SINGAPORE - Oil-and-gas rigging equipment supplier KTL Global will be relocating the bulk of its Singapore operations to Johor, Malaysia, as part of key corporate changes announced on Tuesday following a strategic review of its businesses.
By June, the group will have relocated most of its heavy steel rope and rigging production from Singapore to Tanjung Langsat. "This will resolve the issues of high labour costs, utility charges, and government levies faced in Singapore, as well as a shortage of manpower," the company said.
The bulk of the managed services will also relocate to Malaysia. The group intends to increase its manpower in Malaysia from 18 to 50 by the end of 2015.
KTL Global said Singapore will remain the group's headquarters, with the Singapore facility manufacturing synthetic slings, lifting slings and mooring rope.
But the company said it intends to lease out more space at its Singapore facility as it is freed up, and reduce its Singapore headcount over the next two years.
"The relocation of large portions of steel rope and rigging manufacturing, warehousing and servicing activities to Malaysia from Singapore will result in significant improvements in internal efficiencies," the company said in its announcement. "These are expected to translate into significant operational cost efficiencies in FY2016, which will rise further in FY2017."
The mainboard-listed company makes premium steel wire ropes, synthetic ropes, and subsea rigging equipment including heavy lift slings. It also provides related technical services to the oil and gas market.
It said the recent fall in the prices of crude oil has deeply impacted the offshore oil and gas industry. "While the specialised rope and rigging sub-sector has been relatively stable, the directors believe the change in market dynamics has presented an opportunity to review practices and seize fresh opportunities," KTL Global said.
In two other strategic thrusts, the company said it will scale up the value chain by focusing on higher-value products and services and deepen penetration in existing markets and entering new ones.
It will focus on higher-value products such as heavier tonnage synthetic ropes and higher-margin services including certification and managed services.
To meet the higher demand in the Middle East, the group intends to increase staff strength in the region to 55 from 44 within a year, while building up its capabilities to position it as a hub to target the European market too.