AAPICO Reveals Secrets How to Be the Major Player in the World-Class Automotive Market

Latest Update May 3, 2020
  • Share :
  • 15,047 Reads   

"Every vehicle on the road in Thailand must have at least one piece from our company." If there is a company that dares to say this sentence, entrepreneurs in the automotive industry probably have different answers in their mind. That is the sentence said confidently by Mr. Yeap Swee Chuan, President and CEO of AAPICO Hitech Public Company and the founder of the AAPICO Group, which is a large manufacturer and distributor of automotive parts in Thailand. With the goal of reducing fault to 0 PPM (part per million) for the quality of automotive parts that are reliable, dependable and exported to more than 100 countries around the world, AAPICO said the above sentence with so much confidence that we shall explore why. 

Mr. Yeap Swee Chuan, President and CEO of AAPICO Hitech Public Company and Founder of AAPICO Group

 

AAPICO Hitech Public Company is a large business in the Thai automotive industry. It was formerly known as Able Autopart Industries Company Limited, which was registered in 1985, and engaged in the business of assembling and distributing automotive parts for Ford. It became AAPICO Hitech in 1996 and was listed on the Stock Exchange of Thailand in 2002. It did a one-stop business of design, manufacturing and installation of Jigs. It also manufactured automotive parts for the leading car manufacturing and assembling companies in Thailand.

Currently, AAPICO has many subsidiaries and partnered companies in Thailand and abroad. AAPICO has 2 manufacturing plants located at the Hitech Industrial Estate, Ayutthaya, and Amata City Industrial Estate, Rayong. The main customer groups are manufacturers of many leading automotive brands that Thai people are familiar with, such as Toyota, Ford, Isuzu and others. Thirty-five percent of AAPICO's revenue comes from manufacturing the OEM automotive parts for the leading car manufacturing and assembling companies in Thailand, which include floor parts, cross member, pillars, brackets, clips and other sub-assemblies, and fuel tanks, which mostly are metal parts. However, since the automotive metal parts market in Thailand is small, the company, therefore, expands the business to manufacturing automotive parts that are plastic parts, forging parts, machining, and frame components, which is another strength of the company that has full integration.

 

 

Mr. Yeap continued to talk about the importance of pushing the company to the international level that, for the world market, the manufacturers of automotive parts that have products sold only in Thailand are less reliable than companies that can export parts. AAPICO, therefore, expanded its business and introduced modern production technology into the manufacturing process. The use of advanced manufacturing processes is the key to being an industry leader in that it can supply innovative and high quality products more quickly and economically to the global automotive market, according to AAPICO's lean concept. Currently, the company has exported parts to over 100 countries around the world with no faulty workpiece. The United States and the Japanese are the only two markets that AAPICO hasn't been able to successfully market.

The company sets a goal to be a "Lean & Happy Company," relying on corporate social and environmental responsibility. If employees are happy, then the organization is also happy; if the organization is happy, then the collaboration efficiency will increase, resulting in quality products and on-time shipments making customers happy, which in return, brings happiness back to the company. Mr. Yeap emphasizes that the most important thing in work is loyalty and honesty.
It is probably the above working concept that allows AAPICO to work more efficiently and able to overcome many crises including the Asian Financial Crisis in 1997 and the massive flooding in 2011 and the company received the "World Excellence" award from Ford that same year.

 

 

Year 2019-2020: Downturn of Global Automotive Industry 

During 2019, the company's situation was not very good, which was in line with the world situation. Though the company's revenue increased by 10%, most were export revenue and revenue in Thailand decreased by 5% because AAPICO tried to expand the business to the United States. However, Mr. Yeap commented that it was not a concern because failure is essential to the challenge.  AAPICO was also successful in supplying jigs and automotive molds for 15 companies including Vinfast in Vietnam.

In 2020, Mr. Yeap predicts that the automotive industry in Thailand will continue to decline like in China, Asia and in other regions around the world. However, despite the downturn, Thailand is still an important source of motor vehicle manufacturing and this industry has the highest export value or approximately nearly 900 billion baht in the past year, making the auto parts industry unstoppable.

Visions to the Thai Automotive Industry 

In addition, Mr. Yeap has expressed an interesting vision for the automotive industry that "The automotive industry will last forever. In Thailand, this industry is a large business with a large amount of exports. So I think that the Thai automotive industry will remain stable, but there may be some changes such as the advent of electric vehicles (EV). However, EV will not totally replace vehicles with combustion engines because of some consumer values; people who like to ‘feel’ the engine would still prefer vehicles with combustion engine; or those who have to drive a long distance would probably choose to fill up with fuel instead of stopping to charge for hours. Besides, it would probably be a long time before Thailand is ready for the infrastructure, which I expect that eventually EV would be a big part of the automotive market, while 30% are hybrid cars and another 30% are fuel-powered cars."

Though the advent of electric cars will cause changes in the automotive industry, what will change, essentially, is the engine while approximately 80-90% of other parts will remain the same as current vehicles. 

"The automotive industry is a difficult industry. It is highly challenging, difficult to control quality, requires high investment and needs to reduce product prices every year. Therefore, it is extremely difficult for new entrepreneurs to enter this industry."

As for his view of the government, Mr. Yeap commented that if the government of a country is not good, the industry in that country would not be good. He said the case of pushing the export of pickup trucks was a good support from the government.  Currently, Thailand can export pickup trucks to more than 100 countries around the world because of good support. He also believed that if there is more support in the future, the automotive industry in Thailand may go farther.

 

Because 99.9% Is Not Good Enough

The fact that every vehicle on the road in Thailand must have at least one piece from AAPICO is probably a good indicator of AAPICO's success. This is the result of an important policy to "manufacture automotive parts with a fault of 0 PPM" because in each vehicle quality of all parts means the safety of the driver and other road users. If there is a faulty part, it may cause accidents and damages to life and property.

“That is the reason why we need 0 PPM since 0.1% of the millions of vehicles in the market means thousands of cars. I am very confident that every car on the roads in Thailand has at least one piece coming from our factory.”


 

0 PPM Leads to Technology Selection; TaeguTec Is One of the Suppliers 

It is not exaggerating to say that AAPICO and TaeguTec have known each other since the first day of operations because the company chose TaeguTec cutting tools from the days before becoming the current AAPICO company. The “cost reduction” concept of TaeguTec cutting tools meet the needs of AAPICO the most, so we have chosen TaeguTec cutting tools of many types in the form of cost down project development and production line improvement to increase productivity with reduced time. 

 

TaeguTec is able to help AAPICO achieve its goals. Providing good service through close collaboration between the engineers of both companies, TaeguTec is also able to support AAPICO promptly, especially when the production line has a problem. Due to the quality and service, TaeguTec cutting tools have been continuously selected in the AAPICO plant for turning, hole drilling, milling, and grooving.

Every time AAPICO opens a new production line, the TaeguTec team will provide support from the period of sample production test, making it possible to tremendously reduce costs in the test and the cutting tool costs. Both companies value the importance of manufacturing technology development, which is the key of businesses that rely on technology. It can be seen that the cooperation  between AAPICO and TaeguTec to continuously develop technology has been supporting their sustainable relationship in business operations.