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Anchored in Singapore History : The Story of the Marine Industry


ANCHORED IN SINGAPORE HISTORY

Voice for the Industry
Made in Singapore
Positioning the Keel Blocks
A Remarkable Story of Growth
No. 1 Centre in Shiprepair
Rigbuilding
Shipbuilding
A Future in Industrial Engineering
Lending Support
A Marine Powerhouse
Confronting the Issues

 
ANCHORED IN SINGAPORE HISTORY

  REMARKABLE STORY OF GROWTH

Just like the country which mothered it, the development of the Singapore marine industry over the last 30 years is impressive. Within a short period it has been transformed from a regional shiprepair and building centre to an international maritime centre of repute. Today, Singapore is the biggest shiprepair centre in the world, a leading builder of rigs and offshore structures and a significant builder of smaller ships. Singapore shipyards have also drawn on these heavy engineering capabilities to clinch contracts for the construction of refineries, oil terminals, seaports and power generation plants, at home and abroad.

The presence of over 40 shipyards has given birth to a vibrant supporting industry. Numbered over 3,000, they provide the marine industry with every conceivable service, prompting current ASMI President Tan Mong Seng to remark, "Because of her size, many of the services are integrated - that is our strength". Few countries can duplicate what Singapore can offer.

But progress towards its current status was not plain sailing. Being closely identified with the cyclical shipping and oil trades, its fortunes have ebbed and flowed along with the state of international economy and international politics. In the past 30 years, the industry has had two close calls. The crisis of 1973, which caused oil prices to quadruple to US$10.72 a barrel. Pushed the industry into its first trough. Ships built in anticipation of ever-expanding demand in oil consumption were left high and dry as countries adopted stringent conversation measures.

Then Chairman of Keppel Shipyard G E Bogaars graphically described the tremendous build-up as the proverbial "old man of the sea (which) sits on the shoulders of the industry weighing it down and strangling it". At its peak in 1977, the world tanker fleet stood at a staggering 330 million dwt, far outstripping demand estimated at 250 million dwt. An overcapacity of such dimension was to haunt the industry for years to come.

Testing though it was, this first recession proved to be just a dry run for the prolonged slump of the mid-80s. All sectors were affected, plunging the marine industry's turnover to $651 million in 1985, the lowest in 20 years. To add to the industry's problems, operating costs were high. Generous pay in increases, averaging 10 per cent annually between 1979 and 1985, were handed out in keeping with official recommendation. By pushing wages up, the government had hoped to pressurise companies to mechanise, automate and upgrade, and curtail the increasing demand for foreign workers.

From day one, ships yards pleaded for moderation. Then SASAR President Chua Chor Teck said: "Had this occurred in the early 1970s, when the market conditions were buoyant, the industry would have adjusted more rapidly to a higher level of labour cost, with perhaps, some belt tightening. At this junction, such labour cost increases will further trim the already slim operating margins of the few yards still remaining profitable." But to no avail.

In the bloodletting which followed, an estimated 7,000 workers, mainly foreign workers, lost their jobs as creditors foreclosed on ailing shipyards. Even profitable companies trimmed down their operations or, closed, or orders dried up. Gloom descended on Tuas, Jurong and Kallang, the main centres for marine servicing and construction.

The woes of the marine were mirrored elsewhere as the troubled world economy took its toll. Faced with falling demand, oil refineries slashed their capacity by half and electronic companies scaled down or relocated to lower centres. Singapore slipped into her worst recession since independence with a 1.5 per cent reduction in gross domestic product in 1985. Through it all, industry leaders did not lose faith. They could not, and would not, believe an industry as old as Singapore's could be so easily wrecked by the winds of change without even putting up some form of resistance.

Mr Loh Wing Siew, who headed SASAR at the most tumultuous times, gave eight good reasons for the industry's viability at a union-organised forum on July 24, 1985: "We have all the basic ingredients for continuing to be viable industry: strategic location, political and social stability, technological capability, presence of skilled and hardworking workforce, excellent shipyard management skills, highly competitive price, quality and delivery, and excellent union-management relations." And pulled through it was, by men whose determination was steeled by years of working under testing conditions. References to the industry as a sunset industry by government officials merely toughened their resolve.

A concerted effort was made to attack waste. Under-utilised land was returned to its landlord Jurong Town Corporation, under-employed workers were retrenched. Those who remained were trained to be multi-skilled. Being learner and fitter, the industry could benefit from the upturn in the wake of the oil price collapse in 1986. With the improved market and higher efficiency, the marine industry was once again riding the crest of the waves by the close of the 1980s. In 1989, it ousted electronics to become the star performed of the Singapore manufacturing industry.

The Visible Hand of Government

The marine industry would not have developed at the pace it did without the visible hand of government. It laid down the necessary infrastructure and incentives for private enterprise, and took a stake in key enterprises. Speaking at SASAR's forth annual dinner in 1972, then Finance Minister, Mr Hon Sui Sen, said "It would perhaps be true to say that in shipbuilding and shiprepairing, as in no other industry, government has a deep and abiding concern for its continued success and further rapid development."

Partly by design and partly through force of circumstances the government held controlling stakes in most major shipyards in the early years. Keppel Shipyard and Sembawang Shipyard were inherited from its former colonial masters, the British; while Jurong Shipyard, Jurong Shipbuilders and Bethlehem Singapore were strategic made to enhance Singapore's capability in shiprepair, shipbuilding and rigbuilding.

The deep interest shown arose from the government's recognition that the marine industry had a vast untapped potential. Singapore's involvement in shipbuilding was insignificant even after more than a century, and her shiprepairing was limited, with little attempt made to capitalise on her position at the crosswords of major sea-lanes.

Being labour-intensive, shipyards also offered more jobs dollar-for-dollar than any other sectors. For a country with a burgeoning unemployment problem, it was an opportunity too good to miss.

Injection of Foreign Capital

Foreign yards were invited to invest in Singapore to inject much needed capital and expertise, both in technology and in marketing. Pioneer status was granted to key players by the Economic Development Board to entice them to Singapore. Ishikawajima-Harima Heavy Industries (IHI), Japan's second largest shipbuilding group, was the first company to respond to the invitation extended by the then Finance Minister Dr Goh Keng Swee. Together with the government investment arm, Temasek Holdings, IHI incorporated Jurong Shipyard Limited on April 25, 1963.

The initial attempt was modest, using IHI's 3,400-dwt floating dock. But with the completion of its 90,000 dwt graving dock in November 1964, Jurong became the first commercial shipyard set up to service tankers shuttling between Japan and the Middle East. "We were designed and set up as a commercial shipyard using the latest technology and taking into consideration our environment," said Jurong's present Managing Director K K Tan.

The way it was organised and managed also differed. Right from the start it made extensive use of subcontractors, marshalling all the resources that were available locally. This approach was rather Japanese. "Whatever could be done piece-meal, including steelwork (on per tonne basis) and painting was farmed out," said Mr Tan, who joined Jurong as a design engineer in 1966.

More Foreign investments followed, drawn in by the strong growth potential:
Jurong Shipbuilders, 1968: IHI, Development Bank of Singapore and Jurong Shipyard;
Bethlehem Singapore, 1969: Development Bank of Singapore and Bethlehem Steel;
Marathon LeTourneau, 1970;
Hitachi Zosen Robin Dockyard, 1970; Hitachi Zosen Corporation and Robin Shipyard;
Mitsubishi Singapore Heavy Industries, 1972: Development Bank of Singapore and the Mitsubishi Group.

The crippling recession in the 1980s may have claimed most, but Singapore would not have such big strides in so short a period if it were not for foreign technology, capital and expertise.

Legacies from the British

The Singapore Harbour Board Dockyard Department and HM Naval Dockyard, legacies of the British, were put on a more competitive footing with limited companies incorporated in 1968 to run them. At Keppel Shipyard's incorporation, its first Chairman Mr Hon Sui Sen explained: "In the highly competitive field of shiprepairing, it is essential that there should be no feather-bedding - of management as well as of labour - and that resources are effectively utilised."

Singapore Harbour Board (SHB) had in its management dock and port operation, a historical development going back to 1864 with the formation of the Tanjong Pagar Dock Corporation. Dock operation was considered subsidiary to cargo handling. As then Prime Minister Lee Kuan Yew recalled ten years later, Keppel's assets were being wasted. The yard was not modernised, it was not competitive.

The HM Naval Dockyard was a naval yard designed for quality work at a relatively leisurely pace, during peace-time. A leading British naval shipyard, Swan Hunter, was handpicked to assist in the transition. The government had little time to waste. The British Government was withdrawing her forces and Singapore faced the prospect of a serious unemployment problem. At stake were over 30,000 jobs which the bases provided.

Keppel Shipyard, as the SHB dock arm became known, and Sembawang Shipyard, the former HM Naval dockyard, were subjected to the strict financial discipline expected of any well-run organisation. "(They) will have to recognise, rationalise and expand (or hive off) facilities to meet the target which any private investor would expect in a dynamic industry”, said Mr Hon.

Workers were told to pull their weight. Then Prime Minister Lee Kuan Yew told SHB dockworkers in 1967: "You are not going to fool around. This is not a government in a mood to fool around." Excessive overtime and other malpractices were curtailed, a two shift system was introduced to improve vessels' turnaround and skilled workers retrained to achieve versatility.

It was tough on the employees. "In the early years, you wondered whether it was worth it - the long hours, the scoldings, the different styles of expatriates. You had to impress on them that you knew your work. You worked hard to prove your mettle, said current General Manager of Sembawang Shipyard Jerry Koh, who joined in 1969 as an engine inspector. Despite misgivings, Mr Koh stayed, and is the sole survivor of the first batch of locals who joined Sembawang.

The successful transition was due in no small measure to the no-nonsense attitude adopted by the government. As Mr C N Watson, a Swan Hunter executive who had a hand in the commercialisation, recalled: "We had the government behind us. We were allowed to manage, we were encouraged to manage." Singapore learned from the bitter experience which Swan Hunter suffered at the Malta Drydocks, where attempts at commercialisation were hampered by industrial action. The Singapore unions sent a delegation to the Malta Drydocks in early 1967 to study how the base's run-down affected workers.

"What typically happens is that union and employees extract promises that nobody loses his job. That damns you who lose your opportunity," said Mr Watson, who stayed on in Singapore after the Swan Hunter contract expired. The HM Naval Dockyard was converted to Sembawang Shipyard with no apparent hitches. The workforce was scaled down and put to work three years before the British withdrew. Naval contracts kept it going in the first two years and helped ensure its commercial viability by the end of the base's rundown period.

"The work was different. In naval ships, we did quality work. In merchant ships, there was more emphasis on cost control and time constraint. We had to work fast and produce quality work," said Mr Koh, who still has pleasant memories of the first commercial ship. "It was not another grey ship." So successful was Sembawang that after five years it was floated in the Singapore Stock Exchange to raise funds for its expansion. In June 1973, 25 million shares were offered to the public at $2.04 each.

Keppel Shipyard, which came under local management after the five-year contract with Swan Hunter expired, grossed $148 million in 1977. The performance, a five-fold increase from that achieved by Keppel in its first full year of operation as a private company, was applauded by Mr Hon. At the official opening of Keppel's new shiprepair complex in Tuas. Mr Hon said: "The performance sets a high watermark in Keppel's shiprepair business. At the same time, total assets have multiplied six times while earnings registered significant gains particularly over the last five years."

First Marine Industrial Estate

The climate was created to enable small yards and engineering workshops to thrive as it was recognised they fulfilled a much needed role. This was in keeping with a recommendation made by the UN Industrial Survey Mission invited to assess Singapore's industrialisation potential: "The Economic Development Board should give special attention to the smaller yards and to firms doing repair work in the Roads. The latter especially have a potential which deserves special care. Special consideration should be given to the provision of credit and technical assistance for improvement of equipment and production methods."

The survey team was impressed by these small family owned enterprises, numbered around 40, located along the Geylang River and around Lavender Street, and the adjoining Cavan Road, Horne Road and Victoria Street. "The flexibility of these undertakings, the direct supervision, and the low overhead make it possible to overcome the favourable situation that they have no docking facilities," authors of the report noted.

The 180-metre muddy swampland along the Geylang River was transformed into Singapore's first marine industrial estate. Water supply, sewerage connection, metalled roads and telephone lines were laid out, and the river dredged to deepen the draught. As a further inducement for companies to set up shop in the Kallang Marine Industrial Estate, the Economic Development Board offered soft loans of up to 50 per cent of a yard's fixed assets. The response was good. By 1968, all available slots were taken up by 22 small shipyards and 19 factories, which complemented and supplied the shipyards. Then Finance Ministry Dr Goh Keng Swee, who was present at every groundbreaking ceremony, commented: "It shows this industrial estate is fulfilling a genuine need of small industries."

The reason for its popularity was hard to miss as Director of Times Trading, Chan Tuck Kwai, told The Straits Times: "For a long time now, the small shipbuilders and boatbuilders of Singapore have been living a nomadic life, building our boats on beaches, swamps and other people's back gardens, wherever we have been able to find a piece of land near water. "Now we have parcels of land of our own and even though they are small, they represent to us a fixed base of operation. As a result of this, we can now employ labour on a permanent basis and we have no doubt long, Geylang river will become well known as a shipbuilding centre, not only in Singapore and Malaysia, but throughout South-east Asia."

With a sense of nostalgia, founder of Eagle Engineering, Loke Mun Cheong, recalled: "We had good business, good profit, good location, good workers." Eagle was provided a 1.2-hectare site at a reasonable rent, with the government providing the technical know-how and advice on the construction of its first slipway. It had its choice of workers from the surrounding housing estates.

A Total Approach to Training

Resources were poured into training to complement investment in facilities to equip men and women for the variety and scope of work in a rather difficult environment. "Shipyards are not labour-intensive, they are multi skilled, with a hundred people doing a thousand skilled jobs," said present Managing Director of Jurong Shipyard, K K Tan. It is not a production line involving workers in repetitive jobs.

For the rank and file, a systematic apprenticeship training was introduced as it was seen as the best means for the industry to avail itself of trained men and women. For the better educated, a polytechnic education to equip them for a supervisory role, and for the management ranks, a tertiary education in some of the leading maritime universities.

However, the demarcation was not hard and fast. Particularly not in the early years when apprenticeship was recognised as a good avenue for the young to advance in life at a time when jobs and money were scarce. Through sheer hard work many did, rising from apprentices to top positions in key enterprises.

The industry's most favourite son, Chua Chor Teck, set an inspiring example when he worked his way up from engineering apprentice to become Keppel Shipyard's first local managing director in 17 years. Well-acknowledged for his capacity to work, Mr Chua helped built Keppel Shipyard into what it is today, a multi billion dollar group with extensive interest.

The apprenticeship training offered was a refinement of the rather haphazard artisan-apprenticeship training practised prior to and after World War Two. This followed a review by the Joint Advisory Council for Apprenticeship Training in 1958. The council decided that industrial training should integrate institutional training with programmed on-the-job training in industry. Trainees were to be given time off for classes, first at the Singapore Polytechnic and subsequently, the Singapore Vocational Institute, which inherited the polytechnic's marine craft courses in 1963.

Vacancies were opened to young Singaporeans, below 18 years, with a minimum education of secondary two. They had to undergo two years of classroom instruction on the rudiments of shipbuilding and repair, followed by two years of practical instruction. The national effort was supplement by in-house training in major yards. The Keppel Shipyard's Education & Training Centre was established in 1967 to provide basic training for juniors and apprentices. Sembawang Shipyard had a companion version which started in March 1972, with initial emphasis being on retraining of ex-naval dockyard workers for commercial shiprepair operation.

As for Jurong Shipyard, the first batches of trainees and engineers were sent to the Yokohama Yard of Ishikawajima-Harima Heavy Industries to instil in them the Japanese approach to shipbuilding and repair. They were to form the core group for Jurong. A training centre was formed subsequently to provide basic training to new recruits

Young men and women were groomed for supervisory positions in the expanding industry. Ngee Ann Technical College formed the Shipbuilding and Repair Technology Department in 1976 to offer a three-year course for middle-level technologists. By then, the Singapore Polytechnic had in place a marine engineering course aimed at preparing men for s sea career. Many came ashore after earning their certificates to fill positions in shipyards, ports and survey, salvage and engineering companies.

Promising students were handpicked by the government as well as shipyards for tertiary education in naval architecture, marine, mechanical and electrical engineering in Britain, Japan and Germany. They returned to form the core of keen and well-trained managers for the industry. Thus within a relatively short period, there are locals at the helm of most shipyards. Their presence is credited in helping the industry achieved its present status.

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