SME Spotlight

Being flexible helped firm spread its wings

Mr Sia, founder of Applied Total Control Treatment, notes that the company has gone from being a semiconductor-dependent business to being a more advanced manufacturing business serving a wide range of sectors.
Mr Sia, founder of Applied Total Control Treatment, notes that the company has gone from being a semiconductor-dependent business to being a more advanced manufacturing business serving a wide range of sectors.ST PHOTO: ALICIA CHAN

Business strategies that work well in Singapore might not be as effective overseas, as Marcus Sia, founder and managing director of Applied Total Control Treatment, found out when the company ventured into Penang. In the final instalment of a four-part series about innovative SMEs expanding abroad, he tells Chia Yan Min how the firm is doing things differently outside Singapore.

Q What does the company do?

A We are a surface finishing company, established in 2004. We provide a wide range of advanced surface finishings to the aerospace, oil and gas, medical and semiconductor industries.

Q Why did you decide to expand abroad?

A The company started out serving the semiconductor industry.

At that time, the industry was growing fast and many new products were coming to Singapore.

We were part of that supply chain and the company expanded quickly.

Over time, however, growth in the semiconductor sector started to slow down and began to stagnate. Operating costs were also rising.

Despite this, I was confident the company could grow through the application of our technology in industries besides semiconductors.

WORKING AROUND OBSTACLES

We realised that many of them wanted to work, but lacked transport or needed to be home by a certain time to look after their families. So we offered flexible work arrangements... We also arranged transport for them. We made an effort to understand their problems and then adjusted our policies accordingly.

MR MARCUS SIA, on overcoming hiring problems in Penang.

Initially, we didn't know how to go about it. But after attending several trade shows and business missions in Europe and China with IE Singapore, we were exposed to many more growth opportunities.

Since the Singapore market is small, we decided to take our technology overseas, to expand the business and be closer to our customers.

Q What were some challenges you ran into when you first set up your Penang operations?

A We made a bold move by expanding into Penang in 2012 by purchasing a factory there.

We transferred lower-end technology from Singapore to Penang, while growing the Singapore operation with higher-end technology.

It was difficult initially as we had no customers in Penang. For the first two years, the plant was bleeding money. Customers were slow to come since we were unknown to them.

We were affected by the introduction of the national minimum wage, which went up from RM600 to RM900 (S$200 to S$295), as well as the introduction of the goods and services tax in Malaysia.

Despite this, we were able to grow our business in Penang through lean manufacturing and cost control, as well as a high level of product quality.

We are now seeing the fruits of all our efforts. The Penang plant became profitable in financial year 2015, despite a slow global economy. We are projecting business growth of 30 per cent in the next financial year.

Q How did the company adapt to the business environment in Penang?

A We realised the human resource policies we have in Singapore were not workable in Malaysia.

In Malaysia, there's always a ready market for foreign workers; they can move easily between companies or industries, which is not allowed in Singapore.

This means we need to spend a lot of time and effort to train workers even though they can easily leave to work for another company.

Separately, we also found that many foreign workers sent every dollar they earned back home, leaving them with almost nothing to survive on for the rest of the month.

We decided to counter this turnover by encouraging our foreign workers to put aside between RM50 and RM100 a month in a local bank. At the end of each year, the company topped up the prevailing bank interest rate by 2 per cent.

After the initiative was implemented, our workforce began to stabilise. It makes workers happier, and they feel more appreciated. This helps reduce turnover as they are more willing to stay on with the company.

We initially also found it very difficult to recruit Malaysian factory workers. The response to our advertisements was not positive. Newly-hired Malaysian workers would also leave after one or two days. This is the norm in the market.

To get around this, our human resource representatives visited nearby villages to ask why people weren't coming to work for us long term. We realised many of them wanted to work, but lacked transport or needed to be home by a certain time to look after their families.

So we offered flexible work arrangements, such as allowing people to work from 8am to 3pm.

We also arranged transport for them. We made an effort to understand their problems and then adjusted our policies accordingly.

Q How big is the company now?

A We have about 110 staff in Singapore and 105 in Penang. Penang is growing rapidly. The opportunities there are better than in Singapore.

Q What are your plans for the future?

A We have many good business partners overseas who have been inviting us to set up operations near their factories as well as to join them as a strategic partner. To do this, we need to build a good management team in Singapore and Penang over the next few years.

We're also trying to be innovative and develop new technologies, such as special coatings which are proprietary to us, or are not common in this region.

In addition, we're looking at expanding into manufacturing and offering design and build services.

There has also been a shift in the industries we serve in Singapore. We've gone from being a semicon- dependent business to become a more advanced manufacturing business serving a wide range of sectors like medical and aerospace.

The Singapore business is changing and will continue to provide new high-end surface finishings to our major customers.

Meanwhile, we are looking at expanding in Penang through the introduction of higher-end technologies and services.

A version of this article appeared in the print edition of The Straits Times on January 06, 2016, with the headline 'Being flexible helped firm spread its wings'. Print Edition | Subscribe