Managing Traditional SME: An Introductory Insight into

Management of Traditional Boat Workshops At Pulau Duyong,

Terengganu

Ahmad Naim Zaid

INTRODUCTION

Small and Medium Enterprises (SMEs) are the very heart of Malaysian economy being
a vital contributor to the employment and production chain in the country. Malaysian SMEs are
defined as companies with less than 50 workers or with below RM5 million in sales turnover.
While each of the SMEs may not be able to match larger Multinational Corporations (MNCs)
or Government Linked Corporations (GLCs), their cumulative contribution far outstrip those
two big corporation types. It is thus, imperative that more researches to be carried out to
continuously help improve the SMEs. Most businesses operating in the state of Terengganu fall
into the SME category. They are the single largest contributor to the private sector employment
in the state. Out of those, one particular island is blessed with a unique and specialized
economic activity; the boat making industry.

Pulau Duyung is famous among the local and foreign with its traditional boat making
industry. It is probably due to its geographic nature which is at the estuary of the Terengganu
River that makes it appealing for this sort of industry. What made the boat making industry
very special and well known to the sailing world is that, here in Pulau Duyung, they produce
wooden sailing boat which is getting less as wood is replaced by fiber glass due to its cost.
Among the boat builders, Haji Abdullah is the soul of this industry. His workshop is located in
the heart of a traditional village on the island. Here he and his skilled craftsmen have built
hundreds of wooden sailing boat for local and foreign sailing enthusiasts. Being a traditional
boat making industry, management practices here are also very simple in nature, applying little
of the complicated methods and theories as in managerial text books.

The purpose of this study is to see through the managerial processes in this industry
with the focus on an example i.e. Haji Abdullah’s boat making workshop, and present viable
recommendations to help the traditional boat making industry in Pulau Duyong in particular
and SMEs in general to be more adaptive to the fast moving environment. The traditional boat
making industry is very rare these days and with the elders leaving this world, it is crucial to
have successors to continue this precious heritage. While the industry is getting fair publicity
coverage, little academic research has been done to sufficiently study the industry in a holistic
manner and this paper aims to cover a significant part of that.

To begin with, it fair to state that there are limitations in this study as it depends solely
on an interview with the owner of one of the boat making workshops at Pulau Duyong. This is
a qualitative study to get managerial views directly from the street smart and to make
comparison of what has been said in the books. While this sort of study may have its bias, it
allows us to get to the details of the aspects researched compared to quantitative studies which
only get us to the surface of an issue.

This paper consists of four parts; the literature review, an overview of the traditional
boat making industry, managerial issues encountered by traditional boat makers, the future of
the industry and finally some recommendations.

LITERATURE REVIEW

The first broadly explored managerial system was the quality management system. An
excellent example is the focus on working capital management in UK’s small firm by Carole
Hartworth and Paul Westhood ( 2001 ).In firms of all size, one of the basic aim of management
accounting routine is to control vital areas as well as to monitor, and hopefully improve
performance. The absence of formalization does not necessarily imply that a small firm is poorly
controlled.
Business and marketing reasons lead to a need for proven management quality, an
organized approach to quality of management which can be achieved through the
implementation of an efficient management system. According to Alena Labododava in the
Journal of Cleaner Production ( 2003 ), integrated management system can be described as a
combination of quality management and environmental management consisting of environmental
management, health and safety management.
Marry Parker Foller define management as the art of getting things done through people.
In a broad definition, that means management is the process of administering and coordinating
resources effectively, efficiently in the effort to achieve the organizational goals. The mission
and organizational goals can be divided into four overlapping categories namely planning,
organizing, leading and controlling ( Henry Fayol ). Dr Henry R. Meyer (2000) argued that there
are five common managerial problems; retaining staff, building teamwork, maintaining quality,
increasing productivity and motivating staff. Dr Henry R Meyer also said that managers need to
have a number of fundamental skills; multiple job skills, personal attribute, values, attitudinal
training, strategic thinking and knowledge management.
Sabda S (2008 ) says that modern management should aim to create a harmony
workplace. One way is to create a bond of friendship between employees of all levels. Since
management is about mobilizing people, disgruntled workers can seriously affect the smoothness
of operation. There is also a saying that a happy worker is a productive worker. A harmony
relationship between workers can make management tasks a lot easier.
Drawing on the universalistic or “best practices” approach, past researchers posited that
some human resource practices are always better than others and at the same time, recommended
that all organizations should adopt these best practices. The proponents of the universalistic
perspective believed that greater use of the best human resource practices will help organizations
to increase their effectiveness (Osterman, 1994; Pfeffer, 1994; Delery and Doty, 1996), A
number of recent studies have consistently identified six essential human resource management
practices as crucial to organizational effectiveness (Osterman, 1994;Pfeffer, 1994; Delery and
Doty, 1996; Harel and Tzafrir, 1999). These six practices include: (1) recruitment; (2) selection;
(3) compensation; (4) employee participation; (5) training; and (6) performance appraisal.
Over the years, different authors and researchers have offered various definitions of
innovation. Kanter (1985), Young (1994) and Drazin and Schoonhoven (1996) referred to
innovation as a means to create and maintain sustainable competitive advantages. On the other
hand, Drucker (1985) and Covin and Miles (2003) considered innovation as a fundamental
component of entrepreneurship. Johannessen et. al (2001) referred to innovation as newness and
used six different types of innovation activity to measure innovation as newness. These six areas
of innovation activity are new products, new services, new methods of production, opening new
markets, new sources of supply, and new ways of organizing

TRADITIONAL BOAT MAKING INDUSTRY: AN OVERVIEW

In traditional boatmaking, the boat makers are generally called tukang and with
specializations there are some different names given describing each specific tasks like tukang
timbal. In Sulu, small boat (perahu) makers are called panday. Tukang timbal refers to boat
makers specializing in building large boats. Some well known expert large boat makers are
called tukang besar. These experts are very experienced and skill and they are so good that they
rarely need proper drawing and frames.

They are responsible to ensure that the large boat will float on the ocean. Only the truly
skilled and experienced dare to take the job of designing and building large boats due to the need
to consider the strength of waves that the boat can handle. Tukang besar normally knows what
kind of boat to be built just by knowing the size, load and speed wanted by customers.
Customers usually give full endorsement to what the tukang besar decides for their boats as
these experts knows their job all too well to make any mistake.

After some negotiations between the boat maker and the customer, a written deal is
signed in front of some witnesses. The deals normally do not include the details and specifics of
the boat design, only the size and the price that was agreed. Payment are made in two ways;
either the customer pay only the labour cost and the tukang prepare the inputs or the customer
pay in full and leave everything to the boat maker. Either way, the deal is based on trust on both
sides.

“ tak dop dop..dulu saye dop jual..saye dop jual..saye cume amek upoh je..cume tu pun kedian ni
lah..emm maknenye..tu pun ade upah jugok tu.kapal tu upoh jugok tu...die beli beli barang..kite
wat..”

For big boat makers, they normally have up to 20 workers, skilled and unskilled. There
are some who works only to learn and mostly work for pay. There are also some who are taken
in due to familial relationship. The workers normally respect the tukang besar a lot due to his
experience. Thus there is rarely a problem of lacking motivation or absentees.

In different areas, the design of the boats are normally different due to the infusion of
cultural influences into the design. Pulau Duyong boats are well known for their beauty and
stability on the waters.

Traditional boat making in Pulau Duyong is in general a family heritage. The skills are
inherited from generations of predecessors.

“dari datuk.. tok ki dulu ..Die buat macang perahu perahu kajangang, macam Sarawak... tahu
dok..Tapi dia dok dayung..Die pakai galoh..Die mudik hulu… Die ade rumah dulu situ..Die gi
muat ikang masin, barang-barang gitu la…Kemudian jatuh ke ayoh saye...Tak dok projek
jugok.. mase jepun.. Mase jepun tak dok projek,. Tak dok orang nimbal sini.Tak dok orang nak
perahu la sini..Kemudian lepas pade jepun tu baru ada la..Mule-mule buat moto
nambang....Perahu angkat pasir, die panggil perahu angkut pasir ni dia. Macam
perahu....perahu jalur “

(MANAGERIAL) ISSUES ENCOUNTERED BY BOAT MAKERS IN PULAU DUYONG

From the interview with one of the boat makers (Mr.L) whose name shall not be
mentioned, there are not many managerial problems due to the simple nature of their businesses.
If their management styles are compared to those of the big corporations, then many would
perceive that there are so many deficiencies in their administration and management. However,
from the interview and observation during the visit, it can be said that traditional simple
management methods is much more suitable for their business due to the size of the business and
the culture of the locals who are the boat makers and the workers.
Small Number of Workers
“Adik dia dua orang ..pat (empat) orang pekrja ..nam (enam ) orang ah mula-mula..Adik dia tua
doh..dok minat..kemahiran takdok. Kita ni amik (ambil) pekerja kejap-kejap je..orang kampung
ni je..dok kekal.”
The number of workers is relatively very small, ranging from 5-20 depending on the size
of the boat to be built. The really skilled workers are about 6 people and they are the permanent
workers. The rest are trainees and workers who are called only if required.
“bawah saya ada 6 orang. tetap la tu.hok mahir. tu kalu kije banyak kite panggil la….macam
Kit…Peter…peter ape doh…tu paka 20 orang”
No Proper Documentation and Business Based on Trust.
There is one real problem though Mr.L may not see it as an issue i.e. the non-existence of
proper documentation. Though the Mr.L’s skill is undisputable, a proper recording of progress,
finance and the deals is crucial these days. In the old days, the business is based mostly on trust
but that may not work well in this capitalist world. However, Mr.L clearly stated that there has
not been a case of fraud up till today.
“Takdok.Atas caya je “
(Q: tapi dulu ade dokumen hitam putih dok?
Mr.L: takdok )
Lack of Planning.
There is no record of progress of boat in the making. The unique style of work of Mr.L
and his crew is certainly something to be awed about. It has never been a problem for him in his
entire career as a boat maker. He proudly stated that everything is in his head and thus there is no
need for papers and blueprints. There are some that uses blueprints but only as simple guidelines.
The general blueprint is drawn on the floor under the table used for the interview. It is just an
illustration of how insignificant it is to the boat maker.
“Ada sorang (seorang ) mat saleh tu ( orang berbangsa Inggeris) dari new Zealand nak buat
kapal..tiru wat (buat) pelan ..gitu,,gini..meja gini..dapur sini.. kita boleh nampok belaka
doh.seme (semua ada dalam pala ( kepala) doh..dia wat bot sekaki ,pakai pelan..kita wat bot 80
kaki..40 kaki ..takdok pelan pun.”
”Ada dalam pala belaka,kemas (tersimpan) belaka doh”
“Mr.L:hok ade, ade lah pelan…ade hok takdok “
“Dok timbang air (timbal) doh, kira jadi lalu, Keturunan gitu doh”

Promotional Effort
One obvious weakness of the traditional boat makers in Pulau Duyong is their limited
marketing effort and ability. Despite their fame in among sailors around the world, if no
marketing effort is done, their names will eventually be lost in time. From the interview, we
found that they depend on the customers to spread the word.
“( promosi)dari mulut ke mulut ah …”

It is only one of the many ways of marketing and it is very limited in creating market
demand for their service.
Communication with Customers
Customers who wish to get custom made boats normally come to see Mr.L in person.
Mr.L himself cannot speak or understand English or any other languages besides the Malay
language. However, there has never been any hitch in reaching agreement as both sides share the
common language; the love for artistry in boats. Some even learn the Malay language in advance
before coming to Pulau Duyong to meet the boat makers.
(Pelanggan) pandai cakap Melayu ..memang pandai cakap Melayu . saye dok pandai cakap
orang puteh ( tidak mahir bahasa Inggeris)

Some may argue that without proficiency in English, a businessman cannot succed in the
global market but the boat makers in Pulau Duyong has proven that it is the quality of the
product that matters most. Communication is very important but communication is not limited to
verbal language.

Competitive Advantage

Due to the ability of the boat makers in Pulau Duyong to produce better boats at lower
costs, many competitors around the Asian region has been forced to shut down. In some cases,
Mr.L stated that he even managed to cut fifty percent of the cost. They do not use any advanced
technology nor do they have cheaper source of inputs. It is the skill of optimizing the resources
available and transforming them into quality products that give them the competitive advantage
over others.

“ saye buat perahu macam ni tahun 80, harge 3.75 juta ringgit…tapi saya buat abih 1.5 juta
ringgit je “

“ tapi kat singapure..tutup doh leni..”( competitor out of market)

Business Transaction Method and Cost of Production

The payment for the boat is made in several stages. Once agreement is reached between the two
parties, a percentage of the pay agreed will be banked in advance.

“dia mari…kate nok perahu gini-gini.awak bayar dulu 35 peratus, bukan hari ni…awak balik
dulu…awak masuk bank “

This is to pay for the materials needed to start the work. The balance have to payed during the
duration agreed. The boat makers normally do not proceed with the works if payment is not
received.

“saya orang dok bagi pitih dok leh wak keje “

This is due to the cost of the materials which are usually very high.

“ bot parok..sebab mahal di barang.orang dop..dop tahang..bile kayu mahal..die kuarkan harge
mahal..harge..harge orang nak banding ngan sini…”

THE FUTURE OF THE TRADITIONAL LEGACY

If the current scenario is of any measure, the future of traditional boat making does not
seem bright. This is largely due to the lack of funds, support and continuity.
The cost of building a boat is huge. It is not an easy industry to survive.
“Dapur, dapur saje RM15,000 doh, senget macam mana pung dok balik. Jamban harga
RM1,200 , kita buat water line dia, air doh masuk……”
Due to the increase in the price of wood and all other materials needed, the boat makers
only build boats upon request and advance payment. As it cost a lot of money, the demand has
diminished over the years. Big yachts only appeal to the wealthy and riches and their biggest
customers are normally from other countries. Local demand has normally been only for smaller
boats. The return is much lower making it a lot less appealing for boat makers.
Not many skilled boat makers are willing to take the risk to venture into the industry as
the starting capital needed is too large. This has become a barrier that makes traditional boat
making an oligopoly industry albeit in a small scale.
Soon, when the current generations of boat makers who are all at their golden age are
gone, the picture of the future seems bleak. Not only due to the financial factor but also owing to
the lack of interest from the younger generation to learn the trade. The local youngsters either
prefer to look for jobs outside the area or less physical office works. Even the unemployed seems
to have no interest in boat making. This is an issue that deeply concern Mr.L as he said;
“Anak-anak dok minat, jangan paksa-paksa. Dok dan pandai lari keja kat lain…..( sambil
menjeling tanda tak puas hati dengan anak-anak)”
“lagi kije tu nok taip-taip je…takboh debu-debu ni..gitu lambat lagi a nok kije.hahaha. Bukan
budok duyong ni je….tamboh pulok budok duyong ni bangun pagi tengok perahu..gi blajo
sekoloh…balik kang tengok perahu pulok…..jemu doh.berape kali sehari…nok tido tu berape
kali tengok doh”
Mr.L has voiced his concern many times. He even asked several agencies to send trainees
to come and learn. Some like MARA answered the call. However, due to the lack of funds and
thus projects, not much can be taught. Some trainees lack the patience needed as to be skilled
they need to spend a lot of time learning, requiring dedication and discipline.
“mara die nok antor orang sepuluh orang. Mulenye tahun due ribu empat... bukan..Hooo.... gitu
la lebih kurangnye.. Due ribu lime gamoknye die nok antor tapi kite tak dok projek.. Die tanye
doh macang mane...Bile nok ade projek.Saye kate tok tahu lah...Kalu nak deras awak beli kayu,
beli barang-barang, antor la orang... saye ajor ..”

“tu yang saye kabo ke pejabat kerajaan…ato lah orang…sini takdok orang minat…sebab
ape..budok mude zaman sekarang turun nak gi kije naik moto”
Another problem is the lack of support by the SME authorities to help improve the
business of these boat makers. Bureaucracy and red tape is an obstacle that has hindered the
prospect of the industry to be more commercial and attracting newcomers to make the industry
more competitive and strong.
“Kemudiang die mesyuarat pasal pitih banyok sangat ni.. Mesyuarat die kate bandaran kate
buleh, aaaa.... bomba....ramai jugok lah. Mesyuarat-mesyuarat tak buleh..dok lulus..dok lulus.
Die kata nak buat buleh kene buat bangunan batu gini atas tanoh hok ado doh.. Maknenye deras
lah ni. Tiang ambik tiang asal bubuh atas ..Bawah tu bubuh simen...Die pun turut. Buat la gitu.
Abis la dekat tige ratus ribu jugok la...Emmm... jimat la die dekat dengan sejute Haaa...”
The only cheer that the boat makers in Pulau Duyong get these days is probably the
media attention and maybe a little appreciation from government agencies for their effort to
uphold the traditional boat making heritage. They are a source of pride to the local community.
“dok banyok doh…MARA nok wak buku…nok bagi hadiah ke saya…nk bagi
ijazah..PHD..dalam bulan 11 ni“

When Mr.L talk about the future of traditional boat making, the gloom on his face was
obvious. The old man love the industry and the art of boat making that may soon just vanish.
Traditional boat making in Pulau Duyong is unique due to the artistry in design, the quality in its
built and the ability of the boats to stand against the big waves in the vast ocean. Most
importantly, the industry has been around for ages and generations that it would be a shame if it
is to disappear with time. It is a heritage that should be preserved and strengthen so that one day
it can operate on a global scale and contribute to the economy in a more meaningful way.
CONCLUSION
The SMEs does not need to apply the rigid management methods as in the books. They
are small and thus more agile to react to changes but they are also more vulnerable to financial or
capital disadvantage. The management method used has to fit with the culture of the locals as the
workers are mostly locals. Even workers from outside has to fit in with the originals of the area.
Management is the art of moving people and motivated workers are productive workers. Mr.L
has shown how workers with small pay can stay motivated due to his own incredible work
ethics, his humbleness in handling his subordinates and his willingness to pass his precious
knowledge. In SMEs where the entrepreneur is normally the manager, leading by example is
vital. They have to be around the workers, get to the ground and make them realize how much
they appreciate the work of the subordinates. Besides financial rewards, this is a powerful tool
for motivation and a good approach in human resource management.
From the interview with Mr.L, one conclusion can be drawn; there is a need for
assistance to help the boat making industry in particular and the SMEs in general much stronger.
The assistance can come from different authorities and agencies in various forms; funding,
knowledge support, market support, technological support etc. It is regrettable that even the local
authorities are neglecting the wellbeing of such precious legacy as the Pulau Duyong boat
makers. Their workshops does not seem too well managed with space not enough to produce in
larger scales. Even when they approach authorities for help, they are not well tended to. For
small growing industries like SMEs, motivation is crucial until they can be self-motivated.
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Borins, Sandford (2002). Leadership and innovation in the public sector. Leadership &
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Interview with Haji Abdullah on 15 August 2009 at Pulau Duyong.from 2pm.to 4.30 a.m.