A study of the need for Aircraft/Aerospace

Manufacturing course in Malaysia and

South East Asia

An initial study

Dviation Solution Sdn Bhd

30th January 2014

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Table of Content
1. Executive Summary

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2. Introduction

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3. Industry Review: Focus Asia Pacific/South East Asia

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4. Industry Review: Focus Malaysia

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5. Malaysian MRO sector

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6. Evaluation frame model

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7. Summary

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8. List of Figures & Tables

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9. References

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1. Executive Summary
The following initial report has found that the need to trained qualified people for the aviation
industry is much sought after. Training in the field of aircraft or aerospace manufacturing will be
much look at. Evidence in these report shows the need will rise with the importance of the
development of this industry in this region and in Malaysia. As this is not really address fully in
Malaysia, the development of this course is an open green field that is open to be explored and further
developed.
The positive aspect for the development of this course is as follows:
1. Evidence of regional growth
2. Local growth
3. Governmental agenda
4. Good local support
shows this is a good time to further pursue this training for development. A full study will be required
to show the required syllabus and other important factors to complete the report.
Initial report shows its a GO project for training development.

2. Introduction
Aviation industry is a regulated field. The training for personnel like engineers and technician require
specialised training. Training of such is required to maintain the high standard of quality, knowledge
and skills as dictated by the current aviation airworthiness standards and practices.
Purpose of study
The aviation industry is on its continuous growth. The need of trained personnel is mandatory by law
(Department of Civil Aviation Malaysia, 2005). The resources for trained manpower are limited with
the current supply (Association of Aerospace Industries Singapore , 2011). Hence the current shortage
is limiting the aviation industry growth.
The outlook of the aviation industry in Malaysia is very healthy as airlines increase their fleets, more
airports are built, more MRO set up like SR Technics and introduction of new airline like Malindo Air
really boost the need of trained personnel currently and in the future (The Star, 2013).
With the current growth in the industry (The Star, 2012), it is not surprising that new courses are
developed in training. As there are already development in the Aircraft Maintenance and academic
studies, the oversight of the Aerospace Manufacturing training provision is lacking (Institute of
Labour Market Information and Analysis, 2013). An initial study is required to evaluate the

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opportunity this will present. With these research a more thorough, detail and accurate decision
making can be carried out for this training purpose intent. This study is solely for Dviation Solution
Sdn Bhd in its course development venture.
3. Industry Review: Focus Asia Pacific/South East Asia
The review consists of a literature review of existing local and international sources. The literature is
used to provide a sense of the effect of aerospace industry training directly estimating the effect of
growth. Although the focus of the study is at the macro-level, many of the findings from the review
relate to the industry or individual participants. In addition, much of the review relates to aviation
engineering training generally, as opposed to industry specific training. Therefore these findings have
been extrapolated as far as possible. This review should be viewed as a preliminary investigation and
study only.

Why is there a need in training now more than ever before?

With the current development in the aviation industry in Asia, we cannot ignore the evolution of
growth by the budget carriers. The emergence of new airlines alone indicates the potential of growth
evaluated on the business perspective. According to Boeing, world load passenger factors are on
historical high and will continue so (refer to fig 3.1). A large percentage of this growth is in this
region and Malaysia is part of the growth with the largest Asia Budget carrier (Boeing Commercial
Airplanes, 2012).
Figure 3.1 World Passenger Load Factors from year 2000 to 2011

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Over the next decade by 2023, commercial aircraft annual production levels are anticipated to
increase by an estimate 25%. With such growths, trends and challenges will emerge (Deloitte Global
Services,

2014).

The positive growth is due to emerging markets, market liberalization, environment, airline strategies,
business models, infrastructure, local & regional market growth. This situation created a demand for
more aircraft purchase, emergence of new airline, emergence of more MRO and creates more growth
to other industry such as tourism and education/training. Figure 3.2, shows the forecasted aircraft
purchase in the region due to these factors.
Figure 3.2 Southeast Asia Aircraft market value share from 2012 to 2031

With this growth, the development of human resources grows proportionately. The 2012 Boeing Pilot
& Technician Outlook in figure 3.3, projects a need for approximately one million new commercial
airline pilots and technicians by 2031, including 460,000 new commercial airline pilots and 601,000
technicians (Boeing Commercial Airplanes, 2012). The Asia Pacific region required 243,500
technicians trained in 19 years span. This approximately requires 12,800 technicians every year
trained in this region.

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Figure 3.3 New Technician Outlooks by Region 2012 to 2031

In terms of investment used, Asia Pacific MRO market has utilised USD 16.4 billion in 2013 alone.
61% is at the Aviation/Aerospace Manufacturing sector (Ling, 2013).
The current industry players will have to gear up to the growth challenge mechanism and move
forward. It is expected the annual traffic growth in this region will be 4.8% for the next 20 years
(Herdman, 2012). With the current information and statistic, it is without doubt the demand for
training is definitely there. The future market is positive with the forecast, the demand is available and
the training institute location (Malaysia) in the region makes it at the right place to expand its training
portfolio. With this growth the need for training follows suite and the need for courses such as
aerospace study is important.
The current market available is only geared for aviation engineering training of such aircraft
maintenance engineers and aircraft maintenance technician/mechanics. None have prepared on the
aerospace manufacturing sector. And many companies are recruiting technical staff and carrying out
in-house training to close the current gap of skill and knowledge required (Lim, 2013). This is seen in
Airfoil Services and also new set ups like SR Technics Malaysia.

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Figure 3.4 World Air Traffic from 2012-2032 by region

Another positive statistic of growth can be visible in figure 3.4 in Asia Pacific. Overall the 20 years
growth of 5.5% per annum in Asia Pacific has overtaken Europe and North America (Leahy, 2013).
4. Industry review: Focus Malaysia
All Malaysian Airports has recorded passenger movement of surpassing 68 million passengers in
2012 with comparison about 40 million in 2005, which would be a compounded annual growth rate of
6.88% per annum (Selangor State Investment Centre, 2013). The overall strength of aviation can be
seen in a huge wave of aircraft orders, which begins with a first order of 12 Boeing B737-900ER for
Malindo, while AirAsia just recently ordered additionally 100 Airbus A320 increasing its total order
to 475 single aisle aircrafts from Airbus.
Based on the National Aerospace blueprint launch by Prime Minister in 1997, Aerospace industry
development has been develop and plan. The blue print identifies key initiatives for transforming
Malaysia into an international aerospace nation by 2015. It outlines 45 recommendations (Malaysia
Industry-Government Group for High Technology, 2007). The blue print also has trageted Malaysia
would capture 5% of the global MRO market by 2015 (Samah, 2012).
The Malaysian Aerospace industry has been developed according to four main focus areas, which
were targeted to streamline all efforts instead of a broad approach:

Maintenance, Repair and Overhaul (MRO)

Parts and Components Manufacturing

Avionics and Systems

Global Centre for Training and Education

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One area of focus that requires to be strengthening in the industry is Aerospace Training & Education.
This has been also identified by the Malaysian Aerospace Council.
The Aerospace manufacturing sector is one of the fastest growing sectors in Malaysia. In 2012 it
recorded more than RM2.5 billion of turnover and employed approximately 5,100 workers (Sulaiman,
2013).
Based on this demand, Aerospace/Aircraft Manufacturing course will be in demand as long as the
growth forecasted sustains its course. Hence graduates from this course will be employable with such
growth.
In the context of local scene, the state of Selangor has total turnover of the aerospace manufacturing
industry growth from RM 27.7billion in 2011 to RM 30.3billion in 2012. This also truly reflects the
local optimistic sentiment in the industry. Malaysia also received encouraging signals (funds) from
investors, which will materialise in projects worth RM 2.3billion. (Selangor State Investment Centre,
2013)
Based on the above observations and the growth potentials in ASEAN, Malaysia has certainly a good
location in the centre of ASEAN and with already well established aerospace companies expanding
continuously. Blessed with good command of English language, location and low manpower cost
based, its an added advantage.
Some key developments in this context are excellent infrastructure and facilities, for example
revamping and transforming of the Subang International Airport into the Malaysia International
Aerospace Centre, which became a hub for MRO activities. The Malaysian government also
embarked into several projects focusing on human resources as well as targeting research via the new
Aerospace Malaysia Innovation Centre.

The Malaysian Industry-Government Group for High Technology (MIGHT) also presented a report
on the thriving aerospace sector growing by 9.4% in 2012, which would translate into a contribution
of 3.23% to the national gross domestic product. Aerospace is currently achieving a turnover of RM
30.3billion and forecasted to reach RM 32.7billion in 2013. Looking back at 2006 with a RM
21.5billion turnover, the growth is stable and only slumped in 2009 (Selangor State Investment
Centre, 2013). Refer to figure 4.1.
Some key elements of this development are investment promotion activities by MIGHT and the
Malaysian Investment Development Authority (MIDA), which resulted in a number of quality
projects from Europe, Japan or Singapore. The established names are EADS, RUAG, Rolls-Royce or
Safran Groups Messier-Bugatti-Dowty, which can be found in Subang, Selangor or in Kuala
Lumpur.

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Figure 4.1 Malaysian Aerospace Industry Turnover from 2006-2012

Besides economic gains, technology transfer is important as much as creating highly qualified jobs.
Employment is significant for such a relatively young sector and only a number of companies
available. The government is planning further incentives and might embark into additional programs
to focus the growth of manufacturing of components and parts, which could be announced in 2013/14.
Why the government is pushing manufacturing?
This is easily explained analysing the current export statistics. MRO might require a lot of import
activities, since not all components or parts are readily available in Malaysia. This again is affecting
Malaysias trade balance. Figure 4.2 shows that import values have been rising ever since, which
makes sense in regard to the economic activities. However, exports so far have not performed in the
same way, which made the industry a strong performer in turnover, but a weak contributor in regard
to export statistics. This imbalance has become even worse in 2012, where market observers quote a
surge in imports up to RM 13.2billion, while exports remain low at RM 2.2billion. Analysing this data
against the turnover, the imports become an extremely significant figure. It is very prudent to
strengthen manufacturing, which already forms the bulk of exports and high-value products would
easily raise the export statistics.
Figure 4.2 Malaysian Aerospace Industry Trade from 2008-2012 Import & Export

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5. Malaysian MRO Subsectors

Malaysia has 4 different aerospace subsectors.

Commercial aviation

MRO

Aero-structure manufacturing

Avionic & system integration.

The current development is mainly due to the tremendous growth and success of budget airlines in
Malaysia and finally ASEAN. With reference to figure 4.3, approximately RM 20.5bn turnover in
Malaysia in 2012, the aviation sector holds the largest share within the sector. Some developments
have been shaping the continuous growth as well as creating a more competitive environment.

Figure 5.1 Malaysian Aerospace Subsectors Turnover from 2010-2012

The aerostructure manufacturing has been the main driving force of export growth for the whole
sector. The investment of Spirit Aerosystem in 2009 and the business expansion of CTRM, ACM and
Upeca have seen the aero-structure manufacturing sub-sector record 100 percent growth in turnover
from RM0.6 billion in 2009 to RM1.2 billion in 2011
Recent investments of the SAM Group in Penang through its subsidiary Aviatron Sdn Bhd has
brought capability of providing engine components and parts. This specific expertise was high on the
agenda of the Malaysian government and has widened the footprint of the local manufacturing
landscape. Aerospace Manufacturing training is required to assure foreign investors that sufficient and
qualified workforce is available.
Avionic and Systems integration is mainly driven by Honeywell Aerospace and is also supported by
multinationals such as Celectica and Plexus closing gaps in the supply chain. With currently a
turnover of about RM 1.34bn in 2012, the sector seems to overtake aero-structures and gain a bigger
share of exports for Malaysia. To further enhance and support these growth tendencies, the Malaysian
government initiated CTRM Integration Sdn Bhd (CSI) in 2010, which not only focus but develop
capability and state of the art model concept (Samah, 2012)

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In engine parts and components manufacturing segment, taking advantage of the presence of RollsRoyce manufacturing facility in Singapore, amongst others, Malaysia aims to provide support in
detailed parts manufacturing and skill manpower supply.
According to the Malaysia Economic Transformation Programme (ETP), the aerospace sector has a
potential to contribute an additional RM1.75 billion of Gross National Income by 2020 and expected
to create approximately 5,750 jobs. Global market growth is projected to reach approximately RM205
billion by 2020 (Performance Management & Delivery Unit, 2013).
Malaysia while is actively encouraging local players to expand their capability and capacity, it is also
aggressively promoting global players to invest in Malaysia or to establish partnership with Malaysian
companies. Among the main companies are All Metal Services, Gandtrack Asia, EDAG, Strand
Aerospace, Aerotech Malaysia and Composites Testing Laboratory Asia (Malaysia IndustryGovernment Group for High Technology, 2013).
Subang and Penang are not the only location for MRO activities or electronics manufacturing hubs
but developments of Kedah and Melaka in composite manufacturing has seen some success (Ling,
2013).
The following are some companies with joint venture (JV) or new set up in Malaysia per location and
main activity:
Table 5.1 Malaysian MRO JV/Local set up per location & activities
No

Companies

Location

Activities

Hamilton Sundstrand/MAS JV

Klang, Selangor

Overhaul and repair aircraft air management system

AAR/Airod JV

Subang, Selangor

Landing Gear MRO

Agusta Westland

Subang, Selangor

Fully fledged regional hub for maintenance and

servicing

Eurocopter

Subang, Selangor

Centre of EC products and MRO service centre

GE/MAS JV

Subang, Selangor

Repairs and overhauls for GE, CFM56 and PW4000

engines

CTRM/CTL JV

Melaka

Composite testing

EADS/SECA/MAS JV

Subang, Selangor

PW100 engines MRO

Jet Aviation/Airod JV

Subang, Selangor

Maintenance and services

Hawker Pacific/ExecuJet JV

Subang, Selangor

Maintenance services

10

P&W/MAE JV

Subang, Selangor

Composite repair and overhaul engine nacelles

11

Sabena/MAE JV

Subang, Selangor

Component repair and overhaul

12

Spirit

Subang, Selangor

Manufacture composites subassemblies

13

MTU/Lufthansa Technik JV

Petaling Jaya, Selangor

Engine repair

14

Boeing/Hexcel JV

Bukit Kayu Hitam, Kedah

Manufacture secondary composite structure parts

15

Honeywell

Perai, Penang

Avionics Services

16

SR Technics

Shah Alam, Selangor

Component repair and overhaul

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Myriad of incentives within the aerospace industry was introduced to attract foreign investors and
also applicable to all MRO who qualify in order to further expands business operation and to compete
with other MROs. A feedback of 88.9% received from respondent showed adequate support from the
government was provided to foster industry growth (Institute of Labour Market Information and
Analysis, 2013)
Based on current development, the aerospace manufacturing sector is expected to generate additional
1000 jobs in 2013/14 (Sulaiman, 2013). Insufficient talent in Malaysia are hindering the growth of the
industry ( (Performance Management And Delivery Unit, 2013).

6. Evaluation Program Model

Figure 6.1 Evaluation model of factors linked the training initial development to 5 different factors.
Organisational

Human Resource

Competency
System & Process
Experience

Trainers
Instructors

Market Factor
Location
Current demand &
Supply

Product & Services

Quality
Sufficient
Future demand

Training
Development
Study
Aspects

Financial Factor
Return of Investment
(ROI)

A brief evaluation to factors linked to Aerospace/Aircraft Manufacturing course development

initiative.
Market Factor As foreseen and written in this report, the market growth is well seen. The continuous
growth of market value and aircraft delivery in this region confirms this. Figure 6.2 supports and
reflects this scenario. Asia Pacific has 37% of global aircraft deliveries and 39% of the global market
value (Tinseth, 2013).

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Figure 6.2 Geographical outlook from 2013-2032 of aircraft deliveries and market value by region

Another positive fact is the government support and initiative through National Aerospace blueprint
and the ETP through PEMANDU. PEMANDU has initiated few projects to spearhead this and its
projected the GNI by 2020 (mil) will be approximately RM13350 and projected jobs by 2020 is
20,720 (Performance Management & Delivery Unit, 2013) . The Malaysian government also
recognise that in order to sustain growth of the industry, there must be a continuous supply of quality
workforce. The up skilling of local institutions for aerospace education & training are given a high
priority by the Government ( (Myatt, 2010).
Human Resources Factor- The availability of trained instructors and lecturers are available as this
course does not demand licensing aviation personnel for trainers but people with academic and
teaching qualification and experience in the manufacturing sector. With this requirement followed by
an induction and familiarization to the aerospace industry will be sufficient to deliver a fulfilling and
quality program.
Organisational Factor- Malaysia has already many established learning institution with world class
recognition. This truly reflects the competency of the learning organisation. It also shows the maturity
of its system and process within.
Product and Service Factor- With the availability of qualified human resources and also experience
learning organisation factor, quality and consistency of service provided will be maintained. This is
important to ensure consistent quality of graduates that will support future demand. Ensuring
sufficient supply too.
Financial Factor- Financial and tax incentives are provided if the business objectives meet the
government plans. Malaysian government has also tried to reach out for foreign investment, joint
ventures and strategic collaboration to achieve its plans (Malaysia Industry-Government Group for
High Technology, 2007).

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7. Summary
Aerospace/aviation manufacturing engineering involved in the various aspects of designing, building,
testing, selling and maintaining aircraft, aircraft parts, missiles, rockets, and/or spacecraft. It requires
technicians/engineers to apply the underlying sciences towards viable technological solutions of the
projects/task.
Aerospace/aviation manufacturing engineering involves the actual maintenance and management of
the life of the aircraft systems and their components once they are actually in use. It can be said that
they are more involved with the hands-on work to keep it in safe operation. Its demand in Malaysia is
increasing as Malaysian aircraft operators continue to increase their fleets.
The initial report shows conclusive evidence to pursue this course development. Factors evaluated
are:

Regional market survey

Malaysia market survey

Government support

Forecast market survey (Global, regional & local)

Malaysian MRO sector

Program evaluation Model

A detail study will be required for the development of the course manual and content. An induction
and course training development will be required for the development of the program trainers.
All information gathered is based on current available sources and are based on the company personal
view and interpretation.
8. List of Table and Figures
a. Figure 3.1 World Passenger Load Factors from year 2000 to 2011
b. Figure 3.2 Southeast Asia Aircraft market value share from 2012 to 2031
c. Figure 3.3 New Technician Outlooks by Region 2012 to 2031
d. Figure 3.4 World Air Traffic from 2012-2032 by region
e. Figure 4.1 Malaysian Aerospace Industry Turnover from 2006-2012
f.

Figure 4.2 Malaysian Aerospace Industry Trade from 2008-2012 Import & Export

g. Figure 5.1 Malaysian Aerospace Subsectors Turnover from 2010-2012

h. Table 5.1 Malaysian MRO JV/Local set up per location & activities
i.

Figure 6.1 Evaluation model of factors linked the training initial development to 5 different
factors

j.

Figure 6.2 Geographical outlook from 2013-2032 of aircraft deliveries and market value by
region

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9. References
Association of Aerospace Industries Singapore , 2011. AAIS Aerospace Manpower Study Phase 2
Findings, Singapore: s.n.
Boeing Commercial Airplanes, 2012. Current Market Outlook 2012-2031, s.l.: Boeing Commercial
Airplanes.
Deloitte Global Services, 2014. 2014 Global Aerospace and Defence Industry outlook, United
Kingdom: DTTL Global Manufacturing Industry group.
Department of Civil Aviation Malaysia, 2005. Certificate of Airworthiness Issue and Renewal
Procedure. Putrajaya(Wilayah Persekutuan): Department of Civil Aviation Malaysia.
Herdman, A., 2012. Asia Pacific Aviation: Industry Overview & Regulatory Challenges. Wellington,
Association of Asia Pacific Airlines.
Institute of Labour Market Information and Analysis, 2013. Manpower Issues in Key Sectors of the
Malaysian Economy. Putrajaya, Ministry of Human Resource.
Leahy, J., 2013. Global Market Forecast 2013-2032. Document. Airbus Global Market Forecast.
Lim, J., 2013. Aviation Overhaul and Repair training [Interview] (20 December 2013).
Ling, D., 2013. The MRO Market Outlook-Asia Pacific. Singapore, ICF SH&E.
Malaysia Industry-Government Group for High Technology, 2007. Malaysia Aerospace Strategy.
Putrajaya, Malaysia Industry-Government Group for High Technology.
Malaysian Industry-Government Group for High Technology, 2013. Aerospace Manufacturing.
[Online] Available at: http://www.might.org.my/ [Accessed 21 December 2013].
Myatt, J., 2010. Trade & Investment Sector Breifing: Aerospace Opportunities in Malaysia, London:
UK Trade & Investment.
Performance Management & Delivery Unit, 2013. EPP 1: Growing Aviation Maintenance, Repair and
Overhaul Services - See moEPP 1- Growing Aviation Maintenance, Repair and Overhaul Services.
[Online] Available at: EPP 1: Growing Aviation Maintenance, Repair and Overhaul Services - See
more at: http://etp.pemandu.gov.my/Business_Services-@-Business_Services_-_EPP_1;_Growing_Aviation_Maintenance,_Repair_and_Overhaul_Services.aspx [Accessed 10 January
2014].
Performance Management And Delivery Unit, 2013. ETP Annual Report 2012, Putrajaya: Prime
Minister's Department.
Samah, S. K. A., 2012. Taking the industry to greater heights. Myforesight, Issue 2, pp. 23-27.
Selangor State Investment Centre, 2013. Aerospace in Selangor-Growing Potential in Manufacturing
2012, Shah Alam: Selangor State Investment Centre.
Sulaiman, M. Y., 2013. Accelerating our aerospace sector. [Online] Available at: www.nst.com
[Accessed 15 December 2013].
The Star, 2012. Tourism industry backs Sabah Air expansion plan. 2 Jan, p. 21.
The Star, 2013. Malindo Air to start service on March 22. 18 March.

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Tinseth,R., J., 2013. Current Market Outlook 2013-2032. Document. Boeing Comercial Airplanes

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