Made in S'pore - and beyond
17 Jul 2016The future of manufacturing in Singapore
Multi-country tie-ups, cross-sector collaboration, plus jobs that pay well. And a driver of innovation, to boot. Roundtable panellists see a bright future for manufacturing
Lee Su Shyan Business Editor
Images of rows of factory workers huddled over benches and assembling components make Ms Seraphina Seng shudder.
The media contact at the Singapore operations of United States chip equipment-maker Applied Materials says: "That's not how my office looks like, and that's not what manufacturing is."
Cast aside preconceived notions about factories. The Applied Materials facility in Changi, with its bright and open office, spacious meeting rooms and rest areas with plants and cheerful furniture, is a far cry from the images of Singapore's dirty and noisy manufacturing factories of yesteryear.
Today, rather than making components and ball-bearings, the local manufacturing scene features anything from solar panels to medicines by the likes of multinationals Pfizer and GlaxoSmithKline, and Novartis, to oil rigs by Keppel Offshore & Marine.
Indeed, in some cases, there may not even be a factory here at all. While the actual manufacturing is done overseas, increasingly more research and development (R&D) takes place in Singapore. Procter & Gamble - maker of shampoos and soaps - has an innovation centre here that employs 500 engineers, researchers and support staff.
On the other hand, as Singapore became very strong in the electronics sector, manufacturing made up about a quarter of Singapore's economy. Now, its share has fallen to about 20 per cent. After about a year of shrinking production - down 5.2 per cent last year - the sector continues to be hamstrung by a lacklustre global economy. In low-cost markets such as China, wages have risen. Resource prices are volatile, while skilled talent is often in short supply.
So, can manufacturing still be a key pillar of Singapore's economy? And even if it can still hold that position, can Singapore still find a niche for itself? The answers, from the panel of roundtable experts, may be what insiders at the coalface have already gleaned, but will, perhaps, excite others, and spur them to take a fresh look at the economy's workhorse.
REASONS TO CHEER
Manufacturing may be declining as a share of the total economy but it is more than the sum of its parts.
"Manufacturing fundamentally creates value," says Agency for Science, Technology and Research (A*Star) managing director Raj Thampuran. It adds diversity to the economy and makes it more resilient, the panel member adds.
The sector can generate positive spillovers for the rest of the economy, from services such as distribution, transportation and financing, a Ministry of Trade and Industry study has found.
The ministry contrasts a $1 million increase in demand for manufacturing with a similar increase in demand for the darling of the economy, the services sector.
It found that manufacturing demand translates to $81,000 worth of non-manufacturing output and 0.65 non-manufacturing jobs but services generated a lower $22,000 of non-service output and 0.27 non-service jobs.
Manufacturing also does well in terms of a common measure of productivity - value-added per worker. This was 5.9 per cent for the period from 2009 to last year, outstripping the overall economy's 2.2 per cent.
And it creates good jobs for Singaporeans, says another panellist, Economic Development Board (EDB) assistant managing director Lim Kok Kiang. Its mean (or average) wage is around $4,400 for locals, higher than the $3,900 mean across all sectors. The sector also drives innovation, he says. Last year, it accounted for 54 per cent of total private-sector expenditure on R&D.
And while the manufacturing sector's contribution to gross domestic product has dropped, output has been growing over the last 10 years in absolute terms. This helps Singapore's growth in services, too. What this says is that both manufacturing and services have been growing but it is only because the services sector has grown faster that manufacturing's share has correspondingly dropped.
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PANELLISTS
LIM KOK KIANG, assistant managing director, Economic Development Board
RUSSELL THAM, regional president (South-east Asia) and corporate vice-president, Applied Materials
DR RAJ THAMPURAN, managing director, Agency for Science, Technology and Research (A*Star)
DOUGLAS FOO, president, Singapore Manufacturing Federation, founder, Sakae Sushi
AARON LOW, deputy business editor, The Straits Times
MODERATOR
LEE SU SHYAN, business editor, The Straits Times
Source: The Straits Times © Singapore Press Holdings Limited. Permission required for reproduction.
Multi-country tie-ups, cross-sector collaboration, plus jobs that pay well. And a driver of innovation, to boot. Roundtable panellists see a bright future for manufacturing
Lee Su Shyan Business Editor
Images of rows of factory workers huddled over benches and assembling components make Ms Seraphina Seng shudder.
The media contact at the Singapore operations of United States chip equipment-maker Applied Materials says: "That's not how my office looks like, and that's not what manufacturing is."
Cast aside preconceived notions about factories. The Applied Materials facility in Changi, with its bright and open office, spacious meeting rooms and rest areas with plants and cheerful furniture, is a far cry from the images of Singapore's dirty and noisy manufacturing factories of yesteryear.
Today, rather than making components and ball-bearings, the local manufacturing scene features anything from solar panels to medicines by the likes of multinationals Pfizer and GlaxoSmithKline, and Novartis, to oil rigs by Keppel Offshore & Marine.
Indeed, in some cases, there may not even be a factory here at all. While the actual manufacturing is done overseas, increasingly more research and development (R&D) takes place in Singapore. Procter & Gamble - maker of shampoos and soaps - has an innovation centre here that employs 500 engineers, researchers and support staff.
On the other hand, as Singapore became very strong in the electronics sector, manufacturing made up about a quarter of Singapore's economy. Now, its share has fallen to about 20 per cent. After about a year of shrinking production - down 5.2 per cent last year - the sector continues to be hamstrung by a lacklustre global economy. In low-cost markets such as China, wages have risen. Resource prices are volatile, while skilled talent is often in short supply.
So, can manufacturing still be a key pillar of Singapore's economy? And even if it can still hold that position, can Singapore still find a niche for itself? The answers, from the panel of roundtable experts, may be what insiders at the coalface have already gleaned, but will, perhaps, excite others, and spur them to take a fresh look at the economy's workhorse.
REASONS TO CHEER
Manufacturing may be declining as a share of the total economy but it is more than the sum of its parts.
"Manufacturing fundamentally creates value," says Agency for Science, Technology and Research (A*Star) managing director Raj Thampuran. It adds diversity to the economy and makes it more resilient, the panel member adds.
The sector can generate positive spillovers for the rest of the economy, from services such as distribution, transportation and financing, a Ministry of Trade and Industry study has found.
The ministry contrasts a $1 million increase in demand for manufacturing with a similar increase in demand for the darling of the economy, the services sector.
It found that manufacturing demand translates to $81,000 worth of non-manufacturing output and 0.65 non-manufacturing jobs but services generated a lower $22,000 of non-service output and 0.27 non-service jobs.
Manufacturing also does well in terms of a common measure of productivity - value-added per worker. This was 5.9 per cent for the period from 2009 to last year, outstripping the overall economy's 2.2 per cent.
And it creates good jobs for Singaporeans, says another panellist, Economic Development Board (EDB) assistant managing director Lim Kok Kiang. Its mean (or average) wage is around $4,400 for locals, higher than the $3,900 mean across all sectors. The sector also drives innovation, he says. Last year, it accounted for 54 per cent of total private-sector expenditure on R&D.
And while the manufacturing sector's contribution to gross domestic product has dropped, output has been growing over the last 10 years in absolute terms. This helps Singapore's growth in services, too. What this says is that both manufacturing and services have been growing but it is only because the services sector has grown faster that manufacturing's share has correspondingly dropped.
===
PANELLISTS
LIM KOK KIANG, assistant managing director, Economic Development Board
RUSSELL THAM, regional president (South-east Asia) and corporate vice-president, Applied Materials
DR RAJ THAMPURAN, managing director, Agency for Science, Technology and Research (A*Star)
DOUGLAS FOO, president, Singapore Manufacturing Federation, founder, Sakae Sushi
AARON LOW, deputy business editor, The Straits Times
MODERATOR
LEE SU SHYAN, business editor, The Straits Times
Source: The Straits Times © Singapore Press Holdings Limited. Permission required for reproduction.