Repair services firm hit hard by oil price slump

Director of Toyo Chromium Engineering Emily Tan and her brother, Mr Larry Tan, the company's managing director. Besides being affected by falling oil prices, the firm is facing a labour crunch.
Director of Toyo Chromium Engineering Emily Tan and her brother, Mr Larry Tan, the company's managing director. Besides being affected by falling oil prices, the firm is facing a labour crunch.PHOTO: COURTESY OF EMILY TAN

Toyo Chromium Engineering sales in the first half have fallen 40% compared with last year

The fall in oil prices has been a boon to many companies and consumers, but cheaper crude has been a bane for Toyo Chromium Engineering.

The company provides component repair services to engineering firms in the oil and gas, marine and automotive repair industries, among others.

Sales in first six months of this year plunged almost 40 per cent compared with the same period last year, said director Emily Tan, who runs the business alongside her brother Larry.

This mirrors the sharp fall in global oil prices, which have halved since June last year, reaching levels last seen during the depths of the 2009 recession.

The fall has been attributed to weak demand in many countries due to tepid economic growth, coupled with surging United States production.

"Companies have stopped doing repair work because of the low oil prices...We're not expecting things to turn around soon because oil prices don't look like they will start going up," said Ms Tan.

"Traditionally, companies will do service and maintenance when times are slow. But once the old parts reach a certain age, they are scrapped, and companies have stopped fabricating new components."

Ms Tan said the company's customers in the marine industry have been hit especially hard.

"Marine companies' payment terms have been very bad. Many of the marine companies are middlemen, and when everything slows it becomes harder for them to make money," she added.

About 80 per cent of the firm's clients are based in Singapore, while the rest come from abroad.

The company is also feeling the squeeze from the labour crunch.

"Very few Singaporeans want to work in our field. We've increased salaries for the Singaporeans working with us, so we're also feeling the pinch from that," said Ms Tan.

The company has 25 employees.

While hunkering down to wait out the slowdown, the firm will continue investing in machinery in a bid to reduce its reliance on labour and become more productive.

A version of this article appeared in the print edition of The Straits Times on October 12, 2015, with the headline 'Repair services firm hit hard by oil price slump'. Print Edition | Subscribe