Sustainability Statement Print E-mail

Globetronics strives to be a reliable and competent manufacturing partner to our world renowned customers in bringing the latest technological components and applications into smart devices to improve the lives and connectivity of global consumers. As a homegrown Malaysian company, Globetronics is committed to play our part in making sustainability a part of our organizational values in evaluating our business strategies and decisions. We believe that striking a balance between achieving operational profitability whilst simultaneously focusing on the economic, environment, social ("EES") criterias are essential elements in enabling our company to succeed now as well as into the future.

Being a high technology manufacturing company, some of the key material matters for us would include the welfare of our employees, our procurement practices in supporting the local supply chain, manufacturing excellence and practicing the 3R’s (Reduce, Reuse, Recycle) in our business operations.

The Board leads the Group in embedding sustainability as part of our business strategy going forward. The Group has a Sustainability Policy in place to govern the way we do business and a copy of the Sustainability Policy is available for reference at the Company's website www.globetronics.com.my.

Scope of Report
The scope of the Sustainability Statement covers the period from 1 January 2018 to 31 December 2018. The policies and strategies discussed in the report apply to all subsidiaries within the Group save for Globetronics International Incorporated (foreign investment holding company), Globetronics Industries Sdn Bhd (dormant company), Globetronics Medical Technology Sdn Bhd ("GMT") and NGK Globetronics Technology Sdn Bhd (Associate Company with < 50% stake).

Sustainability Governance Structure
The drive to initiate and embed sustainability into our business strategies is led by our Board of Directors, who play a critical role in continually establishing and formulating new business strategies such as sustainability and the enterprise risk management ("ERM") framework to ensure that the Group remains proactive and dynamic in dealing with the constantly changing global environment to succeed now as well as into the future. The Board is supported by the CEO and ARMC in providing guidance and implementing policies to ensure that Group assets are protected and the sustainability and risk governance issues are proliferated across the subsidiaries in the Group.

The Business/Operations Risk Review Committee ("BORRC") would implement the business strategies that ensures the sustainable performance of the Group economically through the implementation of manufacturing excellence, new product introduction, supply chain management and data integrity/security. The activities and proposals from business units are actively monitored through daily updates, bi weekly managerial meetings as well as detailed monthly business review where strategies and decisions are evaluated to ensure that they are in line with the Group’s vision and direction.

Another enhancement for Year 2018 is the re-designation of our Environmental, Health and Safety (“EHS”) steering council into Environment, Social and Governance (“ESG”) committee that will have a more holistic coverage to ensure smooth facilitation and embedment of sustainability into the key activities of the Group. The ESG committee is headed by the CEO, business unit leaders and key management personnel and meets once a month to present indicators such as energy usage, emissions, safety as well as propose environmental and social projects to be carried out within the Group.

SustainabilityGovernanceStructure2018

Stakeholders Engagement and Prioritization
Stakeholders represent the diverse group of parties that have a degree of interest and influence on the Group and the way it operates. Globetronics is committed to regularly engage with its key stakeholder base that include customers, employees, government, regulators, investors, media and our Board to find out issues that concern them and to build a balanced, holistic business strategy that is incorporated based on the prioritization of the respective stakeholders. Some of our key stakeholders and the type of engagement we have with them is summarized as below.

StakeholdersEngagement

IdentifyingSustainabilityMatters_2018

Materiality Assessment
Our materiality assessment process is done through our evaluation of various stakeholders’ engagement throughout the year, peer comparison reviews and cognizance of the current economic, environmental as well as social trends both locally and globally. On top of this, there is a continual scanning of the business environment done to ensure that we stay on top of the business risks and opportunities that abound as a result of the rapidly changing global environment. This would surmise to determine the key material matters that would impact the Group and stakeholders based on our interaction with stakeholders and from internal discussions in the ESG Committee. Some of the key sustainability matters identified by the Group are detailed below.

ENVIRONMENT

Revenue and Profit Growth
Over the years, we have constantly evolved to fit and meet the ever changing requirements of the customers due to the robust business environment. While it is not easy, we are humbly pleased to report that we have been profitable every year since we commenced business in 1991 and would strive to do so for the coming years through timely introduction of new products to market place, product diversification and new business opportunities.

As product lifecycles become shorter due to the rapid technological advancements, the ability to introduce new products to the marketplace in a timely manner has become a very crucial key to success. Our business model is increasingly skewing towards the co-development of new components/products with our customers, that upon mass production, will be a totally new introduction to the market. At any point in time, we have multiple products that are progressively in development stage waiting to be adopted by the customer and market place that will lead to mass production.

The new products we have successfully qualified and started mass production in 2018 are :
1) Light sensor Gen 2 to be designed into the latest smart devices; and
2) Laser light components to be used in headlamps for premium European automobile.

We also have multiple products that are moving into various stages of qualifications, which include next generation sensor products and bio environment sensor, 5G related components and 3D components for niche industry. These are important aspects of our business diversification process where we actively pursue new business opportunities to diversify our customers as well as product base on a continual basis.

New business opportunities are evaluated and assessed on a thorough basis by BORRC and the Board. All CAPEX spending is justified using ROI and taking into consideration the position of all stakeholders of the Group.

Manufacturing Excellence and Continuous Improvements
Globetronics puts emphasis on manufacturing excellence at all times, to ensure that all our lines and processes are benchmarked and meet all globally defined manufacturing standards. This is done through regular internal line audits, external audits by independent auditors for quality standards, as well as ongoing customer audits to ensure that our operations comply with all requirements and have continuous improvement plans for our manufacturing lines.

The Group has over the years put in resources to reduce the use of paper in our operations. Our subsidiary company GMT had come up with our own Enterprise Business Operating System ("ebizOS") system whereby our main business functions are interconnected through this feature.

We have expanded our manufacturing capabilities over the years from copy exact type of contract manufacturing work to today where we play a key role and a co-development partner in coming up with manufacturing processes for new products/components that are scheduled to hit the marketplace. Our manufacturing capabilities now include wafer level packaging and flip chip processes for the more advanced components in the market place, wafer saw and sorting for advanced LED products and in the process of qualifying new components for the sensors, smart devices, IoT, health and automotive sectors.

Automation has also been a focus area for us in the last few years. We had implemented automation in our KL operations on a phase by phase basis, with Automated Optical Inspection (“AOI”) machines taking over the more labor intensive and strenuous back end manual inspection processes. Our new sensors projects had also implemented AOI, therefore the Group is serving the dual purpose of reducing the manual portion of the operator’s job and also in supporting the local supply chain by purchasing the AOI machine from local suppliers.

As part of our commitment to our customers in allocating resources for future growth, we had invested in expanding our manufacturing floor space by adding approximately 25 thousand square feet through the adding of an additional level on top of our existing Penang factory building in the Phase 4 of the Free Industrial Zone. The space was originally an open air car park. We managed to add this space during a short period of time from May to December 2018 and are nowready for the next phase of growth when our in development products are ripe for mass production. The new facility is well equipped with a new walkway, material flow passage for linkage between the old and new production floors.

Procurement Practices
We extend our best business practices into our supplier chain as well with our suppliers aligning to our core values through the signing of a supplier’s Code of Conduct. The Code of Conduct requires the suppliers to meet our requirements in the following areas:
ProcurementPractices

Suppliers are expected to conduct a self-assessment to ensure they are in compliance to these requirements. They are also measured under a Supplier Rating and Ranking system using QCDS (Quality, Cost, Delivery, Service) to ensure that Globetronics consistently has a reliable and reputable supply chain to provide the best service and support to our customers.

Being a niche player in the technology space and as part of the global supply chain, we understand that Malaysia has its own competitive advantage with its diverse range of technology companies providing complementary services to big global customers. As these multinational customers have been in operation for many decades, they also have established systems, processes and suppliers whom they work with.

For our part, where possible, we are trying to localize some of the procurement sources. The key area where we have made inroads so far are in sourcing AOI and automation machines from local Malaysian companies when we automate our current production processes or set up new manufacturing lines.

Our procurement practices also play a key role in maintaining the competitiveness of our products in the supply chain. There is a continual effort to find suitable, sustainable and cost competitive materials to complement our product improvement programs as part of our value added solutions to the customer. An example of this would be our supplier bidding program where suppliers bid and are selected after going through the evaluated indicators of cost, delivery, service, regulation compliance/licenses and etc.

Project: (Reduce, Recycle and Reuse) - ("3Rs")
For Globetronics, the 3Rs are one area where sustainability is a material matter to us. This stems from the fact that we are doing high volume manufacturing, and the potential for waste from material usage to the environment is high.

The initiatives we undertook would serve to have multifold effects, by ensuring our businesses are operating at optimal levels through the efficient use of our resources while at the same time prolonging our equipment and materials from hitting the environment as scrap earlier.

To drive business sustainability, we have embarked on the following initiatives as part of our 3Rs drive in 2018:

  1. SMT Hi Temp Tape Usage Reduction
  2. Description: Tape used for mounting process was reduced by moving the cutter closer to the ring by approximately 1.5 inches. Saving achieved by this process improvement is the equivalent of 262 rolls of tape for the year.
    Savings = 262 rolls
  3. Blade Extension
  4. Description: Blades used for sawing were subject to an improved dressing method that resulted in better sawing quality that prolongs the blade life. The enhanced dressing method would result in a savings of 969 blades for the year.
    Savings = 969 blades

Data Integrity and Cybersecurity
Data integrity and cyber security has become an increasingly important aspect of business operations. This is especially evident in view of the escalating cases of accounting fraud/scandals globally as well as the recent ransomware virus attack. 

The ransomware virus attack had also exposed the vulnerability of many firms globally to cyber attacks. Whilst no system is fool proof against these attacks, Globetronics is continually monitoring and implementing all the necessary anti-virus programs and firewalls to secure our data. Being part of the global supply chain for components in key electronic devices, Globetronics needs to ensure a reliable and accurate live tracking of its data to ensure uninterrupted delivery of its production lines.

For Year 2018, we have begun to re-evaluate the adequacy of our IT systems in terms of software, hardware and server requirements. The review has indicated that some areas require enhancements to be able to meet the stringent requirements of our customers in capturing important data and running some of the latest manufacturing applications. As such, we have embarked on hardware and software replacement cycle for our Group which would be done in phases, with the first phase of hardware, software and servers replacements completed in end 2018, and to be followed through additional phases in 2019.

ENVIRONMENT

Energy Efficiency-Solar Energy
Development of sustainable energy initiatives have been one of our Group’s key focuses particularly in the reduction of electricity consumption via the installation of solar panels on the rooftops of our building sites. We have now officially signed an agreement to install solar panels on all the buildings of our Penang factory premises in Phase 4 of the Free Industrial Zone. The solar panels are negotiated on a lease agreement, where the panels belong to the installer and for our side, there would be zero investment costs and maintenance fees while securing a rate lower than the current TNB rates for the energy produced by the panels. Installation works began in December 2018 and are expected to be completed by May 2019. The solar panels are expected to contribute about 5% per month (approximately 60,000 kWh per month) of our total energy requirements, with the ability to switch to normal power supply mode during non-active periods at night.

SolarPanelInstructions

Waste Management and Emissions
At the Group’s various plants, we ensure strict compliance with the environmental laws governing plant operations and maintenance in areas relating to environmental standards, emission standards, noise level management and treatment of plant effluents and waste water. As part of our corporate responsibility agenda, we have measures in place to minimize the adverse impact on the environment and to achieve continuous improvement of our plants/factories’ environmental performance.

Water used for our manufacturing sites form a crucial part of the process for most of the production lines, as unclean water can cause high particle counts that disrupt the ability to produce a quality product. As such, we have in place the proper filtration and distilling equipment to ensure high quality water supply to our lines at all times. Industrial and sewage effluents are measured against a range of parameters to ensure that is compliant to all industrial standards. Scheduled production shutdowns (to improve UPH) and regular preventive maintenance are performed on facilities chiller, cooling tower, strainer, vacuum, transfer pump and circulation pump to the reduce usage of water.

A new program we have also instituted in one of Penang subsidiaries is the implementation of manual push button type of cistern for male toilet urinals instead of the continuous flushing of water at male toilets urinal stand. This implementation is expected to reduce water usage by 5,516 m3 per year.

Scheduled waste management programs are also in place with a waste code list measured and submitted to the Department of Environment ("DOE") on a monthly basis. The following is a summary of the waste disposal activities carried out by the Group.

Description 2016 (kg) 2017 (kg) 2018 (kg)
Disposed containers, bags, or equipment contaminated with chemicals, pesticides, mineral oil or schedule wastes 2,370 6,615 7,709
Rags, plastics, papers or filters contaminated with schedule wastes 1,866 2,167 2,522
Waste containing mercury or its compound 62 55 68
Waste from electrical and electronic assemblies containing components such as accumulators, mercury-switches, glass from cathode-ray tubes and other activated glass polychlorinated biphenyl-capacitors, or contaminated with cadmium, mercury, lead, nickel, chromium, copper, lithium, silver, manganese or polychlorinated biphenyl (SW110) – 58 67 194
Sludges containing one or several metals including chromium, copper, nickel, zinc, lead, cadmium, aluminium, tin, vanadium and beryllium 387 759 -
Waste of non-halogenated organic solvents 12,911 5,146 3,189
Spent lubricating oil 102 165 123
Spent hydraulic oil 3 200 200
Uncured resin waste containing organic solvent or heavy metals including epoxy resin and phenolic resin (SW325) - - 52
Total 17,759 15,174 14,057

Industrial scraps and salvageable material are either sold to licensed scrap vendors or recycled/reused in the production lines to minimize waste to the environment.

For the areas where air quality is concerned, they are measured on a periodic basis and include the areas of generator set (emission of solid particles within stipulated limit), gas and piping maintenance to ensure no leaks and compliance to environmental standards. All our operations are compliant to the Standard “C” limit in the Environment Quality (Clean Air), Regulation 1978, Part V, Air Impurities No.27 where hazardous gasses are present. Below are some of the data on gas emissions for FY 2018 :

Type of Hazardous Gasses Unit Air Impurities Concentration Remark
Formic Acid mg/Nm3 ND (<0.5) Not detected
Nitric Acid mg/Nm3 ND (<0.1) Not detected
Sulphuric Acid mgSO3/Nm3 ND (<0.2) Not exceeding
Phosporic Acid mg/Nm3 ND (<0.5) Not detected
Acetic Acid mg/Nm3 ND (<2.3) Not detected
Methanol mg/Nm3 ND (<4.7) Not detected

For energy reduction, we have implemented the Intelligent Flow Controller ("IFC") to the air compressor systems of most of our subsidiaries and for our new projects, the chiller systems that we are installing would also be of the energy efficient variant. Other activities include preventive maintenance of facilities equipment, installation of stabilizers on air compressors and scheduled shutdown of operations to reduce electrical usage. These activities have resulted in an electrical energy reduction of about 7% below the theoretical usage in Year 2018 had these activities had not been implemented.

Currently, all our Penang manufacturing factories are certified to the international environmental management systems standard, ISO 14001.

Overall, we have improved our environment management to be more focused in 2018. The key indicators of electricity usage, CO2 emissions and water consumption are now reported in the monthly ESG meeting. Activities undertaken and programs introduced to reduce usage of the key environment elements are also presented here.

Caring for the Environment-Recycling
The following recycling projects were created with the aim to reduce the harmful effects to our environment which had been set up among the various subsidiaries within the group.

Project: Recycling of batteries
Description: Set up employee program to dispose of batteries. Improper disposal of batteries are harmful to the environment as they contain materials like mercury and lead that can cause the emission of greenhouse gasses as they decompose in landfills. A collection centre was set up in one of our subsidiaries (ISO) and employees are encouraged to bring their dead batteries for disposal. Shipments have been arranged 2 times per annum to pick up these batteries for proper disposal.

Recycled amount : 197 pieces/23.5 Kg

TypesofBatteries

Project: 3R Program (Reduce, Recycle and Reuse)
Description: Set up program to dispose of recyclable waste such as plastic bottle, can, paper. For certain waste such as empty carton, lead frame, tray, empty spool and wooden pallet are returned to supplier or recycle internally. Tray and metal ring are recycled through established cleaning process. Recycling helps to reduce energy usage, reduce the consumption of fresh raw materials, reduce air pollution and water pollution (from land filling) by reducing the need for “conventional” waste disposal and also reduces greenhouse gases emissions.

3RProgram

Project: Recycling of paper/mineral water bottle (plastic)
Description: GSB has set up a program to encourage employees to recycle paper/mineral water (plastic) to help in conserving the environment while contributing to the underprivileged. Plastics are one of the major items that is degrading the global environment and we are happy to be able to play our small part in recycling these items. All recycled items are collected and contributed to SIMA Handicapped Centre, as part of our social contribution to the local community by helping them financially in this area. Recycle bins are provided at designated factory areas to conveniently enable contributions from employees.

RecyclingPaper

Project: Tree Planting
Description: We have set up a tree planting activity in ISO that is carried out fortnightly on Friday at 7am-9am. The program is set up to create awareness to our employees on the importance of green lungs in urban areas and how to help care for the environment. The gardening activities are expected to reduce carbon dioxide emission in the factory compound, and study shows that as a tree matures (12-24 meters), it can consume 21.8kg of CO2 per year as it turns that CO2 into parts of itself. Estimated 1 meter tree can absorb 0.91kg of CO2 per year, where we have 28 trees of this category.

TreePlanting

SportingActivities

SOCIAL

We have a total headcount of more than 1,700 employees in our group. As a niche player in the very competitive technology industry, being a responsible and caring employer to our very important assets, our employees, remain one of our key priorities. We strive to provide a safe, conducive and growth environment for everyone of our employees and this can be tracked through the various indicators listed.

Employee Welfare and Safety
We strongly believe that human capital is the most important value to an organization. To ensure a safe and healthy working condition for our employees and support workers, the Group has developed guidelines to safeguard employees in all of its business operations. Our Environmental, Health and Safety (“EHS”) team which is a part the ESG Committee ensures that health and safety policies are effectively implemented and continuously improved. Our EHS management system are reviewed against international best practices and updated from time to time.

To safeguard employees and instill the values and knowledge essential to a safe and healthy workplace, we continuously undertake first aid training, health talks, fire drills and plant evacuation exercises. All safety incidents are shared in the ESG Committee to ensure no recurrence occurs, and key learning of new safety implementations are also shared. There were 2 fire incidents during FY2018, one caused by the negligence of a canteen worker and one was smoke detected by an operator on an equipment that was quickly put out. Cause of incidents and action plans to ensure no recurrence for both cases were shared in the ESG meeting. At the Group’s manufacturing locations, we have continued to ensure that equipment and building systems are functioning properly and are well maintained.

EHS Indicators 2016 2017 2018
Factory Accident 1 1
~ Fatalities (Cases)
~ With Man-Hour Lost ( Cases ) 1 1
~ Without Man-Hour Lost ( Cases )
Near Miss Accident
Safety Violation
Fire Incident 2 2
Faulty Fire Alarm
Nature Environmental Impact

We had converted our top of the building open air car park into production space in Year 2018, and as a commitment to wellbeing of our employees, we had replaced with an near equivalent number of carpark lots on the ground level of our factory building. It thus reduces very much the inconvenience of having to find parking in the limited spaces outside our factory building. During this time, our EHS team worked extremely hard with all stakeholders and zero safety incidents goal was achieved during the construction period.

Fostering better ties with our employees and improving their quality of life are areas that have continuously been given importance in the Group’s corporate responsibility initiatives. Activities carried out include medical health screening and awareness programmes and recognition of long service. We continue to promote healthy lifestyles and team cohesiveness by sponsoring free courts and consumables for our employees to participate in sporting activities, and have hired professional instructors to conduct exercise lessons for our employees after office hours as well. In terms of working flexibility, we have introduced time off programs for employees who have to put in overtime during the periods when there are urgent requests by customers.

Employee recognition programs have also been put in place to reward key contributors through cash and gifts, and meal treats have been given out to all employees as a token of appreciation for their contribution and efforts.

Department outings or annual dinners are done on an annual basis to create closer bonding for our employees. For Year 2018, we held our annual dinner at Spice Arena where employees were treated to many special performances as well as getting many exciting gifts for the lucky draw.

Human Capital Development
One of our key corporate responsibility initiatives is the development of human capital as our employees are our greatest asset. The development is achieved through the implementation of various initiatives such as in-house cross training and employees’ productivity improvement, building university relationships and encouraging workplace diversity. The ultimate aim of these objectives is the unity of all employees in striving for a common objective i.e. the success of the Group in terms of economic, social and environmental development. Our employee evaluation criteria have also been revamped over the years and we have put in place comprehensive evaluation systems that not only measure the hard skills but also the soft skills of employees like relationship building and charima, to build them to be highly marketable in any industry.

We have also committed to do a 100% appraisal of all employees on an annual basis to ensure alignment to company’s key performance metrics and values, to provide career path guidance and to obtain feedback from employees on their view of the company. This commitment has been achieved in the current year as well as the previous 3 years, with appraisal criteria consistently being improved and matched to best industry practices. These appraisal sessions are also important as an avenue for identifying the right candidates to head the respective leadership roles with the Group.

In terms of nurturing future leaders, many programs have been put in place that include both general and specific targets of key employees at various levels in the Group. The leadership programs are conducted when there is a sufficient pool of identified candidates, some of the established programs we have conducted include the Leadership Development Program, Managerial Development Program and mini MBA.

We invested a total of 168 training programs and spent a total of RM172,000 for human capital development in Year 2018, with 1,952 training hours for 1,827 employees achieving the following:

- 60 new courses were conducted in 2018 in line with Government’s directive in steering Malaysia towards Industrial 4.0 as well as to upgrade our people’s competency levels to new products and technologies, focusing on 5 key areas as below:

2018Training

- Key programs coverage %
  Total Training Need Analysis ("TNA") identified 94 programs and Hit rate: 100% (94/94) Competent Person Training 12 course and Hit rate: 92% (11/12)

Workforce Diversity
Globetronics believes in tapping the resources of a diverse workforce that utilizes the unique gift of each individual. Presently our workforce is made up of multiple nationalities that include Malaysians, Indonesians, Filipinos and Nepalese. We are also proud to say our leadership is also balanced, with women making 31% of positions of manager and above.

WorkforceDiversity

Our recruitment process is based solely on merit and the qualification of the candidates, and our remuneration policy assures that no pay distinctions are made in regards to gender or ethnicity in all our subsidiaries.

Religious beliefs are respected and promoted with the celebration of the various cultural festivals in Malaysia together.

FireFightingTraining

Social Contributions and Community Projects
As a home grown Malaysian company, we are aware of how important it is to build up the local community and to provide opportunities for the upcoming generation to succeed. The focus of our social contributions is directed on the basis of achieving current impactful goals to community building and nation through the sponsorship of relevant initiatives and programs

CommunityProject

In 2018, we were actively involved and contributed in various community and education projects:

  • Cash sponsorship RM5,000 to Penang STEM Carnival to promote Science, Technology, Engineering and Mathematics among the school children and creating future talents
  • Donated RM10,000 to the organizer (jointly organized by SCI Malaysia and Penang State Government) of Penang Peace Run 2018 to promote peace and intercultural understanding.
  • Coordinated the Charity Sales for Sunrise Enterprise, an NGO established to provide employment trainings to disabled persons. Total RM500 was raised.
  • Continue our close partnership with police force to prevention crimes especially in the Free Industrial Zone ("FIZ"). Sponsored the entire renovation costs to repair the FIZ Police Station at Phase 4. Total RM20,000.
  • Sit in the Steering Committee to discuss and analyse the human capital issues within the electrical and electronics sector organized by MIDA.
  • Hosted a visit by 10 Japanese bankers from Nanto Bank, Japan, who is a key investor of one of our customers.
  • Accepted total 8 university students, including 1 Japanese student from Asia University, Tokyo, for industrial training placement.
  • Globetronics Scholarship Award for 1 Malaysian student studying in Volgograd State Technical University in Russia. Total RM60,000 sponsorship.

The other area of contribution by our Group mainly initiated by our CEO, would be in the area of corporate social works such as:-

  1. Supporting our government agencies in promoting foreign investments into Malaysia;
  2. Assisting and sponsoring local, small and medium industries along technologies growth; and
  3. Promoting entrepreneurship within the Malaysia business circles by sharing our success stories in technology conferences or discussions (i.e. FMM SME Conference 2018)

Overall, we aim to bring a holistic approach in supporting our local community from the contributions to various local societal organizations, academia and even the police force to make the community we operate in a better place.