Energy transition case study: Beyonics

Replacing humans with robots means Beyonics, a Singapore-headquartered precision parts manufacturer, can work with the lights off.

“When you see factories on TV, they’re all lit up, but you can run them in the dark and you don’t have to worry about lighting, heating, or air conditioning. Previously, one or two people might have worked on a machine, but now our processes are automated, and robots can work in the dark,” said Kyle Shaw, founder and managing partner at ShawKwei & Partners, owner of Beyonics.

The mid-market private equity firm acquired Beyonics in 2012 through a USD 115m privatisation of the Singapore-listed company. It quickly repositioned the business, phasing out the core hard-disk driver production operation and focusing on precision manufacturing, characterised by lower volumes and higher margins.

Beyonics now specialises in printed circuit boards, tooling and die casting, and plastic injection moulding, serving customers in automotive, industrial, and medical sectors. In 2016, it merged with Chosen, another ShawKwei portfolio company in the precision manufacturing space.

Early efficiency gains, including energy conservation, came with geographic consolidation. At the time of acquisition, Beyonics had 24 factories in Malaysia, Singapore, Thailand, and China with an average size of 60,000 square feet. This was reduced to five (although two facilities in Malaysia are often counted as one), with the overall square footage unchanged.

Centralisation and co-location resulted in less transportation in the value chain because trucks were not carrying goods from factory to factory. Meanwhile, combustion engine trucks are gradually being phased out and replaced by electric vehicles.

Building larger factories also allowed for equipment upgrades. “Whenever you put in new equipment, you become more efficient. You use fewer materials, less time, and there are significant energy savings in doing things exactly right the first time instead of coming close and having to fix it afterwards,” said Shaw. “And then putting in more automation meant we could reduce headcount.”

Each factory has been converted from coal-fired furnaces to natural gas and most also feature rooftop solar. Shaw estimates that solar can cover up to 30% of an individual site’s electricity needs, depending on the time or day and the power consumption demand.

Payback on solar investments is usually around three years, although it varies by geography. In Malaysia, energy pricing is controlled, which limits volatility; in Singapore, there are no government subsidies, and the local energy market is highly sensitive to global pricing.

Having strong sustainability credentials is helpful during supplier qualification processes run by prospective customers. Energy access and security are standard questions in most due diligence, but more emphasis is being placed on doing business with counterparties that are like-minded in approach to environment, social, and governance (ESG) protocols.

Shaw cautions that sustainability alone is not enough to win a contract. Similarly, energy transition doesn’t underpin ShawKwei’s investment thesis for Beyonics – rather, it is one of multiple by-products of efforts to run the company in a more efficient and cost-effective manner. Most of the annual average USD 15m Beyonics allocates for capital expenditure ends up in new equipment.

“We don’t see our primary function as saving the planet. However, energy is a big part of our cost base, especially with oil at USD 100 a barrel, so we are very disciplined in how we use electricity,” Shaw added. “A lot of publicity is generated around ESG by people who have their own agendas. We, and others, think about energy efficiency because it is commercially smart.”

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• Topics
• Southeast Asia
• Industrials
• Cleantech
• Singapore
• Malaysia
• China
• manufacturing
• ShawKwei & Partners