia with China and India leading the pack. North America is no longer the biggest market for aircraft OEMs today, and hence there will be a strategic shift in critical support structures towards Asia.  Malaysia with its geographical, demographic and cost advantage is well poised to capture a large segment of the market.  For that, infrastructure and human resources is critical and hence require strategic planning well ahead of its time.
  18. 18. Centre of Attention for MRO Investments.
  19. 19.  Since the Malaysian government started to promote Malaysia as a new hub for Maintenance, Repair and Overhaul activities, Selangor has become the centre of attention for MRO investments.  Offering advanced infrastructure, including the largest international airport and the most air-traffic of Malaysia, as well as a highly trained and educated workforce.  Selangor is a prime opportunity to locate MRO activities expanding into ASEAN. Since the region has been resilient during the economic crisis, sustained growth in air cargo and air travelling with Thailand, Indonesia and Malaysia ahead highlighted potentials.
  20. 20.  Malaysia’s MRO industry, not unlike the global composition, can be divided into three main categories and a smaller group of other suppliers.  The three main categories are 1. Airframes 2. Engines 3. Components  The Malaysian Department of Civil Aviation (DCA) registered 25 MRO related corporations until June 2011, while the Malaysian Investment Development Authority (MIDA) as well as the Malaysian Industry- Group for High Technology (MiGHT) already list more than 30 related corporations.
  21. 21.  With companies such as Rolls-Royce’s civil aviation unit as well as the largest local MRO, Malaysia Airlines maintenance subsidiary, located at Subang and KLIA, there is plenty of reputable industry knowledge already available.  In addition, GE’s aviation engine unit and Eurocopter, the world’s largest helicopter manufacturer, have chosen Subang with neighbours such as the local Airod Sdn Bhd. The latter has gained a global reputation of excellence and reaches clients in 33 different countries worldwide.  With more than 30 companies in Malaysia and mainly Selangor, the potential from this cluster, collaborations and existing facilities at both airports is high.
  22. 22. Ideal MRO Locations Due to the geographical nature of the country, one single location will not be able to serve the entire gambit of the industry. 1. Sultan Abdul Aziz Shah Airport, Subang (SAAS)  Currently the biggest MRO centre in the country, mainly due to the presence of MAE as an anchor customer and supplier.  Approximately 90% of the nation’s MRO infrastructure is located in this airport.  Malaysia Airports Holding Bhd (MAHB) has set up an independent agency known as Malaysian International Aerospace Centre (MIAC) to manage this business at Subang Airport.
  23. 23. 2. Senai Airport  Senai has the ability to service Singapore at the same time maintaining a significantly lower cost, which gives customers long term benefits.  The Malaysian government is already incentivizing the Southern region of peninsula Malaysia in order to capture a large number of Singaporean businesses and MRO will be one of them. 3. Kota Kinabalu International Airport (KKIA)  KKIA airport is the busiest international airport in the country after KLIA. It is an alternative transit point between the East Asia & North Asia and Australia & New Zealand.  Over the years traffic has been on the rise, and one of the reasons for the major airport expansion that was carried out recently by MAHB.  KKIA airport has the right environment for major MRO centres and support activities due to this market. It is also a hub for regional aircraft market and hence is ideal to set up the related support structure.
  24. 24. MAJOR DOMESTIC PLAYER
  25. 25.  Over the last 40 years, MAE has been delivering total maintenance, repair and overhaul solutions (MRO) solutions ranging from aircraft maintenance services and modification, component and engine support, specialized engineering and workshop support, training and consultancy, to integrated fleet technical management.  Furthermore, Frost & Sullivan has projected significant growth in the aviation segment in the ASEAN region as a result of the development of ‘Open Skies’ policies in various regions of Southeast Asia resulting in increased demand for air travel and more investment into aviation services.  Recognising the potential that aviation MRO holds for Malaysia, it has been identified as one of the Entry Point Projects (EPP) under the Business Services National Key Economic Area (NKEA) of Economic Transformation Programme (ETP).  Identified as a high value-add sector, the aviation MRO services sector is seen to be one of the key sectors to nurture innovation and broaden knowledge and skills base in the country.
  26. 26.  SR Technics (Zurich, Switzerland) has moved a step closer to making Malaysia its hub for maintenance, repair and overhaul (MRO) activities in the Asia-Pacific region with the commencement of its latest facility in Shah Alam in January.  The company, one of the world's leading independent technical aircraft services providers, through its subsidiary SR Technics Malaysia Sdn Bhd, also successfully ramped up operations at its new centre of excellence for component maintenance on February 4.  The facility will be equipped to handle many labour- intensive repairs covering five main product areas, namely avionics panels, hydraulics, mechanical, pneumatics and electrical.
  27. 27.  With the new facility, Malaysia will become the base for its regional customer service and distribution centres serving its Asia Pacific-based integrated component services customers and managing all of their component supply needs.  SR Technics mainly focuses on servicing Airbus, Boeing and Embraer parts.  Among its other customers are Malaysia Airlines, Etihad Airways, Singapore Airlines, SWISS, easyJet and Cathay Pacific.
  28. 28.  Airod was established in 1976 as the first and only in-country facility to support maintenance, repair and overhaul of aircraft belonging to the Royal Malaysian Air Force (RMAF).  In 1985, Airod was privatised as a joint- venture company between National Aerospace & Defence Industries (NADI) of Malaysia and Lockheed Aircraft Systems International (LASI) of USA.  Airod is today in complete indigenous ownership, and is the major MRO operator in the military space of the country. Major customer is obviously the RMAF.  Airod is the only maintenance and modification centre In Malaysia authorized by Lockheed Martin for C-130/L-100 service.  Major customers from Middle East, ASEAN, East Asia and Africa use its facility to carry out major overhaul, very regularly.
  29. 29. Sepang Aircraft Engineering  At the KL International Airport (KLIA), Sepang Aircraft Engineering (SAE) was established and signed up Malaysia-based low-cost carrier AirAsia as its launch customer.  It has built two large hangars at the airport and is currently looking to attract third-party work.  Apart from MRO and technical design services for wide and narrow body aircraft, SAE aims to provide full maintenance system and configuration management, reliability data, cost control and status reporting for customers, through its self- developed computer system.
  30. 30. Composites Technology Research Malaysia (CTRM)  Composites Technology Research Malaysia Sdn. Bhd. (CTRM) was incorporated in 1990 with Ministry of Finance incorporated as its principle shareholder. Its strategic role was to develop the aerospace and composites industries.  The Malaysian DCA has certified CTRM's wholly owned subsidiary, CTRM AV as an Approved Maintenance Organisation for light aircraft such as the Eagle 105B, Cessna 300 and the Cessna 400.  DCA Malaysia also approved CTRM AV and its engineers to sign off the Certificate Release to Service for the Diamond DA40 & DA42, Piper PA34 & PA28, and the Cirrus SR3G.  CTRM AV also provides out-of-base maintenance by posting its qualified engineers and technical personnel in Ipoh, Kota Bahru and Bintulu. It also offers maintenance services in Johor, Subang and as far away as Bangkok, Thailand.
  31. 31. Major Foreign Players
  32. 32. GE Engine Services Malaysia  General Electric decided on Malaysia as the regional hub for its aircraft engine MRO activities many years ago. GE vice- chairman, president and chief executive officer John G Rice recently announced a US$ 3 million investment for the expansion of the company's engine overhaul and service maintenance facility in Subang.  John G. Rice said, "The capabilities expansion at GE Engine Services Malaysia (GEESM) sees a further US$ 3 million to be invested in the next three years that will generate US$ 50 million in revenue.  These new investments will offset the projected drop in older product lines and will keep GEESM at the leading edge of engine MRO technology.“  GEESM is a joint venture between GE Engine Services, Inc, owning 70% and MAS, which holds the remaining 30%.
  33. 33. Eurocopter Malaysia Sdn Bhd  A wholly-owned subsidiary of Eurocopter (EC) Group, Eurocopter Malaysia (ECM) was incorporated in August 2002.  Since then, it has established its footing as not only a centre of sales and distribution of EC products, but also a leading maintenance, repair and overhaul (MRO) service centre in Malaysia.  Spanning more than 50,000 square feet, ECM is fully-equipped to provide a broad spectrum of services ranging from scheduled and unscheduled maintenance, aircraft modifications, logistics support, ground handling and garage.
  34. 34. Honeywell Aerospace Services (M) Sdn Bhd  A subsidiary of Honeywell Aerospace LTD, established in 1998 in Malaysia, mainly involved in repairing and overhaul of Auxiliary Power Unit (APU) and its associated components. Malaysian centre certified by FAA.  Auxiliary Power Units deliver highly reliable electrical and pneumatic power solutions for a variety of aircraft operations, including main engine starting, cabin cooling and electrical power generation.  Using leading edge technologies, integrated system architectures and innovative service solutions to deliver higher performance with enhanced reliability and reduced operational costs.
  35. 35. Malaysian Aerospace Community
  36. 36. End of Presentation Thank You
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