Like many other small and medium-sized manufacturers, Cititech Industrial Engineering was hit hard by the tightening of foreign worker quotas and rise in foreign worker levies that began three years ago.

And like many others, the company, which makes machinery components, also began taking steps to improve its productivity. In 2012, it engaged a consultant who helped it to identify bottlenecks in its operational processes and suggested improvements.

The company, which had 50 staff before 2010, but now has 45, also tapped on the Productivity and Innovation Credit scheme to buy a robotic welding arm that has made it more efficient.

Cititech even forked out up to $100,000 of its own cash to upgrade its software.

Nonetheless, the company is still finding it tough to compete and grow, said chief executive Siew Yit Foong.

The main challenges, he said, are the high cost of doing business and the lack of skilled manpower.

"My labour costs have risen by 15 to 25 per cent from five years ago. Buying a small lorry now costs three times as much as before. All these cause a chain reaction," he said.

"Our product prices have to be raised, so our customers do not order large volumes from us as they can find cheaper manufacturers in other countries."

While he would like to invest further in more high-tech machinery that could further improve his processes, he said he is held back by uncertainties about the future.

He also has ambitions of widening his client base by expanding his business overseas, but the lack of manpower is a major obstacle.

"I do not have people whom I could send abroad to manage an overseas set-up. It is tough to attract locals to join this industry."

What he would like, he said, is to see the Government introduce more training schemes tailored to help companies in such a quandary. "I think all businessmen would like to expand overseas, where we can have better chances of competing, but we need people to be able to do that."

This article was first published in The Straits Times on Feb 5, 2014