Here, KINIBIZ speaks to Ng Aik Chuan, managing director of Xin Hwa Holdings Bhd, and learns about what it takes to be able to move unconventionally large cargoes, as well as the course of starting up the fabrication plant.
Previously, KINIBIZ spoke about the fabrication yard and workshop run by Xin Hwa as a second core business. At that time, according to managing director Ng Aik Chuan, Xin Hwa was growing, with a fleet of about 100 lorries at that time.
“We financed our factory and property through bank loans, but purchased trailers and lorries through cash,” explained Ng, noting that this method was one of the solutions to overcome the problems of a small transporter.
The explanation came in that, by buying just one part of a lorry and trailer combination, basically just the lorry or the trailer, by saving up for it and paying it off in cash, it allowed the group to save on the interest charged by banks on loans.
“Over time, rather than it being used to pay for the interest, I would have saved enough to buy another part of the lorry. In this way, funds would be put for better use, rather than having to pay for interest charged,” said Ng, adding that this had reduced transaction times, as there was no need to wait for loan approvals due to the cash in hand.
Of course, since the topic was already brought to what Ng is proud of about Xin Hwa, KINIBIZ felt compelled to ask about the reward Ng feels is the greatest in managing the group.
“There are quite a few things that I am proud of about Xin Hwa. The first is the knowledge that we have done what other small transporters couldn’t. We are able to move supersized cargoes, as well as oil and gas and cable reels. I relish all of these as challenges to be overcome by the group,” said Ng.
The second, according to Ng, is the pride of the staff that he has. He recounted that there were drivers who had stayed on with the group through its formative years.
“I am proud of the staff for staying loyal, as well as for going above and beyond the call of duty. The group would not be where it is right now without the support of the people that make up our staff,” said Ng.
Ng is of course proud of Xin Hwa being listed on the Main Market of Bursa Malaysia, where the stock was oversubscribed 17 times.
“It was a very happy time. The oversubscription, as well as Xin Hwa’s highest value at RM1.40 per share, showed the high confidence of the market in Xin Hwa. We have strong facilities, and are a recognised name in Johor. This is the first step to seeing Xin Hwa’s lorries everywhere,” said Ng. (Xin Hwa shares closed at RM1.38 on July 27, 2015, but hit an intraday high of RM1.40 that day.)
Ng also noted that by becoming a listed company on Bursa Malaysia, it also came with its own set of challenges, namely that there are now more things to do in the group, such as making sure that announcements are prepared properly for Bursa.
“This being a new experience for us, we are still learning how to be a listed company. We have to learn to do things like preparing Bursa announcements and declaring through proper channels,” explained Ng.
Speaking of learning new things, KINIBIZ was also curious as to how Xin Hwa came to be proficient at moving supersized cargoes.
According to Ng, this came as part of how the fabrication workshop came to be as, initially, the workshop was there to maintain the trailers, but the group had no idea how to construct their trailers. However, they learned and observed, and soon made their first trailer.
“As we used that trailer which was made in our own fabrication workshop, we gained confidence as we watched it perform with no issues. So far, there have been no design issues with the trailer, with structural integrity and steel strength all doing well. As such, we made more trailers, and gained more confidence as we gained proficiency in making our own trailers,” said Ng, stating that the group’s trailers, which were made in-house, are of a better quality than those commercially available in terms of steel strength and design, allowing the trailers to last longer.
Of course, with such a good product, why not market it? Ng replied that while Xin Hwa does indeed sell its trailers, the trailers have an expensive price tag, due to the quality of the materials going into the production of the trailer.
As such, most of the trailers made by the group are those slated for in-house use, as Ng shared that not even 2% of the amount of trailers that they have made were sold.
“There is no way for us to lower the price of the trailer, due to the standard of the ingredients going into the production of a trailer. That is why the manufacturing capacity is for in-house use,” explained Ng, adding that there is actually a 20% saving in costs from making the trailers in-house, than purchasing a trailer commercially.
“We appointed a contractor who moved supersized cargoes for us, and by watching and observing, we learned how to do it from them. After about a year of watching and learning, we decided to fabricate our own trailers for the purpose of supersized cargoes,” said Ng.
Ng related that the trailers fabricated in-house for supersized cargoes are customised trailers that could be connected in different ways according to the cargo that needs to be carried, amounting to a trailer with extendable width and length. He noted that this is part of the group’s goal to be able to present the highest standard in land transport.
“The current focus of Xin Hwa is on supersized cargoes, of which there is no lack of cargoes to move due to the Pengerang and the Mass Rapid Transit projects,” said Ng, who hopes that this will be known as Xin Hwa’s specialty in time, and that there is definitely a market for moving supersized cargoes in Malaysia with the dearth of construction projects.
However, it was here that Ng brought up a point which he feels has been overlooked by a lot of transporters. Ng brought up the issue of matching the right lorry with the job.
“Lorries have different specifications, and the lorry assigned has to meet the scope of the job. A lot of transporters do not understand vehicle compatibility, and tend to assign the wrong vehicle for the wrong job,” explained Ng, noting, however, that Malaysia still has a lot of untapped potential in the field of land logistics.
Ng recalled one particular problem, where he needed to move cargoes to Kuala Lumpur, but it was at a time when Xin Hwa was still growing, and it was quite a task for the transporter then.
“This was a difficult problem at the time, and I spent about half a day thinking of ways to solve the issue. In the end, the problem was solved. I took a train up to Kuala Lumpur, and coordinated the lorries from there,” reminisced Ng, who admitted that he is a workaholic, as his hobby is to solve problems such as these.
As previously mentioned by Ng, Xin Hwa has, from the very beginning, been maintaining and repairing their own lorries, which allow for a faster turnaround time, as well as allowing for a better operational oversight. Through in-house maintenance and repairs, ng noted that the group is able to figure out what causes the lorry to break down.
“Was it the design of the trailer or cab? Was it how the driver was driving the lorry? Was it something that our people in the workshop overlooked? Or was it just something from wear and tear? Being able to answer these questions is one of the strengths of Xin Hwa, as it would allow us to constantly uphold ourselves to the highest standard we can by finding a solution to the problem,” explained Ng.
“If it was a design flaw, we would know to not purchase that particular cab design or to alter the trailer design. If it was a workshop error, we would learn from it and not repeat the mistake. If it was a driver error, we would inform the driver and help him to overcome the issue,” Ng continued, adding that the group has a two-week training course whereby every driver has to undergo to be able to drive for the group.
The group also looks at tyre usage, and constantly monitors the conditions of the tyres on the lorries, due to a worry of variable quality. Factors such as overloading, air pressure, and the quality of the tyre itself are constantly monitored and noted.
“It just makes sense to have good self-evaluations and self-analysis,” said Ng, noting that the asking of “why” is a big part of how the group self-evaluates, and is how the group can keep its costs down.
“All of the problems that could come up represent a cost,” explained Ng.
This has also spilled over to the group working with the government on lorry inspections, where Ng said the department sends people to Xin Hwa’s maintenance centre to inspect the lorries, where they can check up to 40 lorries a day, compared to 10 trucks a day if Xin Hwa sends their lorries to Puspakom or Road Transport Department inspection facilities instead.
To the workshop!
KINIBIZ also had the chance to visit the maintenance centre/fabrication yard owned by Xin Hwa, which was under the direction of the managing director’s brother Ng Kah Huat who serves as operations executive.
“The fabrication plant works on a just-in-time schedule, where one Xin Hwa-grade trailer and one-and-a-half normal trailers are generated every month,” explained Ng, who had taken KINIBIZ on a tour of the workshop floor.
From what KINIBIZ observed, which was later confirmed by Ng, the workshop practises mixed hiring, showcasing both local and foreign talent in the workspace. Ng also shared how the staff are conscientious, and hold themselves to the group’s standards and ideals.
“I remember where one of my guys on the work floor argued with me. I had told him that there was a point on the trailer where welding would be extraneous, as there would be a negligible difference in the integrity of the trailer. He actually stopped to disagree with me, and made his point that he would not compromise on quality and workmanship,” recounted Ng.
Ng also shared an approximation of the savings Xin Hwa makes in buying and repairing secondhand lorries and trailers compared to buying new items. According to the operations executive, a brand new cab would cost about RM300,000. However, the purchase of a secondhand cab, along with repairs, only costs about RM100,000, depending on the model of the cab.
KINIBIZ also got a look at one of the special trailers Xin Hwa uses for supersized cargoes. It sports multiple axles, allowing for a turn of 45 degrees as well as hydraulic balancing to make sure cargoes are not tipped or tilted in any way, which, for supersized cargoes, could well mean the tipping over of the entire vehicle.
In the next article, KINIBIZ looks at Xin Hwa’s warehousing facilities, as well as Xin Hwa’s plans moving forward.
Yesterday: How things started
Tomorrow: The way forward