Assembly Services Sdn Bhd (ASSB), the subsidiary of UMW Toyota Motor Sdn Bhd which is involved in automobile manufacturing, rolled out its 1 millionth vehicle yesterday. The plant is the third one in Malaysia to achieve this milestone since it began operations. The other two plants which earlier achieved cumulative production of 1 million units were Proton in 1996 and Perodua in 2005.
ASSB was one of the first vehicle assembly plants in the country when it started operations in 1968. Initially, it produced around 11,500 units a year. In 2010, it did 70,352 units, its highest ever.
ASSB was set up in response to government’s call to assemble vehicle locally to create employment and increase transfer of technology, for which incentives such as lower import duties were offered. The plant was set up by the Inchcape Group (then a distributor of a number of brands including Toyota) in 1968 in Shah Alam, then a newly-established industrial estate in Selangor.
Over the years, the plant assembled a great variety of makes and models from Germany, France, UK, Japan and even a small batch of Chevrolet Impala cars from the USA. From its initial volume of around 11,500 units a year in the late 1960s, periodic investments in new machinery and expansion of facilities saw its annual capacity growing rapidly; by 1998, it was turning out 50,000 units a year.
“ASSB was the only plant in Toyota’s worldwide network of production facilities to assemble such a diverse variety of models. We assembled models as different as the Land Cruiser Prado and Corolla in the same place, something which is unique and not done elsewhere because the platforms are different," recalled a senior manager who worked at ASSB from the day it began operations. "In fact, the plant has done virtually every type of vehicle from small cars to vans and pick-ups and even large lorries!"
First car produced at ASSB in 1968 was the first generation of the Toyota Corolla (left).
Today, a wider range of models like the Vios (right) are assembled there
During the 1970s, as the popularity of Japanese makes increased, the volume and number of Toyota models assembled by ASSB rose. This led to increased transfer of technology from Toyota which helped ASSB to increase its efficiency and build quality. Needless to say, many elements of the Toyota Production System were incorporated at ASSB and it obtained extensive support from its ‘mother factory’ in Japan, the huge Honsha plant.
As new and better production techniques became available, they were adopted at ASSB, bringing higher levels of quality to the finished products. In 1979, for example, an electro-deposit system of applying protective primer paint to vehicle bodies was added which resulted in a significant increase in corrosion resistance. Later on, the paint processes were further upgraded with assistance from the Tahara plant which makes Lexus luxury saloons.
ASSB began using the electro-deposit (ED) system in 1979, significantly improving the corrosion-resistance of its vehicles. Today, advanced automated processes are used to paint cars at a faster rate.
A lot of technology has been transferred from Toyota’s Japanese factories to make ASSB more efficient and able to produce high-quality vehicles. Like most modern auto plants, the ‘Just-in-Time’ system is used
which minimises waste by having parts delivered to the line only when needed (right).
Like all Japanese factories, ASSB has been using the "Just-in-Time" system which gets needed parts to the assembly lines only around the time they are actually needed. Pioneered by Toyota, the system used at ASSB is a ‘modified’ version which takes into account the differences in the supply chain and also the volume.
The Malaysian market grew rapidly during the 1990s and in the middle of that decade, ASSB (which was taken over the UMW Toyota Motor in 1982) undertook the most extensive modernization programme in its history to enhance efficiency and reduce costs substantially. Though the workforce had increased, productivity had improved faster and each worker accounted for an average of 33 units in 1997. The 500,000 cumulative production mark was reached at the end of the decade. Last year, the plant’s output was the highest in its history with a total of 70,352 units produced, comprising the Toyota Vios, Fortuner, Innova, Hiace and also certain Hino commercial vehicles.
Over 43 years, the plant has produced all types of vehicles for the Malaysian market (picture above left shows school children watching an Unser MPV being assembled in 1999) and more recently, it has also begun exporting the Hiace.
Right from the start, to meet the government requirements of using more locally-made components, ASSB has worked closely with local companies to source many items. The interaction saw the transfer of know-how to other companies, particularly in the areas of cost-control. The plant also set up its own component-making divisions to make seats and exhaust systems. These divisions grew quickly and eventually became profitable subsidiaries that are today also supplying components to the assembly plants of other makers in Malaysia as well as overseas.
In fact, the export of components from UMW Toyota Motor’s subsidiaries has been substantial but not highlighted. This aspect impressed even the MITI minister who was present at the 1-millionth unit ceremony yesterday. He admitted that the focus was usually on exports of complete vehicles and now understood that component exports do make a sizable contribution to the country’s earnings. Together with vehicles (primarily the Hiace which is exported to Thailand), the company exported RM915 million worth of parts and vehicles in 2010, an increase of 36% compared to 2009.
Localization of parts has been ongoing since the plant began operations, in line with the government’s expectations. Tyres were among the earliest items to be sourced locally and today, even body panels are stamped at a local company. By value, 40% of parts used in ASSB-assembled vehicles are locally made.
“We encourage our local vendors to use the Toyota Production System in order to improve quality, lower cost and expedite delivery. Furthermore, we also encourage them to acquire technical collaboration with global vendors to enhance their production technology,” said Tan Sri Asmat Kamaludin, Chairman of UMW Toyota Motor, adding that the company today has 60 Tier-1 local vendors which are responsible for supplying integrated components and systems.
By value, 40% of the parts used in vehicles assembled at ASSB come from companies located in Malaysia, 15% from Japan and 45% from suppliers in other countries (mostly in the ASEAN region). The 40% localisation was achieved quite rapidly during the last decade as it was only 19% in 2003. This was largely due to sourcing of body panels for the Vios from Toyota Auto Body which is also based in Selangor. The plant also produces resin parts such as the bumpers and dashboards and will also be supplying more items for coming models.
As responsible corporate citizen, UMW Toyota Motor has always been very sensitive to the need to protect the environment. This is taken seriously at ASSB which has a world-class level of environmental management in line with the expectations of Toyota Motor Corporation that all its production facilities worldwide meet global environmental standards. ASSB was the first automobile assembly plant in Malaysia to receive ISO 14001:1996 certification in respect to this.
Though the present environment in Malaysia is not exactly a ‘level playing field’ for all automobile companies, UMW Toyota Motor will continue to develop and make further investments in anticipation of market growth and competition. Besides spending RM460 million to upgrade ASSB’s facilities over the past 5 years,  it will invest another RM350 million over the next 3 years. Much of this allocation will be used for the preparation of local assembly of the new Camry model in 2012.

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