When the Movement Control Order (MCO) was announced, A. & H. Meyer Sdn Bhd had only one day to prepare for it. This included shutting down its departments properly and informing customers, suppliers and partners. Payments (including payroll) had to be made quickly as well and the company scrambled to complete some orders so the factory was ready to be shut down. 

“Our immediate challenges were that international clients wanted to have confirmed delivery dates for their clients’ projects. Our entire delivery schedule, which is normally timed to the day of shipment, imploded,” says managing director Peter Lenhardt, who set up the company in Malaysia 20 years ago.

“Shipments with raw materials were on their way to our factory. An air freight delivery from Germany reached Malaysia literally the day after the MCO was implemented and I do not want to see the bill with the storage charges.”

There was no question of A. & H. Meyer, the Malaysian subsidiary of Germany-based A. & H. Meyer GmbH, which manufactures sockets for furniture and cable management, being classified as “essential” and allowed to continue operations as a key criteria for qualification seemed to be whether the company could run with only 50% of its headcount.

A. & H. Meyer, which requires 70% of its workforce to be on-site, was not going to qualify. Not that Lenhardt did not try. He did his best to evaluate whether the company would be able to obtain an exemption for manufacturing essential services, but it soon became clear that he could not. The best he could do was notify clients that all shipments would have to be postponed. 

Now, the company has been running for 15 days with zero turnover. “With zero turnover and a continuing payroll, it is not a great outlook. Thankfully, the government has recognised that the initial stimulus packages were falling dramatically short of the expectations of the business community.

“The last thing I want to do is start retrenching my staff. We have a team of 65 people, with the oldest employee having worked here for almost 20 years. We have a great team of people who do a good job, and I really like them,” says Lenhardt.

Payroll makes up 35% of its costs. And over the years, Lenhardt says, the company has tried to increase the salaries of entry-level operators. Of course, while this was much appreciated at the time, now it has turned into a major challenge for the company.

The additional stimulus package aimed at small and medium enterprises should help as Lenhardt has worked out that it will cover 12% of the company’s payroll costs over the next three months. “My clear target is to maintain my team, who has been amazingly loyal over many years. We will accept the challenge and find our way,” he says.

About 45% of the company’s production is sold locally, while the rest is exported to countries like India, the UAE, Singapore, Japan, Thailand, the Philippines and Indonesia. The company’s clients are mostly office furniture manufacturers and main contractors who use its products primarily for their commercial office projects

“Since 55% of our goods are exported, we have a massive backlog that we will have to deal with once we are back. Some of these markets, like India, have shut down in the meantime as well, with no end in sight,” says Lenhardt.

“At the same time, we kept on receiving orders from international clients, which had to be registered and then prepared for production. That means not only did we have to organise with our sales team how to key in the orders remotely, but also do production planning by issuing orders to suppliers for components, in the hope that we will be able to restart production immediately once the MCO is lifted.

“All of it, of course, is only an effort to prepare for Day X [when the MCO is lifted]. We managed to get all this off the ground with video conferencing as well as getting members of our team to activate their home offices.”

Right now, Lenhardt’s concern is more on the supply side. The company orders the components needed to build its products and these components are stored at the factory. The final product is made to order, which means that right now, the company does not have any stock of its final products on hand.

And to fulfil the orders coming in during the MCO period, it would require more components. “In order for our suppliers to get their production up and running again, they will need to start the whole [production] process and I have real concerns as to whether they will be able to come back. We had to postpone one month’s worth of orders,” he says.

“Once the MCO is lifted, we foresee that it will take up to six weeks [to complete clients’ orders] because even in the worst-case scenario, I foresee my suppliers will be back on track within that time. The reality is that some things are beyond our control and in this case, we are at the mercy of so many factors. It is literally managing with what you have and figuring it out as you go along.”

Having been in Malaysia for close to 20 years, Lenhardt appreciates the announcement made by Prime Minister Tan Sri Muhyiddin Yassin on the stimulus packages for SMEs. It is nice to be acknowledged as being part of the local business community, he says. 

However, he believes things could have been planned better. He says in Germany, the “Kurzarbeit” was activated, which is something to be considered here. Kurzarbeit refers to short-term recession-related programmes operating in several European countries in which companies avoid laying off employees by reducing their working hours and cutting their salaries, a substantial portion of which are paid for by the government.

The most important thing now is to find a way to restart the production lines, he says. “There should be a release for factories and businesses to open again because that will be good for the economy. Of course, responsible employers need to ensure social distancing and other health measures. These are all things that can be easily managed. And everyone I know will be very grateful if business could be resumed.”