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According to the Global Construction 2030 report conducted by Global Construction Perspectives and Oxford Economics, global construction is expected to grow 3.9 per cent per annum to 2030, more than a percentage point faster than the forecasted global GDP growth rate. The strong pace of growth will be powered by both developed countries recovering from their economic malaise, as well as the rapid industrialisation of developing countries.
All in all, global construction is expected to grow by 85 per cent US$15.5 trillion worldwide by 2030. As a result, the building products and construction materials sector is expected to benefit, growing in tandem with construction demand.
Within the sector itself, there has also been a further consolidation with major players consolidating their positions through corporate deals, such as the merger between the world's largest cement manufacturers, Holcim Ltd and Lafarge SA in 2015. This will provide them with the financial position and scale to capitalise on the upturn in construction demand too.
Growing Popularity of Green Buildings Driving Demand for Materials
Another bright spot on the horizon is the growth of the green building materials sector. Green buildings are structures that are environmentally responsible and efficient with respect to resources throughout the lifecycle of the building. Materials utilised for this type of construction are known as green building materials. Based on new research from Technavio, this market is expected to top US$260 billion by 2019, growing at a CAGR of 13.21 per cent across the next four years.The report noted that Europe was responsible for the highest share of the global green building materials market, followed by North America and the Asia Pacific (APAC) region. In particular, it is APAC that is expected to see explosive growth in this area, especially countries such as India, Singapore, Malaysia, and Indonesia. This increased demand is the result of government pushes, increasing buy-in from property developers, and rising recognition of the benefits of green buildings from buyers and tenants.
Green Building Movement Takes Off in Singapore
Meanwhile in Singapore, the green building movement has taken off significantly with three reiterations of the Green Building Masterplan launched by the Building and Construction Authority (BCA) since 2006. Through a mixture of incentive schemes and regulatory policies, BCA has sought to encourage developers in Singapore to build more green buildings.At the heart of the BCA’s Third Green Building Masterplan, there will be a new US$S50 million incentive scheme for existing buildings which will support efforts by building owners to adopt sustainable initiatives and improve energy efficiency. This will be through co-funding up to half of the cost of retrofitting buildings for energy improvements, with sums of up to S$3 million for building owners and S$20,000 for individual occupants.
To date, the three Masterplans have generated considerable results, with the number of green buildings having grown from 17 in 2005 to 2,100 today – or the equivalent to a quarter of Singapore’s total gross built up area. This places the Republic firmly on track to achieve its target of greening 80 per cent of its building stock by 2030.
New Building Technologies and Materials to Boost Productivity
Besides achieving greater sustainability for its buildings, Singapore has also been looking at new building technologies and materials to boost productivity and reduce manpower requirements in constructions. This has been in the form of driving greater adoption of Prefabricated Pre-Finished Volumetric Construction (PPVC) and use of Cross Laminated Timber (CLT).PPVC is a construction method, which allows prefabricated individual rooms to be built off-site in a factory, before being transported to the building location and assembled together in a Lego-like manner. Each of the room components are completely fitted out during the manufacturing phase, allowing for greater productivity, with less manpower and time, as well as a reduction in noise pollution.
Speaking at the opening of the SEF SpaceHub – the first ICPH (integrated construction and prefabrication hub) built here – then Senior Minister of State for National Development Lee Yi Shyan shared that the government intends to develop 10 such ICPHs by 2020, underlining its commitment to PPVC technology.
New Timber Material Helps Developers, Saving Time and Manpower
Meanwhile, cross-laminated timber (CLT) is also gradually being introduced into Singapore’s building and construction landscape. Already widely-used in Europe for more than a decade, CLT is manufactured by bonding layers of timber at right angles to produce solid timber panels that can be used as structural components in buildings.Amongst the many benefits of using CLT in building and construction include the reduction of waste, noise and pollution onsite. Using CLT for construction also allows for quicker completion and less manpower requirements. There are also sustainability benefits such as the lower energy and water consumption of any building material, and its ability to be recycled and reused. Meanwhile, usage of CLT will further reduce the need to import sand and aggregate, which benefits the construction sector.
The ideal place to carry out business
One of the key reasons behind the rise of Singapore’s economy, has been its success in positioning itself as a key trading and business hub for the region. In fact, the Republic has consistently topped the World Bank’s Ease of Doing Business rankings, with companies and professionals being able to carry out their work with the most minimal of fuss.
With Singapore’s corporate landscape a bustling scene of multinational corporations (MNCs), small and medium enterprises (SMEs) and startup companies, there is certainly a strong demand for office supplies and equipment. This runs the gamut from corporate stationery and paper supplies, to printed documents, digital printers and photocopiers.
Indeed, the modern office is becoming increasingly sophisticated, with the introduction of new digital technologies and equipment to complement traditional corporate office paraphernalia. Over the years, Singapore companies have seized on the growth opportunities in the domestic office supplies sector, while also exporting their products and expertise to overseas markets.
Moving Forward with Stationery
Speaking at the Singapore Gifts and Premiums, and Stationery and OfficeLink Fair in July 2012, then Minister of State for Trade & Industry Teo Ser Luck shared that the global stationery products market is set to reach US$155.4 billion by 2015, driven by factors such as technological progress, rising levels of literacy, growing population, as well as a demand for licensed products.
Amidst the intense competition domestically and internationally, Singapore gift and stationery companies have had to constantly innovate with new brands, products, services and business models to stay ahead. For one, many corporate stationery makers here – big and small – have fully embraced online commerce as a way to expand their sales channels beyond traditional retail storefronts, while gaining exposure to overseas markets.
Government Support for Capability Development
In order to help traditional local companies make the transition into the new digital economy, the Singapore government has been actively support them in the development of new capabilities in areas such as brand building and online retailing. One notable success amongst corporate stationery firms here has been the new brand from established corporate stationery maker Grandluxe. Grandluxe was able to successfully tap on funding from SPRING Singapore’s Capability Development Grant (CDG) to work with brand consultants in developing the concept and identity of one of their brands.
Raising the Industry Profile
The industry is also committed to raising its profile as a whole, competing against regional players such as Hong Kong and China. The highlight event of the year for the industry is undoubtedly the Singapore Gifts and Premiums, and Stationery and OfficeLink Fair (SGPFair), with the next edition set for 29 June to 1 July 2016.
The show is also held in conjunction with Office Expo Asia (for office & business solutions) and PrintPack+Sign (for printing, packaging and signage solutions). In 2013, the event saw a record-breaking 10,000 plus visitors across three days. Of the 158 exhibitors then, close to 60 per cent were local exhibitors with the remaining overseas participants.
The events are supported by the Singapore Booksellers And Stationers Association (SBASA), Promotional Products and Giftware Association (PPGA) and Small and Medium Businesses Association (SMBA), among many other local business groups and trade associations. According to their organisers, SGPFair and Office Expo Asia are the region's leading platforms for corporate buyers sourcing for gifts, premiums and office solutions.
Printing Solutions for Business and More
Besides office supplies and equipment, another common sight in offices around the world are printed documents. Ranging from administrative forms to annual reports to financial documents, the range and volume of printed material produced and received by offices are tremendous. And while the rise of the digital economy has reduced the amount of paperwork in many instances, there are still industries that require printed output such as banking and finance, as well as listed companies.
In fact, Singapore’s status as a global banking and finance hub has kept Singapore’s printing firms flourishing, with their need for compliance and regulatory requirements mandating the use of printed documents in many cases. Based on the United Nations Commodity Trade and UN Service Trade annual report for the year, Singapore was in fact the world’s third-largest exporter of printed matter in 2013. In all, the Republic accounted for 8.9 per cent of the global printed matter exports, with a value of US$4.6 billion.
Transforming the Printing Industry through Technology and Innovation
To stay competitive, local printing companies has embraced innovation and new technology to stay ahead and remain productive. For example, new advances in printing technology has created an opportunity for boutique presses or specialised publishers, capable of printing small quantities of materials on demand. The capability to incorporate computer technology into the printing and production process, has also allowed for greater automation, enhancing overall productivity.
To help the printing industry remain strong and competitive, the government has also been stepping up its support for training. In June 2015, the Print & Media Association Singapore (PMAS) received funding from IE Singapore and SPRNIG Singapore in the form of the Local Enterprise and Association Development (LEAD) programme. This joint initiative helps in the setting up of a training academy to further elevate the competitive of the sector.
This training institution is set to commence operations by the end of 2015, helping the industry to cultivate new talent and current print professionals upgrade their capabilities. Beyond this, there has also been active collaborations between PMAS and public sector agencies to attract young talent to the industry and promote ways to enhance productivity.
Rising to the Needs of Offices
Singapore’s office supplies sector looks set to continue to advance and grow, supported by the strong business fundamentals of its corporate landscape, as well as growth opportunities in the region and beyond. The Singapore government and trade associations are also actively taking the lead in terms of guiding and driving individual companies in their transformation and development, and this will be a significant factor in the continued success of the industry.
Importance of the Building and Construction Sector
Within 50 years, Singapore made the rapid transformation from an underdeveloped Southeast Asian city state to a modern First World economy and one of the key business hubs of the region. As its economy grew, so did its urban landscape and infrastructure develop to keep pace with the needs of its inhabitants.Through the years, the building and construction sector has benefited immensely from the rapid pace of urban development, with both the public and private sector creating strong demand for their services.
The construction industry is worth around S$36 billion, accounting for 5 per cent of national GDP. It is made up of 12,500 firms and employs 320,000 workers. However, 5 per cent of the large firms contribute half of the total value add of the industry. The remaining are SMEs and there is usually a great disparity in productivity between large and small firms.
Looking forward though, the industry has come to a crossroads precipitated by the current economic restructuring, and will need to find ways to adopt new technologies and innovations to boost productivity and reduce manpower reliance.
Taking the Lead in Raising Productivity
In Singapore, the government has been taking a strong lead to help the building and construction sector enhance productivity and innovation through adoption of new technologies. In this respect, the Building and Construction Authority (BCA) is the lead government agency tasked with guiding the transformation.In 2010, the BCA formulated the Construction Productivity Roadmap (CPR) and launched the S$250 million Construction Productivity and Capability Fund (CPCF) to boost construction productivity. Another S$335 million was topped up to the fund in 2014 to quicken the pace of re-structuring.
Tightening Foreign Manpower Supply to Spur Change
Speaking in the Budget debates in March 2015, then Senior Minister of State (SMS) for National Development Lee Yi Shyan shared that the roadmap had adopted a 3M Framework, which tackled the productivity issue through three areas: manpower, machines and methods.For starters, the plan looked to spur change by reducing the sector’s heavy reliance on foreign workers. With international best practices showing that when workers are skilled or multi-skilled, construction projects typically require fewer workers while maintaining the same levels of quality, the government progressively tightened the foreign worker supply while increasing foreign worker levies.
To improve the skills of workers in the sector, the BCA set aside funds for their training and development, while introducing policies to favour the retention of higher-skilled foreign workers. Between 2010 and 2014, BCA funded training that helped the industry upgrade more than 74,000 in-service personnel from 6,000 firms.
In recent times, the sector has also responded with its own initiatives, with the Singapore Contractors Association (SCAL) launching its Foreign Construction Worker Directory System in October 2015. The online directory allows skilled foreign construction workers to list out their skill sets, thus enabling construction firms to source for trained workers reaching the end of their work permits. The net result is an increase in construction productivity through retention of skilled workers.
Better Technologies to Strengthen Productivity
The adoption of better technologies and methods of construction has been the other key aspects of the first productivity roadmap. Between 2010 and 2014, some 880 firms received funding from the Mechanisation Credit scheme. In addition, some 135 of these firms also received Investment Allowance, a tax credit, for purchasing productive machineries.One key technology that has been widely adopted in recent years is Building Information Modelling (BIM). This computer technology allows building performance to be simulated digitally, so that design conflicts can be collectively resolved upfront. This avoids costly reworking and wastage at later stages, saving time and effort.
Since its introduction in 2012, more than 80 per cent of the larger consultancy firms and 60 per cent of the larger contractors have adopted BIM. BCA has been pushing for the industry wide adopt of this technology to increase the productivity of the sector.
New Construction Methods to Enhance the Building Process
In terms of methods, the BCA has been pushing for the adoption of Prefabricated, Prefinished Volumetric Construction (PPVC) and the use of Cross Laminated Timber (CLT) in construction. PPVC is a method of construction in which apartment and room-sized volumetric units are fully fitted out and finished, before being transported to the construction to be installed into the building by stacking on top of one another. The PPVC method can potentially achieve up to 50 per cent savings in terms of manpower and time, depending on the complexity of the projects.In the CLT method, cross laminated timber is used for structural and wall components to replace concrete and steel bars, and brick walls. CLT is produced by pressure-gluing multiple layers of timber such that the wood grain of each layer is at 90 degrees to that of the next layer, redistributing the weight.
The resulting CLT panel is capable of bearing loads similar to that of concrete, but is 80 per cent lighter. Thus, the foundation for a building constructed with CLT will not have to bear as much weight. CLT allows for faster construction with fewer on-site staff, thus the waste, noise and dust pollution on the surrounding community. So far, the public sector has been pioneering the use of these methods of construction, although private sector developers are starting to incorporate them into their building designs too.
The Second Construction Productivity Roadmap
In many ways, the first Construction Productivity Roadmap (CPR) has largely achieved its objectives. Based on an industry survey, more than half of the firms have embarked on their productivity journey to explore alternative ways to build smarter, as a result of the productivity measures under the first Construction Productivity Roadmap. Site productivity, which measures the floor area completed per man day, has also been improving at an increasing rate. Site productivity improvement has also been a steady 1.4 per cent per annum from 2010 to 2014.With that in mind, the Ministry of National Development (MND) announced the Second Construction Productivity Roadmap in the 2015 Budget. Building on the 3M approach of the first roadmap, the latest plan added two new thrusts. The first thrust is the adoption of Design for Manufacturing and Assembly (DFMA). In simpler terms, DFMA requires the industry to manufacture as many building parts as possible in a factory. The prefabricated parts are then transported on site for assembly. In his Budget speech in March 2015, SMS (National Development) Mr Lee Yi Shyan shared that firms need new capabilities in design, engineering and manufacturing to embrace DFMA well.
The second thrust is to encourage the development of deep capabilities in the industry, helping the most progressive firms here move up the value chain by acquiring R&D, engineering and design capabilities. This thrust calls for the development of in-house cross-functional teams comprising architects, engineers and project management professionals.
To further fund the enhancement of construction productivity, S$450 million was set aside for the second tranche of the Construction Productivity and Capability Fund (CPCF) from 2015 to 2017 to help the built environment sector make higher investments in impactful productive technologies and improve the quality of its workforce. This is in addition to the current $335 million committed to help drive productivity in the sector.
Every Little Step Adds Up
Beyond the first and second Construction Productivity Roadmaps (CPRs), the BCA continues to collaborate with the industry at large on many other initiatives. For example, the BCA announced in October the first grant call for construction productivity under a research fund by the Ministry of National Development. Under this grant call, S$2.6 million will be used to fund research institutes and industry players to further develop game-changing construction technologies and increase their adoption in the built environment sector.Concurrently, the BCA also announced a revised tender evaluation framework for government construction projects will raise the weightage of productivity from 3 to 6 per cent, up to 10 per cent of the overall score from January 2016 onwards. This means that contractors with good productivity records in their past projects, along with investment in technology adoption and workforce development, will enjoy an advantage during such tender evaluations.
All in all, it can be seen that much time, efforts and resources has been directed towards the enhancement of construction productivity in Singapore. In many ways, this comes as little surprise given the economic importance of the building and construction sector, and amidst the rapid pace of Singapore’s economic transition.
The global marine and offshore sector has faced choppy waters in recent times, with an uncertain economic climate and the fall of oil prices impacting demand for new offshore vessels and structures. Despite the challenging conditions, Singapore’s marine and offshore sectors remain in good shape to continue powering forward. Here, we take a look at the state of the industry and how it is transforming itself to rise above its challenges.
From Humble Beginnings to Industry Leader
Since its early days, Singapore has been an important port of call for international shipping vessels. With its ideal location along many major shipping routes, the Republic grew to become a leading centre for ship repair and maintenance. Fast forward to the present, Singapore has grown from strength to strength in this area, developing a thriving marine and offshore industry in synergy with its oil and gas, shipping and maritime sectors.
In many ways, Singapore’s marine and offshore sector has benefited from rising oil prices in recent years, which has led to a greater demand for more offshore vessels to undertake oil exploration. The Republic has capitalised on this growth momentum to gain a market leadership position in the field of building jack-up rigs and conversion of Floating Production Storage Offloading (FPSO) units. It has also become a niche player in the construction of customised and specialised vessels.
Much of the expertise in this area is home-grown too, with Singapore being home to many successful marine and offshore firms, the two largest being conglomerates Keppel Offshore & Marine (O&M) and SembCorp Marine.
Major Economic Contributor
The marine and offshore engineering sector is a major contributor to Singapore’s economy on many fronts. In spite of challenging conditions – such as an uncertain global economy and increased competition globally - the industry was able to maintain its total turnover above the S$15 billion mark in 2013. Of this, the rig building and offshore sector contributed most to the industry’s total turnover in 2013, with S$9.72 billion. This constituted a whopping 63.5 per cent of total industry turnover. Meanwhile, the ship repair and conversion sector contributed S$4.74 billion or 31 per cent of the industry’s turnover, while the shipbuilding sector accounted for a more modest S$840 million, or 5.5 per cent of turnover.
The industry is also a major employer in Singapore. In 2013, the total marine workforce in 2013 numbered 109,700 workers, an increase of 3 per cent from the year before. However, looking forward, Singapore’s Ministry of Manpower (MOM) has indicated that the hiring outlook for the marine & offshore engineering segment is less sanguine, with employment growth weakness expected, due to the reduced demand for oil rigs. This can be attributed to the record low oil prices that has hit the market since the tail end of 2014, a result of reduced oil demand and excess capacity from US and OPEC (Organization of the Petroleum Exporting Countries) producers.
Rising Above Difficulties
In fact, the plunge of oil prices through 2015 is expected to be the major concern faced by Singapore’s marine and offshore sector in the ensuing period, owing to its strong position in the offshore rig building business. Most of the oil and gas majors have pulled back on exploration and production activity, and this has resulted in more project cancellations and contract delays, as well as fewer new orders across the globe.
Singapore’s marine and offshore sector has been able weather the storm well so far. This has been thanks to inherently strong business fundamentals and an order book that had been built up prior to the oil price crash. Moving forward, the industry will need to find ways to leverage on remaining opportunities to achieve growth amidst these conditions.
Finding New Niches to Dominate
Speaking at the 47th Anniversary Dinner of the Association of Singapore Marine Industries (ASMI) in October 2015, Senior Minister of State (Transport) Josephine Teo said that the industry needs to tap on its expertise in offshore conversions and repair to make inroads into the Floating LNG Vessel (FLNGV) sector. It was noted that Keppel Shipyard won a third contract worth over US$600 million to convert an LNG carrier into a FLNGV in July the same year.
In her speech, Mrs Teo also pointed out that with the long-term shift towards cleaner fuels, there will be opportunities in the highly-specialised market segment for the repair and maintenance of LNG (liquefied natural gas) vessels. In that regard, Singapore has built up competitive advantage, with Sembawang Shipyard recognised as a market leader for LNG vessel repairs, refits, and life extension works. Singapore’s emerging position as the LNG trading hub for the region will undoubtedly also benefit this development.
With the uncertainties surrounding the oil market - and offshore rigs, by association – Singapore’s marine and offshore sector has been hedging its bets by expanding on its position in less affected segments such as ship building, repair and conversion. In ship building, Singapore has built up a niche, specialising in building smaller and customised vessels. For ship repair and conversion, Singapore firms are pushing into niche segments such as LNG carriers, passenger ships, cruise ships and offshore support vessels.
Focusing on Productivity Improvements
Besides encouraging the industry to pursue opportunities in stronger performing segments, the Singapore government has also been working with the sector to look inwards too. Speaking at the opening of Sembcorp Marine’s steel structure fabrication workshop - the largest of its kind in Southeast Asia - Economic Development Board (EDB) chairman Beh Swan Gin called on the marine and offshore industry to reinvent itself and bounce back from the current slump. He also pledged the government’s full support to investments that help boost productivity.
All of this has been backed by with action so far. For example, under the aegis of the National Productivity Council (NPC), a Marine Transformation Plan (MTP) was unveiled, which seeks to enhance productivity across the board for the industry. For another, the Operations Management Innovation Programme for the marine industry – a joint collaboration between ASMI, the Singapore Workforce Development Agency (WDA) and the Singapore Institute of Manufacturing Technology (SIMTech) - has been helping companies in the industry identify and address productivity gaps.
Technology and Manpower Development to Boost Success
There has also been a greater focus on the development and adoption of technology for the marine and offshore sector. Since 2006, the Marine and Offshore Technology Centre of Innovation (MOT-COI) has been helping companies, with more than 150 projects completed so far. Many of these projects have resulted in significant productivity improvements.
Bringing it all together are the efforts to improve the manpower and talent development in the sector. As part of the broader SkillsFuture initiative being implemented at the national level, new programmes such as the SkillsFuture Earn and Learn Programme for Marine & Offshore Engineering have been launched. This is a work-study programme spanning a year, which allows participants to gain a specialist diploma in marine production - along with the attainment of specialised skills - while gaining invaluable work experience. Such programmes will help in developing a highly skilled marine and offshore engineering workforce here with a Singapore core.
Sailing through Difficult Conditions
The global shipping industry is currently looking at a challenging year ahead, beset by the challenges of weak global economic and trade growth, as well as a surplus of shipping capacity. In December 2015, credit ratings agency Fitch revised its outlook for the global shipping sector from stable in 2015 to negative in 2016. In their report, Fitch pointed out that the slowdown in China’s economic growth will impact the global shipping industry hard, especially since China accounts for a significant for two-thirds of global iron exports and a fifth of global coal exports.This forecast has proven to be uncannily accurate. In February 2016, the Baltic Dry Index (BDI) – a leading indicator of the global demand for commodities and raw materials – fell below 300 points, representing a record low. The implications of a plunge in the BDI is significant too, with a downwards trend indicative of global economies starting or continuing to contract. Hence the pessimistic outlook for the industry as a whole.
Opportunities for Growth Amidst Turbulence
However, it is important to realise that such challenging conditions are a result of circumstances that will pass in time. For those capable of staying resilient and looking towards the longer term, there are definitely opportunities for future growth. In its IHS Global Maritime Trends 2016, business information providers outlined two possible trends that shipping companies would do well to pay attention to.One factor that looks to positively impact the shipping industry is the introduction and adoption of Big Data analytics. What Big Data promises for the industry is the ability to better forecast market supply, demand and pricing, based on shipping data and analytics. By providing better insights, Big Data will allow shipping companies to become more effective and productive in their shipping operations. And while it won’t entirely eliminate uncertainty, data analytics can help shipping players reduce unnecessary market risks.
Another factor that offers the potential for strong growth is shifting global demographics, with the rise of a burgeoning middle class in Asian, African and Latin-American developing economies. With their increasing disposables incomes, these regions are expected to see an upsurge in consumption. This will result in increased trade of goods and services, creating growth opportunities for shipping companies.
Singapore Still a World Class Shipping Hub
Despite the challenging conditions, the Republic still remains a major shipping and trading hub globally. In 2015, the port of Singapore handled 30.62 million TEUs of container, making it the world's busiest transhipment Hub. This means Singapore accounts for almost one-seventh of the world's total container transhipment throughput and more than 4 per cent of global container throughput.In addition, the port of Singapore is recognised as one of the top sea ports internationally, and was voted the "Best Sea Port in Asia" for the 27th time at the 2015 Asian Freight, Logistics & Supply Chain Awards. Despite the accolades, the Republic is cognisant of the competitive nature of the shipping industry. As such, it has been constantly looking at improving its shipping and maritime port.
Helping the Shipping Sector Stay Competitive
Speaking at a Singapore Maritime Foundation (SMF) function in January 2016, Coordinating Minister for Infratructure Khaw Boon Wan announced that Singapore would provide an additional 10 per cent concession on port dues for container vessels calling in, with port stays of up to five days. Intended to help the shipping industry cope with the current downturn in the sector, the additional concession will be for a year and be on top of existing port dues concessions. These concessions are expected to provide more than S$17 million in annual savings for container lines.The port of Singapore will also allocate more resources to help customers enhance vessel productivity at the port and optimise network planning activities, such as service deployments and phasing in and out of vessels, with the aim of lowering their operational costs. In addition, it will look to engage container lines that wish to establish a long-term strategic presence in Singapore.
Furthermore, in order to enhance its maritime and port efficiency, Singapore has been investing in technology such as simulation capabilities for marine traffic and port operations. The government is also shaping up the sector’s manpower under its national SkillsFuture Framework – tapping on a joint effort between private sector firms in the industry, educational institutions and the labour unions to ensure that Singaporeans in the sector are equipped with the necessary skills for tomorrow.
Riding through the Cycle, Positioning for Growth
Shipping is largely cyclical in nature, with boom and bust phases that are determined by global trade conditions and industry capacity. Nonetheless, with everything in mind, we can see that while conditions in the shipping industry are challenging for all at the moment, the long term prognosis is still a positive one.
How Singapore is transforming into Asia’s next generation logistics hub.
From Humble Beginnings
Since its early days, Singapore has been a bustling sea port and important trading outpost due to its strategic location along key international shipping routes. And as its economy rapidly took off in the years after independence - emerging as a manufacturing and oil refinery hub - so did its logistics and supply chain industries grow in tandem to support trade and business. Some of the key milestones include the launch of the Tanjong Pagar Container Port to tap on international container traffic growth and the development of Changi International Airport to consolidate its growing air passenger and cargo traffic.
Fast forward to today, we can see that Singapore has continued to grow from strength to strength, establishing itself as a major logistics hub to the region. In 2014, the World Bank ranked Singapore as the No. 1 Logistics Hub in Asia in its Logistics Performance Index. The Republic’s success can be attributed to three factors: world-class infrastructure, good location and excellent connectivity to the region and the rest of the world. In turn, much of this can be attributed to the foresight of the Singapore government, which has continually planned ahead to ensure hardware and software components of the logistics sector are relevant and ready for the future.
A Key Source of Growth
In many ways, the importance of the logistics sector to Singapore’s economy cannot be understated. In 2014, the industry employed more than 188,000 people and contributed some 7 per cent to the economy. The Republic is also an important location for the world’s top logistics companies, with 20 of the top 25 global logistics players running operations here, on top of being the preferred logistics and supply chain management hub for leading manufacturers such as Dell, Hewlett-Packard, Infineon, LVMH, Novartis, Panasonic and more.
With so much going for it, the long term prospects for Singapore’s logistics sector are certainly bright with the economies of Asia forecasted to continue seeing strong growth. Singapore is party to some 18 multilateral and bilateral Free Trade Agreements (FTAs), and continuing to pursue greater trade facilitation such as the Trans-Pacific Partnership. As such, its volume of trade with the region is expected to follow suit. With the ASEAN Economic Community (AEC) coming into place by the end of 2015, the 10 Southeast Asian economies will transform into a single market, bringing about liberalised movement of goods, services and people - and in turn generating even greater demand for Singapore’s logistics and supply chain management solutions.
Taking to the Skies
Singapore is well-connected to the region and the rest of the world by air. And in Changi Airport, the Republic boasts one of Asia’s largest cargo airports, which is served by over 6,500 weekly flights connecting to 280 cities in 60 countries, and handling close to 2 million tonnes of cargo each year. In this regard, its strategic location is definitely a help, with Singapore being proximate to the world’s major markets and situated within a seven-hour flight radius to half of the world’s population in Asia Pacific.
By 2017, Changi Airport will see the completion of its Terminal 4 complex, adding an additional gross floor area of 195,000 square metres. At the National Day Rally in August 2015, Singapore’s Prime Minister Lee Hsien Loong further announced that Terminal 5 will be built by the mid-2020s to double the airport’s current capacity, so as to stay ahead of regional competition. In all, some S$3 billion has been set aside in the Changi Airport Development Fund for the cost of development and upgrading and replacement of air navigation and operations facilities.
Air freight providers engaging in niche categories such as high-value goods and perishables will be glad to hear about the development of specialised logistics facilities catering to them. Opened in 2010, the Singapore Freeport is a highly secure storage vault for high value collectibles that is located adjacent to the Changi Airport and securely connected via internal airport roads. Its close proximity to the airport also offers international collectors convenient access to their stored valuables.
Meanwhile, the Coolport @ Changi is a S$16.5 million on-airport perishable handling centre, which is designed to handle a wide range of fresh produce including chilled meat and live seafood, as well as temperature-sensitive pharmaceutical and biomedical products. Both specialised logistics facilities are also built on free trade zones, which means that the goods stored do not attract duties or taxes while they are within the premises, and making both excellent transshipment hubs.
Moving on the Seas
When it comes to shipping, the Republic boasts the world’s busiest transshipment hub, which handles about one-seventh of the world's container transshipment throughput or 31.24 million twenty-foot equivalent units (TEUs) of containers in 2013. In fact, Singapore is connected by 200 shipping lines to 600 ports in 123 countries, with daily sailings to every major port of call in the world. The comprehensive port facilities and services are also unmatched with regards to quality, efficiency, competitiveness and reliability, with the ability to handle more 2,000 containers per vessel, with a turnaround time of less than 12 hours. All this is perhaps, why Singapore is frequently recognised as the “Best Seaport in Asia” by the Asian Freight and Supply Chain Awards (AFSCA).
Despite its relatively small size, Singapore has several port and terminal facilities to cater for different types of shipping traffic. Towards the southern part of the island, the Port of Singapore Authority (PSA) manages a total of 57 berths at its container terminals in Tanjong Pagar, Keppel, Brani and Pasir Panjang, which operate as one seamless and integrated facility. To the western part of the island, Jurong Port serves the maritime and shipping needs of Singapore’s industrial companies nearby with 32 berths, handling general, bulk and containerised cargo.
With an eye on the future and to cater to growing cargo trade, the Singapore government has stepped up the development of Pasir Panjang port, which is currently in phase three and four of an expansion and look to be operational by the end of 2017. The new terminals are expected to handle 15 million containers, bringing Singapore's total handling capacity to 50 million containers a year. Looking even further ahead, the Ministry of Transport announced in 2015 that the Republic will be relocating its transshipment port operations to Tuas in 10 years, a move that will add 65 million TEU in annual capacity, nearly doubling today's capacity at local PSA terminals. It noted that consolidating transshipment operations at Tuas will bolster efficiency and economies of scale while eliminating inter-terminal transfers, resulting in cost savings and increased productivity.
Taking Stock of Progress
Singapore is the preferred location in Asia for many global logistics players in part due to the strong support they enjoy from the Singapore government. Besides the constant upgrades in infrastructure and connectivity to the region, the Singapore government also believes in close collaboration with logistics companies to set up a robust and competitive ecosystem. The Republic’s business-friendly customs procedures and excellent air and sea freight handling capabilities offer partners a strong platform from which to add on their own logistics and supply-chain excellence.
The Singapore government also provides strong support to logistics firms that are looking to increase their productivity and reduce reliance on manpower. A wide variety of government grants are available such as the Productivity and Innovation Credit (PIC) scheme to support the adoption of productivity enhancing technology and the Capability Development Grant (CDG) to help companies develop new capabilities to increase their overall competitiveness. Government agencies such as SPRING Singapore also support companies in the logistics industry through the Logistics Productivity Toolkit as well as work with industry groups to improve sector wide productivity.
Manning Up to the Challenge
While Singapore pushes on in its quest to transform into Asia’s next generation logistics hub, it has not forgotten that skilled talent and manpower will be required to operate new facilities, technologies and systems effectively and to best results. Some of the ways the Singapore government has looked to upgrade its existing logistics sector workforce and build up a talent pipeline is through SkillsFuture. This nationwide initiative aims to equip Singapore’s workforce with skills needed in the future economy.
SkillsFuture aims in part to encourage companies to take a more active role in the training and development of the workforce by working closely with education and training institutions to provide more opportunities for workplace learning. One such initiative is the SkillsFuture Earn and Learn Programme, where fresh polytechnic and Institutes of Technical Education (ITE) graduates are able to gain work experience over a one-year period at participating companies while concurrently studying for further qualifications relevant to their discipline of study.
On a higher level, the Economic Development Board of Singapore (EDB) is also working with companies to develop talent that can navigate the complexities of Asia’s fragmented logistics and regulatory landscape. Logistics professionals looking to take on greater leadership and management roles at their respective companies can also look to the renowned Double Masters Program (DMP) by The Logistics Institute-Asia Pacific (TLI-AP), which taps on the academic stature of both the National University of Singapore (NUS) and Georgia Institute of Technology (in the USA).
Today, there is a wide spectrum of packaging materials and processes, which has arisen to cater to the packaging needs of an increasing diverse array of manufactured goods and materials. Packaging companies are also constantly looking to innovate, developing packaging solutions that are more effective, durable, economical, and sustainable, to stay ahead of the competition.
A Small but Vital Industry in Singapore
Based on figures from the Economic Development Board of Singapore (EDB), the packaging industry in 2013 accounted for about 0.2 per cent of the national GDP. In all, there has been a cumulative annual growth rate (CAGR) of some 1 per cent in manufacturing output from 2009 to 2013.This has happened while the number of establishments consolidated from 264 in 2009 to 249 in 2013. The number of workers has also seen a similar decrease from 8,803 to 8,562, resulting in value-added per work rising from S$61,000 to S$67,000. This is indicative of an industry consolidation of sorts, while packaging firms get more productive and efficient too.
Amongst local packaging firms, those producing paper-based packaging make up the largest market segment, followed by plastic, metal and wood packaging. The packaging ecosystem in the Republic currently comprises those dealing with packaging materials, equipment supply, and machinery design and consultancy.
Asia to Become Key Market for Global Packaging Industry
In the Future of Global Packaging to 2018 report by Smithers Pira, it was forecasted that the global packaging sales is set to reach over US$1 trillion by 2018. Meanwhile, Asia will increasingly become the key market for the global packaging industry, growing from 36 per cent of the marketing in 2012 to 40 per cent in 2018.Amongst the key factors driving overall growth for the sector include the rapid urbanisation and growing middle class consumer segments which are fuelling demand for new products in emerging economies such as China, India and more. For the developed markets, factors affecting the development of the packaging industry include shifts in consumer preferences such as the increasing popularity of smaller and more convenient packaging.
Future Trends Impacting the Global Packaging Industry
To stay ahead of competition, packaging manufacturers around the world have been constantly innovating to stay ahead. At the same time, it has to stay one step ahead to cater to new consumer trends. One example is the growth of prepared food and meals across the years.Packaging firms have had to support this rising trend with the development of new packaging solutions offering enhanced product protection and preservation, amongst others. With our increasingly mobile lifestyles, more consumers are opting for prepared foods and drinks that have some form of re-sealable element in their packaging too.
Sustainability: The New Buzzword in Packaging
Globally, growing consumer awareness of the importance of sustainability, has driven manufacturers and their packaging partners to develop more eco-friendly and sustainable packaging solutions. According to a report by the US-based Association for Packaging and Processing Technologies, one of the top three trends affecting global packaging is greater consumer awareness of recycling and environmental issues for packing.This state of affairs is also backed by a recent Mintel report on the 12 key global food and drink trends for 2016, which noted that “Eco is the new reality”. Already established in Africa, Australia and New Zealand and becoming mainstream in Europe, this trend is also emerging in North and South America and parts of Asia too. All in all, the report states that sustainability has evolved to become a necessary product development consideration for the common good.
Singapore Packaging Going Green Too
Singapore has also been welcoming the shift to more sustainable packaging. In 2007, the Republic launched the Singapore Packaging Agreement (SPA), a joint initiative by the government, industry and non-government organisations (NGOs) to reduce packaging waste (which constitutes about one-third by weight of Singapore’s domestic waste). The SPA is voluntary, so as to provide flexibility for the industry.A second SPA was renewed on 1 July 2012, following the expiry of the first agreement. As of 2015 the signatories have cumulatively reduced about 26,000 tonnes of packaging waste and saved more than S$58 million. The second SPA will last till 30 June 2020, with expectations that signatories will continue to build on the good work so far.
In 2016, 16 companies were recognised for their notable efforts and achievements in reducing packaging waste, at the 3R Packaging Awards. Amongst the winners include international firms such as Coca-Cola and Nestle and local small and medium enterprises (SMEs) such as Sunfresh Singapore and Thong Siek Food Industry.
In recent times, the emergence of the new middle-class in Asia – with their strong consumer purchasing power – has spurred greater demand for well-designed and well-made furniture. Here, we look at how the furniture sector in Singapore has successfully made inroads into overseas markets, while restructuring itself to be more productive and competitive than before.
Growing Asian Affluence Spurring Demand
While the global economy has witnessed greater turbulence in 2015, the Asia region is still seeing robust economic growth rates. In October 2015, the Asian Development Bank (ADB) reported that economic growth for the whole Asia region this year would be 5.8 per cent, still a relatively strong pace.
With Asia’s economic outlook remaining largely positive, it is expected that middle class incomes will continue to grow along with their purchasing power. This rising tide of affluence will also spur greater demand for quality furniture, as consumers look to elevate their quality of living. In fact, the Asian middle class is expected to account for an estimated 80 per cent of the growth in global spending from 2014 to 2030.
Singapore Furniture Staying Ahead, Looking Abroad
Despite Singapore’s emergence to become a First World economy in recent times, the fact remains that its domestic market is still a relatively small one. This has prompted Singapore furniture companies early on to look towards international and regional markets for business growth. Efforts to internationalise and grow have been successful so far, with the industry punching significantly above its weight.
According to data provided by industry grouping Singapore Furniture Industries Council (SFIC), the Republic has a total of 1,921 companies engaged in the furniture business with 19,700 personnel within the workforce. Singapore furniture companies also trade with over 80 countries worldwide and have a presence in more than 19 countries, including top markets like the United States of America (US), China and Europe. In terms of international profile, local firms have also been exhibiting at top international furniture fairs in Italy, Germany and China. In 2014, Singapore’s furniture sector saw overall revenue rise by 2.8 per cent from 2013 to reach an estimated $6.24 billion.
Making Better Furniture by Design
For Singapore furniture companies expanding overseas, quality design is an important means by which to differentiate themselves. In his opening speech at the 2014 International Furniture Fair Singapore, Minister for Trade & Industry Lim Hng Khiang echoed this sentiment, noting that furniture firms can gain competitive advantage in the long term when they incorporate design thinking in their strategies.
To that end, the lead industry association SFIC has also identified design thinking as one of the key thrusts to help furniture firms improve, integrate and innovate. The Singapore government also provides much support in this area, through assistance programmes such as the DesignSingapore Council’s Design Innovation Assistance (DIA). The scheme supports enterprises in using design as a strategic differentiator and enabler for innovation, productivity and business growth.
In July 2015, then Senior Minister of State for National Development Lee Yi Shyan, spoke at the major launch of a leading local furniture retail, pointing out that leveraging design thinking in furniture can extend to its styling, use of quality materials, functional utility, user experience and even incorporating infocomm technology (through the emergent Internet of Things trend). In many ways, Singapore furniture companies are at the forefront in terms of incorporating design to make their products more marketable.
Bringing Singapore Furniture to Overseas Lands
In order to expand their business and achieve greater economies of scale, it has been imperative for furniture companies to venture beyond Singapore’s domestic market and target international markets. To date, many Singapore furniture firms have achieved relative success in this area, setting up stores in Asia and beyond.
This internationalisation has been strongly supported by IE Singapore, the lead Government agencies for the external economy. One area has been its funding support of trade shows and business missions, as well as helping to facilitate the establishment of trade contacts in important markets such as Germany, China and the USA.
International Enterprise (IE) Singapore is also supporting companies with internationalisation plans by helping them develop new capabilities under the Global Company Partnership (GCP). Under this programme, firms expanding overseas can receive up to 70 per cent funding to defray the costs of external consultants providing support in internationalisation, branding, design, intellectual property (IP) management, franchising and licensing, and more.
Enhancing Productivity and Overcoming Resource Limitations
With Singapore in the midst of an economic restructuring, the furniture industry has also been actively pursuing new ways to enhance its own productivity and reduce reliance on manpower. In general, companies in Singapore can count on a number of government assistance plans to help them grow their productivity.
One of these is the Productivity and Innovation Credit (PIC) Scheme, which provides either a cash payout or tax rebate on investments in technologies and equipment that can help increase productivity. Another is the Capability Development Grant (CDG), which helps companies defray the costs of investment in consultancy, training, certification and equipment to acquire capabilities across 10 different areas, including branding and marketing, and intellectual property (IP) protection.
To overcome space and manpower limitations in Singapore, many Singapore furniture companies have also set up manufacturing plants and sales offices in overseas countries. According to the SFIC, Malaysia, Indonesia and China remain the most favoured locations for furniture companies to set up operations abroad. In fact, these three countries account for almost half of all manufacturing facilities.
One notable measure that has been taken by industry grouping SFIC is helping its members benchmark their productivity against their peers. In its Singapore Furniture Outlook 2014, the association outlined the average revenue and value add per worker for furniture manufacturers, furniture contract manufacturers and furniture retailers, thereby providing members with a reference point to compare themselves against international counterparts.
Raising the Next Generation of Talent for Singapore Furniture
The Singapore government and furniture sector has looked to ensure that the industry continues to flourish by cultivating the next generation of talent too. In that respect, the SFIC continues to play a key role in its partnership with the Singapore Labour movement and Singapore Workforce Development Agency (WDA) to launch the Creative Craftsman Apprenticeship Programme in Feb 2014. The programme matches potential craftsmen with participating employers, and they can look forward to improving their technical skills with on-the-job training and mentorship sessions from their new employers.
A sum of S$3.5 million has been set aside to place and train about 180 Singaporeans through the structured apprenticeship programme lasting six months. Some 25 companies are said to have signed up for the programme. In conjunction with the programme, the industry has introduced a voluntary Progressive Wage Model, which aims to help employers redesign jobs from carpenters to creative craftsmen.
Another talent development initiative by the three parties is a Professional Conversion Programme called Project Creation, which aims to build a pipeline of skilled designers for the furniture industry. The SFIC Institute targets to train and certify 1,700 workers through 16 new courses under this programme by 2016. With this pool of furniture design talent, the programme looks to sustain the growth and development of the furniture sector. Through it all, underscoring both these programmes is the newly-announced SkillsFuture movement, a long-term government initiative to put in place pathways for Singaporeans to deepen their skills mastery.
Building on a Strong Foundation, Crafting a Better Future
Despite its considerable achievements, the Singapore furniture industry continues to push for further growth and development, especially in the areas of design, internationalisation, productivity and talent and manpower development. This refusal to rest on its laurels is characteristic of the Singapore business mentality, as it looks to build on its current success, while shaping future platforms for growth in a farsighted manner. Looking ahead, the outlook for the industry is positive, with the potential to ride on Asia’s consumer growth to greater heights.