Speech by Senior Minister of State for Trade & Industry and National Development, Mr Lee Yi Shyan at the Singapore Innovation and Productivity Conference 2012, Tuesday, 30 October 2012, 9am
Mr George Huang, President, Singapore Manufacturing Federation (SMF),
Distinguished guests,
Ladies and Gentlemen,
Good Morning. I am delighted to join all of you here at the Singapore Innovation and Productivity Conference.
The world we live in today has become much more complex and interconnected. Constant and rapid changes require us to respond and adjust ourselves quickly. This means new ways of doing things, paradigm shifts and accelerated learning. And very often, time is not on our side.
Firms that have not been able to innovate fast enough have found themselves lagging behind. They may be global market leaders a decade or less ago, but a number of them are now struggling for basic survival. As we envision the kind of economy we desire to see in the next 10 to 20 years, we should ask ourselves critically if we are innovating fast enough to create our future.
One measure that we use to show our ability to create value has not looked too sanguine. Based on figures from the Economic Development Board (EDB), the manufacturing sector managed an average annual productivity growth of 3.2 per cent from 2000 to 2005, but this has tapered to only 1.0 per cent from 2005 to 2010. We all know that this trend should not continue, but what must we do to change its course?
State of the Manufacturing Sector Today
Our manufacturing sector is still a key pillar of our economy. It contributes to about 22 per cent of the country’s GDP, 14 per cent of the total workforce and employs more than 414,000 employees. The industry comprises diverse sectors which includes chemicals, biomedical manufacturing, precision engineering and electronics. Today, 98 per cent of all manufacturing companies are SMEs, of which 89 per cent have sales turnover of less than S$10 million.
To be sure, our manufacturing companies have progressed with time. More are infusing innovation and technology in their businesses. Factories have become more efficient with computer-aided techniques, automated processes, vision-capable robotic systems and highly skilled workers. But we require not just one or two companies going high-tech, we need mass transformation to reach our national productivity target growth of 2 to 3 per cent per year over the next 10 years.
Consider the example of a Nissan factory in Sunderland UK. In 1999, the plant hired approximately 5,000 workers to build 270,000 cars a year. Last year, it produced close to 490,000 vehicles by adding only 500 more workers to its headcount. The reason? It is because the factory has gone high tech. It is now one of the most advanced and productive automotive plants in Europe.
Productivity growth is not only about doing things faster and cheaper. It sometimes means a fundamental rethink, a structural transformation, or a different business model to grow the top line.
For instance, in recent years, growth in the electronics industry has been increasingly driven by mobile computing devices such as tablets and smartphones. To seize opportunities in these growth areas, companies such as Samsung and Apple innovated and developed new products which allowed them to outperform Dell and HP that focus more on traditional products such as PCs.
Leading smartphone and tablet companies like Samsung have contributed to the strong growth of Korea’s electronics sector1, widening Korea’s lead over other electronics-producing countries including Singapore in the last five years.
Importance of Innovation for Productivity
Innovation does not happen by chance. It requires deliberate strategy, leadership’s focus and commitment of human efforts and financial resources to make it happen.
A local company, CEL Coating is an example of commitment to improvement. The company provides specialised surface treatment and coating services to various manufacturing industries. It recently implemented both automation and workflow redesign to improve productivity. The company expects to quicken its process timing by 50 per cent. It will also help maximise space utilisation.
Another local company Lintech Engineering, undertook a project to develop a fully-automated robotic welding system for repair jobs. The system runs completely unmanned. The speed of welding has also increased by up to 5 times. There was greater consistency in the quality of the welds and savings in the cost of consumables. This increase in speed, quality and throughput boosted their productivity by at least 300 per cent.
Singapore Manufacturers are in a Good Position to Innovate and Improve Productivity
The Government is committed to help the manufacturing sector boost their productivity. In fact, there are many broad-based programmes and schemes in place to help SMEs raise their productivity. These resources include the Productivity@Work portal, Productivity Management Programme (PMP), and various schemes such as the Innovation & Capability Voucher (ICV), Technology Innovation Programme (TIP) and iSPRINT2.
At the industry level, we have targeted measures to help companies raise productivity levels. The National Productivity and Continuing Education Council (NPCEC) recognises that each sector in our economy faces different challenges and hence requires tailor-made solutions. Productivity roadmaps are being developed to spur productivity at the sector, enterprise and worker levels for the Electronics, Precision Engineering, Transport Engineering and General Manufacturing sectors.
Today, I am happy to announce the launch of the Singapore Innovation and Productivity Institute (or SiPi for short) as the national productivity centre for the manufacturing industry. It is spearheaded by the Singapore Manufacturing Federation (SMF) and supported by the Government. SiPi will champion productivity efforts for the manufacturing sector, complementing the sectoral-specific productivity plans.
SiPi functions as a one-stop shop for companies wishing to seek productivity assistance and advice. It will help enterprises implement their specific productivity roadmaps and to undertake research to develop tools and localise best practices. I urge all companies and agencies to work with SiPi to help boost the efforts of SMEs in their productivity and innovation journeys.
Conclusion
Let me take the opportunity to congratulate SMF on celebrating its 80th anniversary this year, and on the launch of SiPi as another centre of excellence. I am glad that SMF is working together with SPRING, WDA and other Government agencies to level up the industry.
I am also happy to note that many SMEs have already taken the lead to look into ways of improving productivity and have benefited from them with tangible results. My congratulations go to the winners of the WDA-SMF Productivity & Innovation Awards for embarking on their first productivity project, as part of the WSQ Certified Productivity & Innovation Manager Programme.
On this note, may I wish everyone a productive day ahead.
Thank you.
1 Source: EDB
2 iSPRINT: Increase SME Productivity with Infocomm Adoption & Transformation