BRAVING NEW WAVES TOGETHER

A Complete Maritime Community

Critical Mass

With over 3,000 companies within 645 square kilometres, Singapore has one of the highest concentrations of maritime companies in the world. In place are specialists in instrumentation, electronic equipment repairs, turbocharger reconditioning, refrigeration and air-conditioning maintenance as well as engine manufacturers, propeller makers and navigational equipment suppliers. There are also workshops providing marine engineering and fabrication services and companies offering ship design, consultancy and management services, and other equipment supplies.

Together they provide the full spectrum of products and services, which ensure that any requirement of the shipyards and shipowners can be met promptly. This has endeared Singapore to shipping companies as shipowners stand to lose thousands of dollars in charter hire whenever a ship is delayed.

The critical mass of services has put Singapore a cut above the competition. There is no doubt in many industry players’ minds that the Singapore marine and offshore industry would not be what it is today without the benefit of a strong and comprehensive supporting industry. The density of services is one of the industry’s key success factors, making it difficult to replicate. This concentration also creates an intensely competitive climate, which has proven beneficial to customers in both pricing and service availability.

“The supporting industry in Singapore is well able to provide the services needed by shipyards or shipowners at short notice. The infrastructure and the level of competence in Singapore are state-of-the-art. The fact that all these services are offered so close to each other makes Singapore very competitive,” said Peter Kneipp, Chairman of ASMI’s Supporting Industry Committee, 2007-2009, and President and CEO of MTU Asia Pte Ltd.

The happy position that Singapore is in today is due to a confluence of factors. The development of the port and shipyards helped to set the stage for private enterprise. The government fostered this growth when the nation gained independence in 1965, in its effort to build up the marine industry to provide jobs for Singaporeans. Government incentives were extended to encourage multi-nationals to set up bases, including regional headquarters, in Singapore.

The response was phenomenal. Hundreds of companies sprung up to provide engine repair, navigational systems, electronic equipment repair, marine spares, underwater cleaning, refrigeration and precision equipment maintenance. Over the years, all key engine manufacturers and propeller makers have set up shop to offer a more convenient service to customers in the region. Also on board are all the key classification societies.

By the 1980s, Singapore had a strong cluster of equipment suppliers, service providers and other supporting services. Some of these were started by locals who had cut their teeth working in the shipyards or ex-seafarers. Since then, the range of services has expanded to include offshore equipment, support and engineering services, making Singapore a one-stop marine and offshore centre, and placing it at a distinct advantageous position over the competition.

“The marine supporting industry in Singapore is very diversified and comprises companies with very different backgrounds. From the regional headquarters of MNCs (multi-national corporations) to SMEs (small and medium-sized enterprises) and very small companies, a lot of areas in the industry can be covered in a very efficient way. The supporting industry is specialised in the service sectors and supports well the customers in the market,” said Mr Kneipp.

Strategy for Growth

The industry is optimising the benefits from this diverse range of services by promoting greater synergy amongst the different constituents. It is felt that by replacing a vendor-customer relationship with mutually beneficial partnership, companies can leverage on their complementary resources to achieve improvements in quality, safety and costs. With increased global competition, the need for cooperation among industry members has become more vital.

Spearheading this drive is ASMI, which has made partnership in this diverse community operating in a dynamic environment a major agenda for the association. With increasing participation of the supporting industry in ASMI, the Non-Shipyard Committee was set up in 1997. Renamed Supporting Industry Committee in 1999, it helps to address the concerns of non-shipyard members, chief among which is to foster closer cooperation between the non-shipyard and shipyard members.

The Guide to Good Business Practice for the Marine Industry was published in 2001, to align industry members and make working together smoother and more coherent. “The guide has been accepted by the supporting industry members and the shipyards. We are constantly reviewing the guide in order to ensure that it represents the actual status of the industry,” Mr Kneipp added.

Mr Heng, in his speech at the ASMI Anniversary Dinner in 2004, pointed out, “There is a need for the local shipyards and these marine companies or contractors to work closer together as partners...to confront the external competition and to drive for greater efficiency. For this to take place, a mindset change is necessary.”

“Through partnership we can achieve a certain amount of transparency to derive greater benefits. It allows common goals – shipyards with customers and shipyards with the marine supporting industry. Ultimately, I believe that greater benefits can be achieved, the profitability of companies can be improved, and business can be more sustainable,” added Mr Heng.

“One main focus of the Supporting Industry Committee is to provide a platform for intense networking. That is where our members can benefit the most. In addition, it can help provide the link between the members and the big shipyards in a more neutral way, which can be very helpful for all parties,” said Mr Kneipp.

Through concerted efforts and networking opportunities, good progress has been made. There has been increased participation from supporting industry members in the association’s activities.

The two groups – shipyards and supporting industry – are working closer together, which has led to the formation of strategic alliances for mutual benefits.

Levelling Up

As the industry develops, there was soon a widening gap between the shipyards and marine SMEs, as the latter lag in keeping pace with the transformation in the shipyards and their shift towards higher value jobs. Several initiatives have been adopted to raise the capability of the marine supporting industry. Amongst the most enduring is the Marine Local Industry Upgrading Programme (Marine LIUP).

Set up with the support of the Economic Development Board (EDB) in 1996, the Marine LIUP provides a structured approach for the bigger shipyards to assist the SMEs collectively to enable them to level up. Marine SMEs play a key role in the industry, providing a large and diversified support to the larger shipyards. As the shipyards sub-contract a large bulk of their work to the marine SMEs, it was critical that these SMEs are up-to-date in their capabilities.

“Sub-contractors account for 75% of the workforce. Whatever they do, must affect us,” said Wong Peng Kin, ASMI’s Vice-President, 1997-2009, and Jurong Shipyard’s Senior General Manager of Human Resources, who spearheaded the formation of the Marine LIUP, and has remained its chairman to this day.

In the early days, the focus had been on improving the productivity and efficiency of the marine contractors. In 2003, the Marine LIUP introduced the SME Affiliate Programme to strengthen marine industry entrepreneurship. It provides the platform for the six major shipyards to mentor the 50 SME-affiliates in the programme, to raise their operational effectiveness so that they could better support the shipyards both locally and globally.

“Shipyards can share their business experience and equip the affiliated SMEs with the necessary knowledge and the right mindset to expand beyond the local shore and also to provide linkages with the relevant government bodies,” said Mr Wong, who is also Chairman of the Marine LIUP Steering Committee.

During the last 12 years, the Marine LIUP has been instrumental in developing human capital, best practices and technology to enable SMEs to keep pace with the shipyards’ development in quality, service and safety management systems.

Generation Next

As many of the marine SMEs are home-grown and family owned, more attention is being paid to succession planning. For many of them, there are children, nephews or nieces, waiting in the wings, groomed to take over the helm in time to come.

In Kwong Soon Engineering, one of the oldest marine engineering companies in Singapore, which started in 1928, nephew George Ching is working alongside his uncle and Managing Director, Louis Ching. Having grown up in the business and becoming involved since their teens, they have slipped into their roles like fish to water and have contributed to developing the business.

From being an afloat repairer whose prime customer was Shell, the company has leveraged on its contacts to secure contracts ranging from ship repair to engine and turbocharger repair, and fabrication of offshore components in Singapore, Vietnam and China.

Over at Heatec Jietong, a leading heat transfer and piping system specialist, Managing Director Johnny Soon has the problem sewn up. “I’ve been in the marine industry for 25 years and I will be here for another 5-10 years,” said Mr Soon. Much to his delight, his children seem willing to take the mantle, as all three of his children have joined the business after graduating with requisite qualifications – Jenson is the head of the Engineering and QA Department, Jeffrey is operations manager and Jacqueline is in human resources.

Jenson, the eldest but the last to join, answered his father’s call to come home to head up the Engineering Department as a suitable candidate could not be found. “We are going into design and building of heat exchangers for pleasure vessels. In order to go into this, we need to have our own engineering department,” said the elder Soon. Jenson, who completed his masters in the United States where he took heat exchange in his final module, met Heatec Jietong’s requirement to a tee.

Singapore needs an excellent supporting industry to maintain its position as a world-class marine hub. By helping SMEs to rise to the challenge, Singapore’s position in ship repair, conversion and rig building will be more secure.

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