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Anchored in Singapore History - Book Cover

Voice for the Industry
Made in Singapore
Positioning the Keel Blocks
A Remarkable Story of Growth
No. 1 Centre in Shiprepair
A Future in Industrial Engineering
Lending Support
A Marine Powerhouse
Confronting the Issues




Industrial engineering is a natural extension for Singapore yards as it utilises the same core skills as shipbuilding and construction. Considered a feast and famine business in the past, and one to be developed only as a subsidiary activity, industrial engineering has come to it own on the back of strong regional demand.

Group Chief Executive of the Sembawang group, Ng Pock Too, said in an interview with Singapore Business. "Shiprepair is a steady, fairly mature business. It will remain the core business, but not the only business in the group. Engineering - the potential is unbelievable."

Singapore's position in the heart of the world's most dynamic region has given companies reason to hope. With the explosive development in Asia, road, airports and seaports have to be built to facilitate transportation; power plants installed to provide much-needed electricity; and sewage and toxic waste disposal plants constructed to make life possible.

These have opened fresh opportunities for industrial engineering companies, whose well-being once hinged on the narrow base in offshore exploration and production. The offshore sector still holds good potential as countries with the oil and gas resources in this region will have to exploit their energy resources to fuel their economic development.

A Glimmer of Light

The push to utilise fully Singapore's engineering capability came during the depths of the marine recession when industrial plant construction, marine and ocean engineering were identified as promising areas. Faced with more qualified engineers and foremen than it had work for, Keppel Shipyard decided to channel them into a newly created engineering department. Present Managing Director of Keppel Shipyard, Mr Loh Wing Siew, recalled: "The basic philosophy was to retain the better engineers and foremen."

Domestic construction, which the government used to pump-line the economy in a recession, provided as possible source of work. Keppel pitched for and won contracts to build an automated people-mover-system linking terminals and an underground tunnel for the Singapore Mass Rapid Transit System. With the volume of work it soon outgrew the department. An independent entity, Keppel Integrated Engineering, was formed to group together all the engineering outfits which Keppel had acquired over the years.

Other industry majors were adopting a similar tack. Promet's Director and Sales Manager Vincent Lam told Petromin Asia in 1985: "So far, we've diversified our activities to general contracting, building of industrial plants, offshore structure…Our facilities allow us to flexible enough to handle everything that has to do with steel and concrete."

With the successful diversification, industrial engineering became the only sector in the marine industry to post gains in a depressing 1985. According to SASAR's annual report, turnover doubled to $117.4 million as member yards constructed sections of the Mass Rapid Transit system and an incineration plant at home, as well as built a hangar and light beacons for neighbouring countries. The revenues generated from industrial engineering have been creeping up ever since.

Wider Vistas

With the experience gained, Singapore companies are now primed to go regional. "For engineering companies, fabrication yards, equipment suppliers, sub-component manufacturers - the future must be to go into the region," said current ASMI President Mr M S Tan. "Marine companies can enhance the marketability of their products and the margins they enjoy if they can use local materials purchased at local prices," Mr Tan added.

Both Far East Levingston Shipbuilding and Van der Horst have secured awards to build and operate electrical power barges for the National Power Corporation of the Philippines, while Ipco International, has a contract to build and operate a privatised port in Malaysia. Often the requirements are so sizeable that are beyond the capability of any company. This has encouraged Singapore companies to group together to make a bid for power generation plants, ports and townships. Even foreign partners are taken on board.

In a well-publicised move, the Sembawang Group formed a strategic alliance with American engineering giant, Bechtel Group, Inc. "It will structure the development, financing, ownership, construction and operation of large-scale infrastructure projects in Asia, such as power plants, environmental projects, roads, airports and ports. The burgeoning growth in such projects in the region presents immense opportunities for the partners to leverage their complementary management, engineering, construction and marketing capabilities," said the joint venture company, Sembawang Bechtel Enterprises.

These regional projects can create spin-offs for Singapore, in terms of designing, procurement, financial packaging and compensation trade.

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