Speech by SMS Koh Poh Koon at the Official Launch of Fong's Engineering and Manufacturing Pte Ltd's Smart Factory Journey

Mr Jeremy Fong, Chief Executive Officer, Fong’s Engineering and Manufacturing Pte Ltd,

Mr Low Ming Wah, Chairman, Singapore Precision Engineering &Technology Association (SPETA),

Sisters and Brothers from the Metal Industries Workers’ Union

Distinguished Guests,

Ladies and Gentlemen,

1. A very good morning to all of you. I am delighted to join you for the official launch of Fong’s Engineering and Manufacturing’s Smart Factory Journey. In many places, you hear of companies doing smart factory transformation all around the world but it is a journey that most companies undertake on their own. This journey here is a very unusual one because it is undertaken with tripartite partners. This is also an important milestone for Fong’s transformation journey. So, congratulations to Jeremy and his team for undertaking this journey. 

2. I thought it will be a good occasion to share about Fong’s beginnings so that you can see the transformation and what lesson it bears for all of us here, how do we work as tripartite partners to bring this transformation to fruit. Since its founding in 1982, Fong’s has evolved from a precision machining company into a designer and manufacturer of high-end medical devices. The company continues to reinvent itself to maintain its competitive edge, and the launch of its Smart Factory today is testament to the company’s remarkable digital transformation journey, and this is probably only the beginning. It is through the leadership of companies like Fong’s that the future of manufacturing is being shaped in Singapore today.

Singapore must press on with efforts to transform the manufacturing sector

3. Manufacturing has long been a key pillar of our economy. In 2018, manufacturing accounted for slightly more than 20% of our GDP, about 21.4%, and employed about 13% of our workforce, which is a significant number. The manufacturing sector has been facing strong headwinds recently due to the weakening global economic environment coupled with tighter domestic constraints. A key source of uncertainty is the US-China trade dispute, which is likely to accelerate the reorganisation of global supply chains and undermine global business and consumer confidence.

4. Against this changing global environment and against this backdrop that is increasingly getting even more challenging, it is critical that we work together to build resilience and transform our industries for the longer term. There are technology challenges, geopolitical challenges and political challenges. But this is not the time to slow down. In fact, this is the time to buckle up and really seize opportunities that can come with transformation. Singapore’s existing strengths in areas like intellectual property protection and quality assurance will allow us to continue attracting high-quality investments, such as those involving high-mix low-volume production. Fong’s is obviously targeting at such industry segments. We must press on with our transformation efforts in order to weather the storm, and importantly, to seize new opportunities and emerge stronger when the dark clouds clear. 

5. We have made good progress under the Precision Engineering Industry Transformation Map (PE ITM) that was launched in October 2016, which is coming to around three years since we launched PE ITM. The ITM aims to shift the PE industry’s profile towards higher value-added activities that will form the foundation for the future of manufacturing. Besides developing and strengthening growth subsectors, and helping more companies become core suppliers and product and process owners, one of the key strategies of the PE ITM is to accelerate the adoption of digital technologies and advanced manufacturing.

6. A study by Boston Consulting Group estimated that rapid adoption of Industry 4.0 in Singapore could improve labour productivity by approximately 30%, which means a significant amount of cost savings for our SMEs. It can also create 22,000 new jobs, and not just new jobs but jobs with better wages that Singaporeans desire, and grow total manufacturing output by S$36 billion by 2024 . These are all very positive developments if we can seize the initiative and transform ourselves effectively to remain competitive. 

7. In line with the PE ITM, Government agencies have been working in very close partnership with the industry, unions and Trade Associations and Chambers (TACs) such as the Singapore Precision Engineering & Technology Association (SPETA) to roll out various Industry 4.0 initiatives. You have heard how Jeremy has shared about some of the ways in which these agencies work together to capitalise such change. Let me also take this chance to illustrate a lot more about how all these come together, and how companies such as Fong’s uses these measures to effect change. For instance, in November 2017, EDB launched the Smart Industry Readiness Index, or SIRI in short, to help companies evaluate their current digital maturity and diagnose gaps for improvement. Recognising that some companies may need more guidance to identify focus areas, EDB further introduced a SIRI prioritisation matrix in April this year. It is a diagnostic tool that helps companies that want to embark on the journey to do a self-check on how far you are on the journey. It also recognises that some companies may need more guidance to identify focus areas, because after the self-check, they may realise areas that they may need to improve on. Although the big question that companies face is which one they should do first that will give the best returns on time and investment. This is where EDB introduced a SIRI matrix which we launched in Germany earlier this year. This initiative was also supported by Enterprise Singapore and the Singapore Standards Council, which developed the Standards Mapping for SIRI (SmS). The mapping covers standards in areas ranging from interoperability and reliability to safety and cybersecurity. We try to create a matrix to help companies make a decision on what they should focus on, and set standards, so that you know that you are achieving something of a reasonable and good standard. 

Fong’s Smart Factory harnesses the potential of Industry 4.0   

8. I am heartened that Fong’s has made a bold move to harness the potential of Industry 4.0. It is a journey that will take years and you will need to start on the right footing, and you have to be persistent. Following the completion of its SIRI assessment, the company worked with SMT Technologies and A*STAR’s SIMTech to design, configure and adopt advanced manufacturing solutions. Today, Fong’s has successfully transformed one of its production lines to establish a lights-out and fully-automated Smart Factory that can operate round-the-clock with minimal human intervention. The facility features an integrated manufacturing shopfloor powered by advanced robotics and autonomous robots, enabled by industrial Internet-of-Things to collect data seamlessly. This makes it possible to leverage data analytics to make decisions in real-time and optimise processes, thus enhancing overall efficiency and productivity. This is where you have to make better decisions to optimise the use of your machines.   

9. Fong’s Smart Factory Journey will be crucial in reinforcing the company’s business strategies and speeding up its growth trajectory. Over time, Fong’s has evolved to become a product owner offering the design and manufacture of flexible endoscopes as an OEM service. The Smart Factory will further equip Fong’s with the capacity and capabilities to break new ground and scale its business. In fact, Jeremy mentioned that the Smart Factory is projected to increase Fong’s revenue on a year-to-year basis by about 20%, and productivity by at least 30%. These are important numbers for SMEs undertaking moves to become more competitive. I wish Jeremy and his team every success in achieving these goals. Enterprise Singapore has been assisting Fong’s in capability building and business matching, and is prepared to continue rendering its strong support alongside other government agencies.  

Worker 4.0 must go hand-in-hand with Industry 4.0

10. While technology has been a key driver behind Fong’s transformation, another critical success factor is the company’s progressive approach towards worker development. The workers must also be able to use the technology well in order to actually create a multiplier effect and realise the full potential of the hardware that you put your money into. The National Trade Unions Congress (NTUC) has coined the term Worker 4.0 to describe an individual who possesses a mix of adaptive, technology and technical skills to thrive in a dynamic, fast-changing workplace. I am heartened that Fong’s has embraced this concept and is actively upskilling its employees as part of the company’s transformation journey. 

11. Jeremy talked about the mind-set of the company, and that is critical. If the boss does not want to change, no one else in the company can change the company, not even the government agencies. Only when the bosses decide what to do is where they need to bring the workers along. This is where mind-set change needs to be across all levels in the company, starting with the boss. Fong’s has recently pledged to set up a Company Training Committee (CTC) in collaboration with the Metal Industries Workers’ Union (MIWU). This CTC construct comprises key management from the company, as well as union representatives and workers within the company coming together to chart out competency requirements for all workers, be they rank-and-file workers or PMEs, and design a structured training roadmap that is tailored to meet specific workers’ needs. This is important because oftentimes it is a very top-down approach where the workers wait for the bosses’ instructions, and the workers feel no ownership in the entire change process. Having a CTC construct where the workers have a seat at the table to brainstorm and think about what kind of skills they need and how they can redesign jobs and make the process work better for them gives them ownership in the change process to become active drivers of the change itself. This will complement many of the company’s ongoing initiatives – for example, the SkillsFuture workshop that Fong’s recently organised to help employees understand how they can upgrade their skills amidst technological disruption. Together with the government agencies, what the labour movement wants to do is to capitalise change from within. Deep change that is not just from superficial buying of technology, but deep change including mind set change, that is more sustainable and more long lasting. NTUC aims to establish 1,000 CTCs across different subsectors of our economy, and we are happy that Fong’s is one of the pioneering companies that has undertaken to form a CTC. Indeed, we must put workers at the core of Industry 4.0 to better catalyse acceptance, adoption and actualisation of technology. Industry 4.0 will not happen without worker 4.0. If it were so easy to just buy technology, Industry 4.0 would have succeeded years ago, so it has to work hand in hand with worker transformation. 

12. Workforce Singapore has also supported Fong’s through the Capability Transfer Programme (CTP), which helps companies plug capability gaps quickly by transferring new capabilities in growth areas to our local workforce. Fong’s Smart Factory has helped to reduce some of the mundane, repetitive work which is prone to human error. Instead, these workers can be reskilled or upskilled to take on higher-value added work, such as data analytics and robot management. I think it will be right to say that many workers prefer to be the robot manager than the robot itself as the work is less labourious, and hopefully the pay goes up as well. Under the CTP, Fong’s intends to bring in specialists from abroad to conduct training for its employees. That is the correct approach because you may not be able to send everyone overseas, but you can bring the trainer here to upskill the cohort of workers. At the same time, the company will support some of its employees’ capability development by sending them overseas to invest in their training as well. In tandem with Fong’s advances towards smart manufacturing, its workers will benefit from hopefully better wages, welfare and work prospects too.  

Closing remarks

13. In closing, I would like to congratulate Fong’s Engineering and Manufacturing, and to thank them for being a stellar example of an Industry 4.0 and Worker 4.0 champion. Fong’s has shown us that with a clear vision, systematic plan and buy-in from both management and workers, digital transformation is possible and well within reach for our SMEs. I encourage Fong’s to continue working closely with partners such as SPETA and MIWU as well as government agencies to sustain this momentum and further multiply these efforts. Fong’s example is one that I certainly hope more companies especially the SMEs in the manufacturing sector can emulate. 

14. Once again, congratulations to Fong’s on the launch of your Smart Factory Journey. May this milestone propel you to even greater heights, may your company grow in size, and as they say in Chinese, tripartism is good because 三人行必有我师焉. There will be challenges on this journey, but when you walk this journey with tripartite partners and not alone, you will be able to find better solutions to achieve greater results.  

15. Thank you.