I am very happy to be here this morning to celebrate our National Day with Panasonic Refrigeration Devices Singapore (PRDS).
Strong bipartite relations help PRDS to upturn
1. Last year, when PRDS celebrated national day, the situation was vastly different. The economic situation was good and the main complaint that I hear from electronic companies was the difficulty in getting workers. Today, the main challenge for the company, as with the other electronic companies, is what to expect beyond the third and fourth quarters of this year as business conditions have become very uncertain arising from the global economic crisis.
2. PRDS, too, has not been spared. The company suffered an average of 30% sales cancellations in the second half of 2008. It faced problems of excess capacity and manpower, inflated fixed cost due to committed investments and lower output and higher material inventory cost due to lower consumption. Our union recognised the severe challenges that the company was facing and I am glad to say that we have been working very closely to support the company and to help the workers keep their jobs. Together, we quickly embarked on the SPUR programme.
3. The company also quickly looked into other cost cutting measures including restriction of OT and a 12 day plant shutdown. These measures helped to reduce its operational costs. The Jobs Credit was also a timely lifeline for the company. With a total workforce of 1,915 employees, the company could save about $200,000 per month. This amount makes up to approximately 3.5% of the total wage bill. The situation in PRDS is now much better. Overtime work has been steadily increasing from April onwards which is good news for our workers and we do hope that the recovery will be sustainable. Through such initiatives, PRDS was able to cut costs and save jobs and there were no retrenchments in PRDS.
Maintaining trust and confidence
4. If there is one key lesson that we can learn from this crisis, it is that building a strong foundation of trust and confidence between union and management is crucial. We see how valuable it is in helping the company to navigate through these difficult times. And trust and confidence cannot be built overnight. It takes time to develop. It is like a savings account that we have with the bank. In order to have enough savings to meet any emergency needs, we must top up the account regularly so that we can draw down from the account to meet unexpected expenditures. It is the same in the relationship between union and management. During good times, we need to invest in this relationship so that in bad times, we have enough in the account for us to draw upon.
5. I must commend both the management and branch union in PRDS for their good efforts. I have worked with PRDS for a few years now and I have seen how the two are able to work closely. For example, the company regularly shares information with the branch about its financial situation and its plans and consults the union before making changes. The union on its part supported the company by talking to the workers and getting their support on the cost cutting measures which have an impact on them, as well as encouraging them to go for training. I was told that the company also works closely with the union towards a fair and equitable restoration package to reward workers upon the recovery of the economy. PRDS is also one of our strongest branches with a sound membership base. Workers have ample trust in the union and management.
Electronics sector
6. The manufacturing sector as a whole contributes about 22% to our GDP. Out of this, the electronics share of the value added is about 26%. So the electronics industry is an important contributor to our economy and provides about 90,000 jobs. Many of you would probably have heard the most recent news that Seagate will be retrenching 2,000 workers. The Seagate closure of its hard disk drive production line is a reminder to us that we need to stay ahead of the competition as the global environment has become very competitive.
7. Although this news may be disheartening, there are still potential and growth in the electronics sector. There are companies that are setting up their international headquarters here and more are also investing in R & D. Electronics have also become more pervasive in our lives today and there will be new growth areas such as in bioelectronics, plastic electronics, security and green electronics.
The way ahead – continuous improvement mindset to push up our productivity
8. The way ahead for us is clear. With stronger competition, we not only have to run faster but also have to be able to do things better while keeping our costs down. Companies need to develop new products and find new markets and continue to invest in processes and technologies that will enable them to be more efficient and productive. On our part, as workers, we must continue to invest in ourselves through training and skills upgrading courses, constantly looking for ways to add value to our work by helping the company to think of ways to cut waste or improve the work process and always be ready for new challenges. There is little that the company can achieve if workers are not involved in the process or are not engaged. So finding ways to engage the workers and involve them in the changes will reap benefits for the company too. To boost our productivity, requires everyone from top to bottom to have a continuous improvement mindset.
PRDS Example of Continuous Improvement
9. PRDS is a very good example of a company with a continuous improvement mindset. It adopts a 3-pronged approach on improving efficiency and productivity.
(a) Best in Quality
PRDS strives to be the best in class. It has attained a remarkable quality achievement of 6ppm in market-reject. This means that it has only 6 defective products in every one million pieces of products that it produces – a very high quality standard indeed and has placed the company’s product as one of the best in the world. The contribution of the management and the workers working hand in hand to achieve this gold standard is indeed remarkable and will certainly give an edge to the Singapore plant compared to the other plants elsewhere and we are proud of this achievement.
(b) A Flexible, Multi-Skilled Workforce
PRDS focuses a great deal on enhancing workers’ capabilities. To PRDS, continuous improvements in productivity must be achieved not only through automation but also through the flexibility of its work force. Therefore, five years ago, PRDS started a programme to train all the workers in five different process operation skills. PRDS also started a plant-wide activity to promote operation autonomy, which has empowered workers in decision-making including stopping operations if necessary to address problems that arise in the course of production. This practice has become part of the company’s culture to ensure continuous improvement. PRDS attributes this multi skill training approach as one of the key success factors for its Singapore manufacturing plant achieving high quality and excelling in manufacturing. The downturn has provided the company with yet more opportunities to train and retrain workers in multi skills. Some workers have already undergone SPUR training and it intends to put another 500 workers over the next two years through training programmes by EDB and SPUR.
(c) Developing New Niches and Products
PRDS is the second largest fridge compressor manufacturer in the world but the company is not resting on its laurels. It recognizes that increasingly in deciding which fridge to buy, customers will look for those that help them consume less energy a major cost factor because of the rising oil prices. Hence, it is constantly looking at ways to produce new products that are cost competitive and energy efficient. With this continuous improvement mindset on the part of the company and its workers to improve its productivity, I am confident that PRDS will not only be able to upturn the downturn but will continue to remain as one of the most competitive companies in the world.
Conclusion
10. Finally, this morning, we will also be giving out U Care assistance vouchers to our members in PRDS who were affected by the earlier plant shutdown. Our union, UWEEI, understands the difficulties that members face arising from the loss in income. So, we will be giving out a total of $258,200 to our members.
11. Let me conclude by thanking PRDS and all the workers for doing your part helping to upturn the downturn. We are confident that with the close collaboration between management and union, the company will grow stronger and workers’ future will be even more secure. On this note, I wish everyone a very happy National Day.
