Comrade Yap Huat Hin, President of Keppel FELS Employee’s Union
Distinguished guests
Ladies and gentlemen,
Good Evening,
I would like to share with you a few thoughts about some of the challenges of the marine engineering industry and how we can prepare ourselves to meet them going into 2004.
When we talk about Singapore’s marine engineering industry today, we should be proud of ourselves. Singapore’s marine engineering industry is truly a global leader. Today, the Singapore marine industry accounts for about 16 per cent of the global market for ship repair and 60 per cent of the market for building of jack-up rigs. We have built a world-class brand in many of our marine products and services. We have responded well to changes in market demand and technology over the past 35 years. And the industry continues to evolve itself to stay relevant. But our success did not come easy. Our success was due to Singapore’s strategic geographic location, our strong emphasis on technology and people development, and the hard work of all the contributors to this sector.
The Operating Environment
The last few years have been particularly challenging, with the war in Iraq, SARS and the global economic downturn. Although the local marine and offshore engineering industry saw some light in November 2003, posting a 6.2% growth, the performance for the whole year of 2003 was lackluster. The industry saw its total output drop 12.5 per cent to about $5 billion, while employment fell 6.3 per cent to 36,829 jobs. The decline appears partially due to the SARS outbreak, but predominantly it was due to high freight rates which prompted delays in vessel repair docking. But the outlook for the marine industry remains optimistic for 2004, as postponed repairs were finally conducted. The healthy order intakes for ship repair and the booming demand for oil and gas exploration would also give the marine sector a boost. We can expect 2004 to be a year of opportunities for the local marine industry. However, we should not rest on our laurels, beneath all the positive news, shifts of an even greater magnitude are happening. The scene of global competition is fast changing.
Singapore’s marine and shipbuilding industry, be it ship repair or oil-rig construction or conversion, is facing fierce competition from many low-cost locations such as China, Vietnam, the Middle East, as far away as Eastern Europe and Latin America. Some of these cheaper locations have lured away some of our businesses like repair and conversion jobs for tankers and Floating Production Storage and Offloading (FPSO) vessels. It is extremely difficult to compete with them on price alone. We have to leverage on our strong technical expertise developed over the years and to continuously utilize our advanced engineering know-how to retain our market leader status in our niche areas. We have to continue to live up to our reputation, for our high efficiency, fast turn around times and timely delivery of services.
Restructuring for Competitiveness
We must also continuously examine our cost structures closely to ensure that we are competitive and allow it to be nimble and adjust to market conditions as and when required. Currently, the wage structure of the marine industry is actually quite flexible. According to a survey done by the Industrial Relations Department of NTUC, the average variable payment for ship repair and shipbuilding industry from 1995 to 2003 ranges from about 3 months to as high as 5 months. That is to say that the variable component of a ship repair worker’s annual salary package could be as high as 30% and the fixed component being about 70%. This is in line with the tripartite guidelines and is indeed heartening and much to be applauded.
Flexibility in Working Hours
The next area of improvement can be in the area of flexible work hours. As the marine industry has peak and trough periods, workload is not fixed and there can be no work during normal working hours. Some workers also cannot start work until other jobs are completed. This mismatch of workflow requirements results in inefficient deployment and unproductive utilization of manpower resources. This erodes the company’s competitiveness. Employees also suffer because they need to work longer hours to meet customers’ expected turn-around times. Hence, many companies in the marine industry are exploring flexi-time schemes in order to create the flexibility in deployment of manpower more effectively. The union should work closely with management to identify workflow requirements and deployment of manpower resources so as to enhance and maintain the company’s competitive edge. At the same time, the union must also ensure that workers are fairly compensated for having to change working hours and shift patterns.
Public Perception of the Marine Industry
The Singapore marine industry is of a high global standing in offshore engineering work, specialized ship repair and conversion, oil-rig building, and many other marine related services but many Singaporeans are unaware of these facts. On the contrary, many Singaporeans, especially the younger and newer generation, label the marine industry as “sunset”, “non-glamorous” and “hazardous”.
From a survey done by SMEEU (Shipbuilding & Marine Engineering Employees' Union) from the major shipyards in Singapore, the average age for shipyard workers who are Singaporeans is between 49 to 52 years old. We need to groom new blood to complement the more experienced workforce in the industry so that there is continuous growth for the future in the sector. It is necessary for the marine industry to undertake initiatives to promote itself so as to convey an image that is reflective of its current international standing. We need to clear misperceptions and raise public awareness of the local marine industry in order to make the work in the marine industry attractive.
Contributions of Union Leaders
The growth and development of Keppel FELS from a builder of barges to a leading offshore and marine services group with operational presence in the key offshore oil and gas centers throughout the world, is truly a success story just like Singapore. Our union leaders have contributed actively to this success story. At all stages of the transformation and development of Keppel FELS, they have done well in monitoring and keeping pace with the changes and leading workers in the right direction. They have proven themselves to have the capabilities to help workers make the successful transitions to cope with the complexities of the fast changing economic environment. They are real agents of change. And there is no doubt that they will continue to play this role.
Unions and Management Collaboration
To continue to cope with the demands of the competitive challenges in the marine industry, restructuring in the industry is inevitable. To be more competitive, Keppel has consolidated its facilities and merged its various shipyards. On a similar vein, this has implications on the three unions within Keppel. The unions should resolve the issues of amalgamation quickly, as there is an urgent need for a unified union to work closely with the management to fight the challenges of intensifying global competition. For example, on the issue of different bonuses paid, for the 10 years from 1990 to 1999, there were 8 years in which Keppel Shipyard paid more bonuses than Keppel FELS. [For correct comparison, it must be noted that in Keppel FELS, I am told, there is no annual wage supplement, but in Keppel Shipyard there is the 13th month payment. The 13th month payment must be included for meaningful comparison.] On this basis of comparison, it was only in recent years from 2000 to 2003 that Keppel FELS paid out more bonuses. All three unions should endeavor to work hard to resolve issues so that the interests of the members can be looked after, the company’s competitiveness can be increased and at the same time create a win-win situation for all.
Conclusion
Looking ahead, many more challenges will continue to come in the way for the marine and shipbuilding industry. While we have taken hits in one form or another, the question to ask ourselves is: “Is our armor strong enough?” I am confident that if the management of Keppel, the unions and the workers cooperate for the common good of the entire body of workers, we shall be able to turn the vision of establishing Singapore as a Centre of Excellence in Ocean, Offshore and Marine into a reality.
I wish KFEU (Keppel FELS Employee’s Union) a Happy Dinner and Dance and many rosy years ahead! Thank you.
