Government will help manufacturing firms: PM Lee

But they must do their part to upgrade by tapping schemes and working together

By Goh Chin Lian, The Straits Times, 30 Sep 2012

Prime Minister Lee Hsien Loong last night promised to help manufacturing firms adapt to a changing economic landscape, but urged them to also do their part by upgrading themselves and working together to overcome their size constraints.

He also acknowledged the challenges they faced, such as a labour crunch and the tightening of foreign worker inflows.

"We can't guarantee that every single company will always succeed, but we are committed to help every company find a way forward," he told 1,500 business leaders at the Singapore Manufacturing Federation's (SMF) 80th anniversary dinner at Marina Bay Sands.

The federation, which has more than 3,000 corporate members, was formed in 1932 to champion the manufacturing sector.

In recent months, many companies, especially small and medium-sized enterprises have raised concerns about difficulties finding manpower, just as the country continues to make moves to tighten the tap on foreign workers.

Last night, PM Lee noted that the manufacturing sector fuels more than 20 per cent of the economy, and assured them: "We want manufacturing to remain a major pillar of our economy."

He also called on firms to adapt to business changes brought by new technologies and the need to integrate with the services sector to compete with cheaper locales.

He listed four ways to beef up the sector: Leverage Singapore's position as a hub into Asia and the world; boost productivity with new technology and by upgrading workers; keep attracting multinational companies; and maintain a pro-business environment.

Mr Lee added: "We need to continue to welcome foreign talent, while encouraging employers to train and build up the local talent pool."

He also encouraged firms to take full advantage of the Government's many schemes such as the Productivity and Innovation Credit. They could also form consortiums to enter new markets or bid for large contracts, he said.

SMF president George Huang, however, suggested streamlining the 160 schemes offered by different agencies to make them less confusing, as well as simplifying the application process.

Companies like battery supplier Swee Hin Power Systems noted PM Lee's call to raise productivity to cope with labour shortages.

Its director of sales and marketing, Mr Tay Jih-Hsin, said the firm has improved the workflow for its 40 staff and invested in IT systems.

The chairman of SMF's electrical and electronics industry group also said he plans to seek out other groups to share expertise and take on projects together.

Singapore manufacturers worry about recession as orders drop

By Aaron Low, The Straits Times, 1 Oct 2012

FOR manufacturing firm Apex Technologies, the past few months have been among the most trying since the financial crisis in 2008.

The firm's boss, Mr Alex Hoong, has seen orders drop by as much as 40 per cent as his customers are afraid to commit to orders.

"You usually see orders pick up about now for the year-end Christmas period. But so far, it's been very quiet," said Mr Hoong, who manufactures parts for the semiconductor and plastics industries.

Manufacturing has been one of the worst-hit sectors in the Singapore economy this year, having been adversely affected by the slowdown in China as well as the sluggish economies in Europe and the United States.

For August, industrial production dropped 2.2 per cent from the same period last year, far below the 1 per cent expansion many economists were expecting.

Among the manufacturing sectors, electronics, which forms 33.4 per cent of manufacturing, has been battered. The sector fell 7.3 per cent in August.

The set of poor numbers released last week prompted many economists to predict that Singapore will enter into a recession for the first time since 2008.

A technical recession is defined as two straight quarters of consecutive decline. The economy has already contracted 0.7 per cent in the April to June period.

But the recession seems to be confined mostly to manufacturing, said Bank of America Merrill Lynch economist Chua Hak Bin.

"Construction looks like it remains healthy, while services is probably weak but still growing," he said.

Dr Moh Chong Tau, president and chief executive of manufacturing firm Makino Asia, said that electronics firms were the hardest hit by the global slowdown so far.

"Business has definitely slowed, with clients more nervous than they were a few months ago. But so far, aerospace engineering has held up, so has biomedical," he said.

Mr Kelvin Wee, general manager at contract manufacturer Patec International, agreed, saying that of all the products he manufactures, electronics has seen the worst falls in demand.

Sectors such as oil and gas, marine and construction are still seeing growth. E-Steel's general manager Nick Chong said orders are still coming in for the piping it produces for oil and gas firms.

Likewise, public infrastructure projects worth billions in public housing and transportation are keeping construction firms busy.

Jian Huang Construction managing director Annie Gan said she has enough work to last till 2014.

Whether this technical recession tips over into a full-blown recession depends on how well the job market continues to hold up, said DBS economist Irvin Seah.

The economy created 31,700 jobs in the three months to June, faster than the 24,800 created in the first three months of the year. The citizen unemployment rate stood at 3 per cent in June.

"Many still have jobs and therefore they do not feel as if a recession is here. But should things turn bad, this can change very quickly," said Mr Seah.