Given the challenging external environment and operating conditions, I would like to congratulate the marine industry for another sterling year of performance. Indeed, it is impressive to know that the marine industry has sustained its solid growth with a total of $4.4 billion sales turnover in 2002, contributing about 2.83% to Singapore’s economy. With an expected increase in the volume of ship-repair and conversion activities, it seems that there would be even more rosy days ahead. Nonetheless, I would like to draw your attention to several underlying fundamental issues that may potentially affect the competitiveness of this industry.
Job Placements for Singaporeans in the Marine Industry
First, the renewal of the marine industry is facing its greatest challenge in terms of recruiting young indigenous manpower as new entrants. This includes getting some of our brightest minds in engineering, skilled labor and management to be involved in our shipyards and rig-building companies. As an indication of the rapidly aging profile of the local marine workers, the average age of the Union’s local Ordinary Branch members currently stands at 49 years old. The average age of the Union’s delegates and Executive Committee members are 46 years old and 45 years old respectively
The increasing need for Non-Traditional Source (NTS) workers to fill in the manpower gaps left behind by retired marine workers is an indication of the urgent need for an industry revamp of its wage policies and image. Shipyards are still generally perceived by the public to offer low pay and poor career prospects, notwithstanding its image as a dangerous place to work in. Although, statistics such as accident rate, would show that it has fallen by more than 62% from 1,140 accidents recorded in 1992 to 429 accidents in 2002, there is much work needed to promote the marine industry as an attractive industry for locals to work in.
I would like to cite two examples to illustrate how difficult it is to employ Singaporeans in the marine industry. For example, in November 2001, MOM had jointly held a marine industry job fair with ASMI, NTUC, SNEF and EDB. Although there are more than 4,000 positions available, only 130 job positions are taken up by the job seekers. Next, in May 2002, in a marine industry work orientation and familiarisation programme jointly organised by MOM and ASMI, only 42 applicants took up jobs out of the 1010 vacancies available. With the above examples, it is not difficult to explain why NTUC has decided to step in to facilitate the job-matching process for unemployed Singaporeans in different industry sectors, the marine industry being targeted to be one of them.
In bridging the expectations between employers and employees, the Union will play an active role in job matching by reviewing the factors that are perceived to be likely obstacles in encouraging Singaporeans to take up jobs in the marine industry. This will encompass having a clear understanding as to how one can improve the average marine worker’s salary, working conditions, working hours or even to shorten the traveling time required to go to the shipyards. With the formation of the Workforce Development Agency (WDA), I am confident that not only would there be more avenues for job-matching to be carried out but with the inter-agency involvement of NTUC and the respective companies, there would be greater retention of Singaporean workers in this industry.
Wage Restructuring for the Marine Industry
The second important development in the marine industry that I would like to touch on refers to the increasing competition faced by local shipyards in shipbuilding and ship-repair from low cost centers such as China and Vietnam. Given such intense competition, it is imperative for local shipyards not just to develop new business strategies but to also examine their wage structures carefully at the same time for any rigidity. Whilst there are already certain elements of flexibility in place, such as having a mix of core and non-core workforce in shipyards that can be readily reduced when work volume drops, a flexible wage system would present itself to be a more comprehensive solution as wage costs is tied in with the level of individual and corporate performance. With wage restructuring, companies will be able to act swiftly to reduce their labor costs in bad times.
As a result of wage restructuring, workers may find themselves receiving a greater portion of their pay in variable component. Nonetheless, the total pay packet may be higher than what they used to receive previously due to higher individual and corporate bonuses. Hence, wage restructuring does not necessarily mean a wage cut, though it may be necessary in certain cases, such as those companies with an entrenched seniority-based wage system. NTUC is currently working actively with about 70 identified companies in carrying out wage restructuring and a few of them come from the marine industry.
As NTUC is in full support for companies to carry out wage reform in this sector, the Union would be talking to you on the changes that are necessary to bring about a flexible wage system. This includes achieving the desired ratio of the pay packet in terms of the annual fixed component, annual variable component and the monthly variable component; achieving the desired min-max salary ratio; setting up a performance system tied in to Key Performance Indicators, etc. We hope for your fullest support in helping us to implement such a flexible wage system in your company if it is not in place.
The Path Ahead for the Marine Industry
Even as the global economic situation remains uncertain with recovery forecasted only by the first half of 2004, I believe there would be even further consolidation within the marine industry as major shipyards understand that the long-term key to survivability lies in their ability to restructure their operations in order to achieve higher savings and productivity. Workers will need to continuously upgrade their skills in order to prepare for the day when they will be called upon to perform multiple tasks at the same time as a result of company restructuring.
Other critical success factors for the major yards in the marine industry include the expansion of strategic alliances with foreign yards to compete more effectively for new customers. There is also the need to further develop technical and engineering niches, such as our prevalent technology in building FPSO (Floating, Production, Storage, Offloading) and semi-submersible vessels in order to retain our existing customers. With all these in place, I am confident that the marine industry will enjoy even more good years to come.
On this note, I would like to wish all of you a pleasant evening ahead. Thank you.
