Boosting gains, raising wages: 4 success stories

Prime Minister Lee Hsien Loong and National Trades Union Congress secretary-general Lim Swee Say gave several examples yesterday of how employers - and one of Singapore's industries - have succeeded in raising productivity, hiring more local workers and raising employees' wages through skills training. Mr Lim's bottom line: It can be done.

By Janice Heng, The Straits Times, 2 May 2012

THE ELECTRONICS INDUSTRY

ECONOMIC restructuring may seem daunting, but Singapore has gone through it before.

The country has been an electronics manufacturer for a long time, but its output has changed.

In the past, Singapore factories assembled basic electronic products such as television sets, video recorders and personal computers, said PM Lee.

Then, over the last 20 years, the industry restructured to focus on manufacturing semiconductors. These are the computer chips that are the 'brains' behind the machines


.

Now, Singapore produces high-end electronics. For instance, it makes 80 per cent of the chips used in biometric passports around the world.

It was a 'big transformation' that saw Singapore lose 37,000 jobs over 21 years, said PM Lee.

But it also created nearly 30,000 new jobs which were higher-skilled and offered better pay, he noted.

Productivity also went up almost fivefold, and the industry's contribution to the Singapore economy increased by more than three times.

As a result, workers' wages, too, went up.

SHOWA DENKO

HARD-DISK drive manufacturer Showa Denko was held up yesterday as an example of how companies can successfully improve productivity.

Last year, it merged two of its production plants to improve productivity and the quality of its products.

It upgraded its workers' skills and redeployed them.

As a result, workers had their job scope expanded. For instance, maintenance personnel were tasked with covering more machines.

With a larger job scope, production personnel also improved their troubleshooting skills.

All this meant that operation costs were cut by 10 per cent, said PM Lee. Workers gained as a result, with higher salaries and bigger bonuses.

SIA ENGINEERING COMPANY

MR LIM raised the example of aircraft maintenance firm SIA Engineering Company (SIAEC), which he said has shown in the past few years that it is indeed possible to become 'cheaper, better and faster'.

The firm had to overcome three challenges. Firstly, China was providing stiff competition.

Secondly, Singapore Airlines - and many other airlines - were replacing Boeing 747 aircraft with Airbus A-380 models.

This meant that SIAEC had to revamp its aircraft-hanger capabilities, facilities and workers' skills in order to service the new aircraft.

Finally, inflation meant a strong Singapore dollar, which put the company under tremendous pressure to stay competitive globally.

But the joint efforts of unionists and company management brought success.

Over the past two to three years, SIAEC has renewed itself: with new technology, processes, work arrangements and new skills.

It increased its profit by $10.5 million, and about a third of the gains - some $3 million - were shared with its workers.

MAKINO

TEN years ago, local workers made up just 60 per cent of the Singapore operations of Makino, a Japanese manufacturer of precision machinery and tools, said Mr Lim.

The company faced a high turnover of its foreign staff due to work permits expiring. This made it hard for the company to sustain a high standard of quality.

That was when Makino decided to pursue the vision of 'quality with a Singaporean core', the labour chief added.

The company invested in technology, enhanced its capabilities and adopted human resource best practices to strengthen its Singaporean workforce.

New hires are now sent to Japan for training. Existing workers also have the chance to upgrade and acquire new qualifications, which allow them to rise to better jobs.

And age-friendly innovations allow older workers to continue working for the firm.

Over 10 years, Makino's output has grown by three times. Its productivity has also risen 30 per cent to 40 per cent.

All this was achieved with local workers forming 80 per cent of the company's workforce.

'So, in other words, strengthening the Singaporean core in the manufacturing sector is possible,' concluded Mr Lim.

Recession, but firm seized the day to do better
By Janice Heng, The Straits Times, 5 May 2012

THE 2009 recession was an unlikely blessing for hard-disk maker Showa Denko HD Singapore.

Slow sales created the perfect opportunity to merge its two factories and become more productive.

But the streamlining did not see any of its 1,000 staff losing their jobs. Instead, the workers gained new skills and, in turn, a higher pay and better bonuses.

For the company, costs went down by 10 per cent.

Yet the move was not just about hard numbers, but 'intangibles', like having 'everyone together, so we can feel that we're working together', said Mr Masanori Kudo, senior vice-president of the business and corporate division.

Its efforts caught the eye of Prime Minister Lee Hsien Loong, who held the company up as an example of how firms can boost productivity in his May Day Rally speech earlier this week.

Showa Denko HD Singapore - a subsidiary of leading Japanese chemical engineering company Showa Denko - began operations in 2002, in a leased plant in Pioneer Road.

In 2007, it built another plant in its own building a few kilometres away, in Pioneer Crescent.

With production at full throttle at both sites, any plan to merge was out of the question - until the 2009 slump.

'Since operations were quite slow, we thought it was a good chance to move,' said Mr Kudo.

The merger brought savings in rent, maintenance, utilities and transport.

At the same time, quality was improved as the first plant's older machines were upgraded 'to meet the customers' higher requirements', said Mr Kudo.

The workers, in turn, had their skills upgraded too.

Workers from the first plant were trained to handle both the upgraded as well the main plant's machines.

Also, about 10 to 15 per cent of the main plant's staff learnt how to use the upgraded machinery.

As a result, workers can now be deployed across different production lines, to meet shifting demand for each line's products.

In addition, staff were trained to handle a larger job scope and more work processes. 'We had to retrain anyway, so we decided to make it more in-depth,' said division manager Oh Wai Some.

The decision not to cut manpower, even with greater efficiency, was deliberate - and fortuitous.

In the latter half of 2009, business began picking up. Since then, the company has expanded its capacity by 30 per cent, requiring it to even hire more workers.

The plant merger is one of two projects for which Showa Denko has tapped the Inclusive Growth Programme.

The government-funded programme helps finance productivity projects that share the gains with workers.

On top of pay rises, trained staff may get further increments and bonuses.

Ms Ruzieyah Johri, who works in research and development, moved to the main plant last year. Her salary went up in March, thanks to gains-sharing and her work performance.

But the benefits are not just financial. She now has the chance to grapple with more complex and varied issues. Smiling, the 31-year-old said: 'Every day is a different experience.'