The future of manufacturing jobs

Making wooden pallets may sound like a humdrum job but assembly workers in LHT Holdings are tapping technology to work smarter.

Three years ago, LHT's executive director May Yap took the bold step of automating the production process at the Sungei Kadut site with assembly machines and an electronic database system. The technology keeps track of inventory and monitors output, reducing the need for workers to make manual calculations and keep excess stock.

"The flow is much smoother now," says Ms Yap. "We were able to keep the same team of people but raise productivity." The changes helped push profits up by 15 per cent last year, and more than doubled the output of her 180 staff.

LHT is one firm that has adapted successfully but some other manufacturers, like makers of lower-end electronic products such as disk drives, have had to move out of Singapore. The manufacturing sector has been in recession for at least a year, with the number of workers laid off last year at the highest level since 2009.

The sector employed fewer workers last year compared with 2009, the year of the global financial crisis, with manufacturing employment falling from 520,000 in 2009 to 510,000 last year. For the past three years, the sector's share of the economy has also been below the 20 to 25 per cent level recommended by the 2010 Economic Strategies Committee.

From left: LHT Holdings' head of strategic business development Thomas Yeo, A*Star researcher Ao Yintai, LHT Holdings' executive director May Yap, logistics executive Ng Chin Chau and sales coordinator Toh Hong Chin. Mr Ao helped develop the new database system. ST PHOTO: WONG KWAI CHOW

The bright spot is that manufacturing still accounts for a significant share of overall employment, at 14 per cent last year. Productivity, measured as real value-added per actual hour worked, grew by 6.1 per cent per year from 2009 to 2015, higher than the 2.7 per cent for the overall economy, according to the Ministry of Trade and Industry (MTI). That has helped keep wages competitive.

Last year, the nominal median monthly income of full-time employed residents in manufacturing was $4,440, compared with $3,950 economy- wide. MTI believes the long-term prospects for manufacturing here "remain positive", but says the landscape is challenging due to rising competition and global trends such as reshoring, which is multinational firms' movement of production back to their home countries.

It is thus important that Singapore moves up the value chain towards advanced manufacturing to remain competitive.

At the same time, significant use of new automation technology may cost the sector some jobs.

DBS economist Irvin Seah says: "There'll be fewer companies hiring fewer workers but focusing on areas where they are the best in the field."

But the impact on workers might not be so bad as there has been a shortfall in the sector, which was why Singapore turned to foreign manpower to fill some vacancies, says SIM University economist and Nominated MP Randolph Tan.

The shift up the value chain could well create higher-skilled jobs that attract local workers, he says. "Advanced manufacturing might be the type of new challenge that future Singaporeans might embrace as a career."

If Singapore succeeds in restructuring its manufacturing sector, both companies and workers will benefit, says MTI. It quoted a report by think-tank Brookings Institution, which found that US workers in advanced industries earned in 2013 nearly twice as much as the average worker outside the sector.

"Advanced manufacturing is expected to improve the productivity of our firms and create new manufacturing jobs with good wages," says the MTI spokesman.

Already, workers who have adapted have received a boost. United Workers of Electronics and Electrical Industries general secretary Tan Richard says he met an older worker who was initially afraid of going for training and exams when his company restructured. But he passed and received a 10 per cent pay rise in his new role working with robots.

"If the Government brings in more foreign investment, it's usually with higher technology that requires less manpower," the union leader says. "But it's an advantage for workers because in the future we're bound to see higher salaries than today because more skills are needed."

Some of the new jobs that have emerged are industrial data scientists, who extract and analyse Big Data, and robot coordinators, who oversee and maintain robots.

To help workers adjust to the changes, the Government is investing heavily in training and skills upgrading.

The Singapore Workforce Development Agency (WDA) launched a series of masterclasses and workshops on advanced manufacturing in February this year, covering areas such as advanced robotics and automation, optical and laser engineering and additive manufacturing.

About 300 Singaporeans and permanent residents have participated, WDA said.

There are also Singapore Workforce Skills Qualifications courses, such as a specialist diploma in the additive manufacturing area of precision engineering and a diploma and graduate diploma in mechatronics.

It could also be as simple as attending a week-long course in the office, as LHT sales coordinator Toh Hong Chin did to learn to use the new database system.

"We can see all of a customer's past orders and stock balance on one page on the computer. In the old system, we had to search through papers to find orders one by one," says the 27-year-old Ms Toh.

A version of this article appeared in the print edition of The Straits Times on June 18, 2016, with the headline 'The future of manufacturing jobs'. Print Edition | Subscribe