NI to invest US$80m in Penang facility

GEORGE TOWN: Nasdaq-listed National Instruments (NI) is investing US$80mil in a manufacturing facility in Penang, which is scheduled to commence operation in 2012.

However, plans are already under way for it to distribute its products from Penang to the Asia-Pacific region later this year.

NI (Penang) managing director Rajesh Purushothaman said the group would bring its products to Penang from its manufacturing sites in the US and Hungary later this year or early next year.

Rajesh Purushothaman ... ‘We will be using the latest technology.’

“We have invited companies to submit bids to manage, distribute, provide logistics and freight services. More than likely, the third-party provider will be a multinational since we need a company with operational presence in many countries around the world,” he told StarBiz.

“How much savings NI will get using Penang as a distribution site will only be known after we finalise the third-party provider.”

Rajesh said the company had already hired a logistics manager and would also engage soon procurement staff to do local outsourcing.

NI manufactures computer-based measurement and automation software and hardware products, which are used to build virtual instrumentation, and control systems for applications such as manufacturing test, laboratory automation, data acquisition and industrial control.

Rajesh said the timeline for investment in Penang was dependent on future company growth.

“We have already started our research and development (R&D) activities in Penang and plan product distribution operations soon.

“Although manufacturing is scheduled to start in 2012, this could change based on capacity requirements.

“We will closely monitor the global economic scenario, so that we can act on a timely basis.”

Rajesh said NI would develop its products from concept to release in Penang, which included hardware, software and firmware.

“This is very similar to what we do in our research and development centre in Austin, the US.

“We will be using the latest technology for our production and testing processes. We anticipate that a significant portion of the manufacturing and assembly processes will be done in-house.”

NI was always looking at partnerships with local and regional suppliers for raw materials and semi-finished goods, Rajesh said, adding: “Over 95% of the products manufactured in Penang will be exported.”

He said NI expected over 40% of its workforce to be professional staff involved in R&D, manufacturing, IT, finance, human resources and legal functions.

“We will have a few expatriates from our US and Hungary operations in Penang during the initial years. This is to help with knowledge transfer and the speed of the ramp-up.”

NI is investing US$45mil for the first phase of its plant in Penang, which will serve as the group’s integrated global R&D, manufacturing, IT and finance centre and hub in Asia.

“For the second phase, an additional US$35mil will be injected. Over the two phases, NI plans to recruit about 1,500.”

On the shortage of skilled labour in the country, Rajesh said NI believed most of its initial requirements for the start-up operation could be hired locally in Penang.

On meeting the long-term human resource needs of NI, he said NI would work with the local universities to enhance the engineering and science programmes.

Headquartered in Austin (Texas), NI has more than 4,500 employees and direct operations in nearly 40 countries.