UMW bags RM1b contract from Rolls-Royce

SERENDAH, Selangor (April 10): UMW Holdings Bhd has secured a second contract worth RM1 billion from British aerospace company Rolls-Royce Holdings plc to manufacture rear cases for the latter's Trent 1000 and Trent 7000 aircraft engines.

The new 15-year contract was bagged by its wholly owned company UMW Aerospace Sdn Bhd, which will invest up to RM65 million to set up chemical milling and related processes to manufacture the rear case at its existing facility in the UMW High Value Manufacturing Park here. At present, the rear case is imported from overseas and assembled into a complete fan case, UMW said.

In August 2015, UMW Aerospace became Malaysia’s first home-grown Tier 1 aerospace engine component supplier to Rolls-Royce upon receiving a 25-plus-five-year contract to manufacture and assemble fan cases for the latter’s Trent 1000 and Trent 7000 aircraft engines.

UMW said the company’s fan case project for Rolls-Royce took only two years to take off from ground zero to maiden delivery, and is recognised as one of the fastest aerospace engine component development programmes of its kind.

The announcement of the new contract was made by International Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz during his working visit to the aerospace plant here.

Tengku Zafrul said UMW Aerospace's latest contract is a testament that established multinationals perceive Malaysia’s industrial landscape as stable and conducive for their global supply chain.

“I congratulate UMW Aerospace on securing a second major contract from Rolls-Royce within eight years. It is also worthy to note that UMW Aerospace would be the first company in Southeast Asia to develop the chemical milling capability for the aerospace industry, hence strengthening the Malaysian aerospace ecosystem,” he said.

"This is also in line with the Malaysian government’s national investment aspiration, which has identified aerospace as one of the five key target sectors to elevate Malaysia’s industrial profile, while facilitating knowledge transfers, supporting local small and medium enterprises (SMEs), and creating more higher-paying jobs for Malaysians. It also fulfils the key objectives under the Malaysian Aerospace Industry Blueprint 2030 to strengthen the nation’s aerospace industry, and elevate its position in the global supply chain," added Tengku Zafrul.

He noted that the capability to secure fresh contracts and new work packages by the Malaysian supply chain will enable the industry to maintain its positive momentum in achieving the blueprint’s 2030 targets.

“Apart from investing in digital solutions and adoption of Industry 4.0 technology, such projects will also facilitate more localisation activities by SMEs. In 2022, Malaysia's aerospace industry achieved more than RM15.3 billion in revenue, while exports of aerospace parts and components increased 9.1% year-on-year to RM6.3 billion. Two aerospace projects worth RM146.75 million were approved in 2022 involving the aerospace manufacturing and maintenance, repair and overhaul sectors," he added.

Rolls-Royce president for Southeast Asia, Pacific and South Korea Dr Bicky Bhangu said the group is delighted to continue its trusted partnership with UMW Aerospace in Malaysia, a market it had been active in for over 60 years.

“The Malaysian government’s ongoing support for the aerospace sector is exemplary, and we are proud to play our part in supporting its further development. We continue to regard the country as one with enormous potential, not just within aerospace, but also its ability to drive broader economic growth and positively contribute to the Southeast Asia region as a whole,” said Bhangu.

“Over the decades, Rolls-Royce has benefited from the range of expertise, skill sets and perspectives from Malaysia, alongside its manufacturing capabilities and well-connected supply chains. This will be exemplified through the high-quality rear cases that will be supplied by UMW Aerospace, and we look forward to the next chapter of this partnership.” Bhangu added.

UMW president and group chief executive officer Datuk Ahmad Fuaad Kenali said UMW Aerospace’s commitment to quality and excellence has led to various recognitions in recent years.

"It received the 'Trusted to Deliver Excellence Award' from Rolls-Royce in 2018. UMW Aerospace was inducted into the 2021 cohort of Rolls-Royce’s high-performing supplier group (HPSG), which represents the top 5% of Rolls-Royce’s global suppliers, and has successfully maintained its position in the 2022 and 2023 cohorts of HPSG.

“In 2022, UMW Aerospace further added the Supplier Best Practice Award to its list of achievements, which recognises suppliers with exceptional qualities, including focus on continuous improvement in operations and cost optimisation as well as their commitment towards zero defects," he said.

“Furthermore, Rolls-Royce recognises UMW Aerospace’s continuous efforts towards sustainable practices, such as the installation of rooftop solar panels to utilise renewable energy as well as rainwater harvesting to reduce water consumption in its operations, which led UMW Aerospace to be a member of Rolls-Royce’s Sustainability Working Group. In addition, since starting operations in August 2016, UMW Aerospace has maintained a remarkable safety record of over 2,400 days without industrial accident or zero LTI (lost time injury),” Ahmad Fuaad added.

“All these accolades, we believe, paved the way for this contract from Rolls-Royce. We would like to thank Rolls-Royce for their trust and confidence in UMW Aerospace, and we will strive to continuously deliver high-quality products and services to our customers. UMW Aerospace will continue to expand its capabilities to bid for more aerospace projects in the future,” said Ahmad Fuaad.

At the time of writing on Monday (April 10), shares in UMW were one sen or 0.26% lower at RM3.82, giving the group a market capitalisation of RM4.46 billion.