MOS Teo Ser Luck at The Official Opening Of The Small Footprint Standard Factories

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SPEECH BY MR TEO SER LUCK, MINISTER OF STATE FOR TRADE AND INDUSTRY,

AT THE OFFICIAL OPENING OF THE SMALL FOOTPRINT STANDARD FACTORIES

ON MONDAY, 29 JULY 2013, 1015 HRS AT BUROH STREET

Dr Loo Choon Yong, Chairman of JTC,

Mr Png Cheong Boon, CEO of JTC,

Distinguished guests,

Ladies and gentlemen,

Good morning.

Introduction

1.              It gives me great pleasure to join you today for the official opening of JTC’s Small Footprint Standard Factories. Today marks a significant milestone for JTC, as it celebrates the dawn of a new generation of standard factories, designed to cater to the spatial and business needs of SMEs in the manufacturing sector.

Importance of the Manufacturing Sector and SMEs to Singapore

2.              The manufacturing sector is an important part of our economy. It accounts for 20% of our GDP.  Over the last 10 years, its productivity growth has surpassed that of all other sectors. This has translated into good jobs for Singaporeans. For example, in recent years, local wages in the manufacturing sector have outpaced the national average.  In 2012, the local median income for the manufacturing sector was approximately 8% higher than the national average.

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3.              In addition, manufacturing activities provide economic spin-offs in sectors such as services and logistics. They also add diversity to our economic base, and strengthen our economic resilience.

4.              Playing an integral role in the vibrancy and flexibility of our manufacturing eco-system are our SMEs. SMEs not only serve the local market and contract manufacture for bigger companies; some have over the years also acquired capabilities which allowed them to make the leap to become product innovators. In addition, we are seeing an increasing number of SMEs that have successfully penetrated overseas markets, and wriggled themselves into global manufacturing circuits. These are remarkable achievements – which do not come easy.

Government Support for the SMEs

5.               Our SMEs continue to be the backbone of our economy and a formidable force in the business sector. They employ 70% of our local workforce. We should assist, facilitate and support them wherever we can.

6.              However, SMEs today face both external and internal challenges. Competition from low-cost countries, evolution in manufacturing processes and rising business costs as a result of domestic resource constraints are squeezing out profit margins. SMEs have to rethink their business models to remain competitive and to sustain their businesses moving forward. I know that many of you are already doing so, but are facing challenges along the way.

7.              You are not alone in this journey. The Government has been looking into ways to help SMEs overcome these challenges. SPRING Singapore, together with government agencies such as Workforce Development Agency and International Enterprise Singapore, has been supporting SMEs through a slew of measures in the areas of financing, productivity and capability upgrading, technology and innovation, and market access. We have rolled out many schemes and have set up SME Centres in the heartlands to explain these schemes to businesses and reach out to the community. Latest on our list of schemes is the Land Productivity Grant, which supports SMEs that are keen to improve their land productivity. This is especially important given the land constraints we operate under. Some would like to expand their business and need more land, while others need to use their land more productively. That is why JTC has embarked on this journey to take on a developmental role and to make sure that SMEs optimise their land use.

8.              To increase our outreach to SMEs, the agencies are also working in partnership with SME Centres, Trade Associations and Chambers to spread the word and guide the SMEs.

JTC’s Innovative Infrastructure, which Supports SMEs

9.              Besides introducing schemes that improve the “software” of businesses, the government has also been conscientious in ensuring that our “hardware” – in other words, industrial infrastructure – also evolves to meet changing industry needs. For many years, JTC has been spearheading innovation in industrial infrastructure. These innovations help ensure we have the space to grow and develop our manufacturing sector for years to come.

10.          In the past, SMEs in steel fabrication and furniture sectors had to operate in land-based factories because they needed a direct driveway for loading and unloading. This was costly for them. As a result, JTC did some study and launched its Ramp-Up Factories in 2000 which I’m sure many of you are familiar with. Ramp-Up Factories allowed these land-based factories to stack up by providing direct vehicle access to individual factory units through the use of ramps. This was unheard of at that time. SMEs initially had to make some adjustments in the way they operated. However, they also enjoyed much reduced capital costs. Today it is a successful product with significant demand from SMEs.    

11.          In recent years, JTC has also been active in pushing out a pipeline of   innovative infrastructure solutions which SMEs can benefit from. These infrastructure solutions include innovative features which reduce cost, allow SMEs to set up quickly and promote industry collaborations. Let me give you an example of two such developments, which SMEs can look forward to in the coming months – the Surface Engineering Hub and MedTech 1.

12.          The Surface Engineering Hub was designed with a centralised wastewater treatment plant that is linked to each factory unit through piping. This lowers the capital outlay and regulatory compliance costs for companies.

13.          MedTech 1, located at Tukang Innovation Park, provides tenants with a shared sterilisation facility which will comply with the Food and Drug Administration (FDA) and ISO standards. This helps medical technology SMEs mitigate business risks and reduce compliance costs which they will otherwise face on their own. Furthermore, by co-locating both SMEs and MNCs across the value chain, there are greater chances for interactions which may lead to knowledge exchange and business collaborations.

JTC’s Latest Innovation – the Small Footprint Standard Factories

14.         This brings us to today’s event and JTC’s latest innovation – the Small Footprint Standard Factory. The rationale is for JTC to be able to play a developmental role for our SMEs. Today, SMEs face many challenges especially land constraints in trying to maximise land use and reduce business cost. The Small Footprint Standard Factory is a new-generation standard factory designed to allow manufacturing processes, which are traditionally operated on a single storey, to cut across three storeys. This innovation reduces the land footprint of manufacturing SMEs, increases land productivity and reduces capital investment.

15.         I understand that at least two companies that have taken up lease in the Small Footprint Standard Factories were previously operating from factories which took up more land. With some help from JTC and SPRING, these SMEs tapped the Land Productivity Grant to enhance land productivity, and then redesigned and re-engineered their manufacturing processes to fit into the layout of this new facility. 

16.         The concept of the Small Footprint Standard Factories is an unconventional one. It exemplifies JTC’s ongoing efforts to improve land productivity and create better value for SMEs.  I believe that this development will help set the pace for industrial developers to adopt innovative and land-optimising building designs in future.

17.         I am pleased to note that a few of the companies that embraced this new concept are here to celebrate this important milestone with us today. They include Globaltronic Precision Pte Ltd, Hoshin Kenzi (S) Pte Ltd and FA System Automation (S) Pte Ltd.

Conclusion

18.         SMEs remain the bedrock of our economy. They are a very important part of our economy and we have to strengthen them for the future. That is why we are undergoing this transformation to achieve productivity-driven growth. At the same time, all hands are on deck to help strengthen our SMEs. JTC will play a very important role for our businesses and SMEs moving forward.  I am confident that we will continue to maintain our competitive advantage as a manufacturing hub if we continue to adapt and innovate. The government is committed to assist SMEs through our various schemes and initiatives. I strongly encourage all SMEs to tap on them. 

19.         Congratulations to JTC on the opening of the Small Footprint Standard Factories, and I wish all companies at the development every success.  Thank you.

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Based on MOM’s Singapore Yearbook of Manpower Statistics 2013, the June 2012 median gross monthly income of full-time employed residents (including employer CPF) was $3,480 at the national level and $3,770 for the manufacturing sector. The median gross monthly income was $3,263 for construction, $3,384 for services and $3,640 for others.