SPEECH BY MR LEE YI SHYAN, SENIOR MINISTER OF STATE FOR TRADE & INDUSTRY AND NATIONAL DEVELOPMENT, AT THE FOOD MANUFACTURING PRODUCTIVITY CONFERENCE AT SINGAPORE EXPO ON 12 OCTOBER 2012 9AM
Distinguished Guests,
Ladies and Gentlemen,
Good morning.
Introduction
Consistent with our approach to raising productivity sector-by-sector, this inaugural productivity conference for the food manufacturing sector is most timely. It also reflects our collective commitment to face the productivity and manpower issues squarely and proactively, so that the industry can be competitive, profitable and sustainable. I am therefore pleased to see all of you here.
Challenges and Key Findings from Food Manufacturing Productivity Benchmarking Study
Before we chart the growth plan for our industry for tomorrow, we ought to know where we stand in terms of competition today. With this in mind, SPRING commissioned Bain & Company to conduct an international benchmarking study on our food manufacturing sector. The study compared Singapore’s food manufacturing industry with 12 other countries, such as Australia, Hong Kong, Japan, Taiwan, United Kingdom and the United States. The findings have been insightful.
The study shows that our food manufacturers have strong established products and brands, forward-looking management, stringent quality control and food safety standards when compared to other countries. These are the areas which we have done well and should continue to strengthen.
However, the study also reveals that whilst the industry’s productivity1 has improved, it still lags behind countries such as the US, Japan and Korea. It identifies the lack of scale and the reliance on a large base of low-cost workers in Singapore as the main driver of low productivity. As a result, our food manufacturers also invest less in automation. Some common challenges that our food manufacturing companies face include the lack of scale and operational inefficiency; manpower shortages; rising business costs and an inefficient delivery ecosystem. Bain & Company will elaborate on the findings later on.
In the meantime, the Government remains committed to help food manufacturers improve their productivity. We hope that on your own, and through the benchmarking study, our food manufacturers will find new urgency to improve and innovate. We need to discard legacies and adopt a new mind-set to embark on a transformation journey.
Many of you may recall that SPRING launched the S$45 million Food Manufacturing Productivity Plan last year. Since its launch, a good number of food manufacturers have embarked on their productivity journey. In fact, over S$6 million dollars have been committed for more than 140 projects, and we are seeing a gradual increase in the take-up of productivity initiatives by food manufacturing companies, in areas such as: (1) manpower training and development, (2) innovative and higher-value products, (3) collaboration for economies of scale, and (4) automation and process improvements. We hope that many more companies will come on board.
Let me share with you what some of your fellow food manufacturers have done to raise productivity and cope with the various challenges.
(I) Manpower Training and Development
Ha Li Fa, a manufacturer of fish balls and fish cakes, used to face high staff turnover rate of 30%. With support from SPRING, the company embarked on a HR capability development project which lasted eight months. Through the project, they put in place a structured training process, performance management system and more. As a result, its staff turnover rate was greatly reduced from 30% to 10%.
(II) Innovative and Higher-Value Products
Another example is Golden Bridge, one of the largest processed meat manufacturers. With the help of the Food Innovation & Resource Centre (FIRC), Golden Bridge’s subsidiary Ellaziq developed various pâté (meat spreads) with innovative flavours – olive salmon, butter chicken and black pepper crab, just to name a few. At the 2012 Gulfood Expo2, these new halal products drew great interest from visitors at the Expo. With the premium image of its new pâté range, Ellaziq can now engage higher-end customer segments, such as airlines and hotels and expand into new markets.
To date, the food manufacturing productivity plan has supported a total of 14 new product developments.
In addition, 60 food manufacturers have adopted food safety standards, which is crucial for our companies to export food products to overseas markets. Our companies should continue to keep up with our stringent food safety and quality checks and look into adopting international food safety standards necessary for new export markets.
(III) Collaboration and Consolidation for Economies of Scale
My 3rd example is Tung Lok’s central kitchen to support its 26 restaurants. This is an interesting example because it was originally in the F&B service business, but is now shifting its business model to focus more on production and distribution for better and more consistent qualities, and less reliant on manpower. The owner Mr Andrew Tjioe told me that on hind sight, he should have started a central kitchen 12 years earlier. It’s never too late. But we should not further delay the much needed innovations for this sector.
(IV) Automation and Process Improvements
Clearly, embracing technology such as automation is key to raising productivity in this sector. Consider the example of Baker’s Oven. Through a productivity improvement project, Baker’s Oven installed a turnkey line for the production of frozen dough and pies at their 600-square metre food factory. The automated production line synchronised the bakery equipment and reduced manpower utilisation by 50 per cent. The enhanced production capacity resulted in increased revenue, as well as a better workplace environment for the workers as it eased movement and minimised product transfer.
Announcement of Food Automation Unit under FIRC
It is thus important to provide companies access to additional resources to support their productivity initiatives. For that, I am pleased to announce that the Food Innovation & Resource Centre (FIRC) @ Singapore Polytechnic will set up a food automation unit, to provide food automation solutions and advisory services to food manufacturing companies. More specifically, the new unit will be able to offer technical expertise in the design and development of customised food automation solutions, maintain a database of equipment suppliers and conduct training for the industry. This new unit will be a focal point for food companies with automation needs and targets to help at least 350 food companies over the next three years. Together with its existing capabilities to develop innovative food products and product packaging, I believe FIRC is well positioned to support food companies to improve productivity.
Conclusion
In conclusion, let me impress on everyone present that we need to renew our commitment to raising our food manufacturing productivity. We need bold and ambitious transformations at the firm level; we also need to accelerate the restructuring of the supply chain at the industry level to achieve greater economies of scale and specialisation. In short, we hope to create a competitive, profitable and sustainable food manufacturing industry that is modern, reputable and highly innovative. In this way, we will create meaningful and good-paying jobs for our workers and professionals.
I wish all of you a fulfilling and insightful discussion ahead. Thank you.
1 In 2010, Singapore’s food manufacturing sector comprises about 830 establishments and employs about 25,600 workers. The total output stands at S$7.4b and the value-added is S$1.9b. The value-added per worker is about $72,800. (source: EDB, 2010)
2 The largest annual food tradeshow in the Middle East