Conglomerate wants Philippines to lead Southeast Asia in next-gen cars
MANILA — Because no Southeast Asian country has yet developed the infrastructure to support electric vehicles, Philippine conglomerate Ayala can help this country lead the region in that cutting-edge technology, says CEO Arthur Tan of AC Industrial Technology Holdings. The chief of Ayala’s manufacturing unit sat down with the Nikkei Asian Review to discuss the conglomerate’s push to expand manufacturing operations. AC Industrials, as the unit is commonly known, helps ensure the rest of the group has the cutting-edge technology it needs, Tan said. Now, the vast resources available to the group, combined with recent acquisitions and partnerships, will support the unit’s entry into a field that promises to revolutionize personal transportation.
Q: Why is Ayala bolstering its manufacturing operations, and targeting electric cars in particular?
A: Right now, [Thailand, Indonesia and Malaysia] have cars. But they don’t have electric cars.
We know the electric vehicle is going to come, so OK, we’re not going to be the biggest today, but we know what the future’s going to be. It’s going to be electric-based, and if we start now, we’re ahead of the curve.
Q: So, Thailand, Indonesia and the Philippines are all at the same starting point.
A: All in the same level field. They don’t have an infrastructure right now. And because they cannot use the current infrastructure, the electric vehicle is a completely different animal.
Q: But the manufacturing business is not as profitable as other businesses.
A: I agree with you. Manufacturing margins are different from [profit margins in the real estate business]. The difference is the utilization of assets. For example, if I have a piece of land, I will make 25-30% margin on that piece of land when I make a building. But after I build that building, my utilization rate for that land is finished, because I cannot build another building on top of it and build another building on top of it. I put a factory, and I only make 5% margin, but that’s every month. [And] a factory that can build [cars] can build anything lower.
Q: What is AC Industrials’ role in all of this?
A: I’m actually the enabler. There’s going to be disruption that’s going to happen in all the different spaces where Ayala is. In banking, fintech. In Globe [Telecom, a subsidiary], satellite communications. In Ayala Land, prefabricated homes and smart homes for an integrated building. All these technologies require disruption. If your expertise is building a house, how are you going to be able to understand this technology of making a very high-tech house? You’ll need an enabler. That’s us. We sit on the technology side. When you start talking satellite, [the next generation is communication in the] 70 gigahertz range [compared to 4GHz or 5GHz currently]. Five to 70 is not easy. In [Ayala Industrials subsidiary Surface Technology International] right now, we build satellite communication products. All my staff runs at 70GHz, so we’re ready for that. Uplink, downlink. We’re ready for it. That’s the enabling technology that I bring to the group. They don’t need it now, but what I want to make sure is that our businesses [are] future-proof. That’s my role. Interviewed by Nikkei staff writer Jun Endo.
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