FMM: Slowdown affecting SMEs, MNCs in Penang

March 12, 2019 editor Corporate News, Economy

GEORGE TOWN: Some of The Federation of Malaysian Manufacturers (FMM) Penang members have experienced a slowdown in their business in the past two to three months.

FMM vice-chairman Datuk Lee Teong Li told StarBiz that most of them were small and medium enterprises (SMEs) involved in the food, electronic and metal component manufacturing businesses.

“So far, none have indicated that they would downsize or cut their operational hours.

“They are just experiencing a slowdown in orders,” Lee said.

FMM Penang has 360 members, of which 75% are SMEs.

Lee was commenting on the economic downturn impacting the SMEs and multinational corporations (MNCs) in the country.

Recently, Renesas Electronics Corp announced that it would shut down its operations in the country from April to September.

It said both the front-end fabrication and back-end facilities would be subjected to a temporary suspension of production.

“We will suspend the front-end factories twice, coinciding with the Japanese holiday periods in May and in August, for approximately one month, respectively.

“Operations at our back-end facilities will be shut down several times, taking customer delivery schedules into consideration,” the announcement added.

Osram announced in January 2019 that it would resize its Penang and Kulim operations in response to weaker growth and an uncertain outlook, according to a March 8 announcement by the company.

According to Osram, a voluntary separation scheme was initiated for its research and development division on March 8.

“Function heads of these departments will hold meetings to communicate further details on this programme.

“The reduction is very limited, targeting less than 1% of the total Penang and Kulim employees,” the announcement said.

Lee said the current economic slowdown did not apply in general across the board for all the industries.

“Some of our members have benefited from the trade war between the United States and China. There are Chinese companies that have shifted their manufacturing base to Penang.

“They want to export from Malaysia to avoid the anti-dumping duties imposed on goods shipped out from China.

“The local packaging industry, for example, has benefited from the trade war,” he added.

Lee said moving forward, there was little visibility.

Meanwhile, the Malaysian Trades Union Congress (MTUC) Penang wants the state government to call for a meeting with the electronic manufacturers in Penang to gauge the depth of the downsizing problem affecting the industry.

MTUC Penang secretary K Veeriah said in a statement that MTUC Penang had taken sight of notices from a couple of MNCs involved in the electronic manufacturing sector announcing manpower downsizing, lower wage increases, lower bonuses and periodic plant shutdowns. “Besides the announcements, we have also received reports that other companies are also planning to implement such measures.

“The said notices that we have read attribute to a weak global demand, weaker growth and an uncertain global outlook as the underlying causes for the action undertaken by the said employers. The notices that we have seen and the information that we are receiving seem to indicate that the electronic-sector employers are initiating downsizing and shutdowns from end-March 2019 onwards.

“We believe that we have only received a tiny bit of information and are of the view that the uncertainty in the global market would, in all probability, impact upon most of the major players in the sector,” he said.

Malaysia will benefit from the relocation of investment out of China but will be negatively impacted if the world economy slows down and demand drops.

Source : TheStar