Singapore-made arms to be produced overseas

ST Kinetics changing strategy by licensing intellectual property and partnering firms

ST Kinetics' armoured vehicles (left) have been used in Afghanistan by the British army. Mr Choy (above) said partnering foreign manufacturers is good for the firm.
ST Kinetics' armoured vehicles (above) have been used in Afghanistan by the British army.PHOTOS: ST KINETICS, ST ENGINEERING
ST Kinetics' armoured vehicles (left) have been used in Afghanistan by the British army. Mr Choy (above) said partnering foreign manufacturers is good for the firm.
Mr Choy (above) said partnering foreign manufacturers is good for the firm.

Singapore-made armoured vehicles, howitzers - a type of artillery piece - and guns will soon be produced overseas.

The country's sole arms manufacturer, ST Kinetics, is changing its strategy as it prepares for future growth through partnering and licensing its intellectual property.

Mr Patrick Choy, ST Kinetics' executive vice-president, explained that Singapore has no raw material.

Steel, for instance, has to be shipped here to be made into military equipment. The final product is then transported to customers in the United States, Europe or Asia.

The shipment of goods is costly and adds to the final price tag.

"So why not do it overseas in the country where our customers are? We can license our intellectual property to manufacturers there," he told The Straits Times.

Mr Choy did not specify where ST Kinetics might make its products abroad, but he suggested one possibility was South America.

ST Kinetics has gained recognition in the arms making industry, giving it new options, and companies are approaching the company to license its technology or to look for partnerships, he added.

These options are important for ST Kinetics' growth. It will continue to produce arms here but land scarcity makes expansion a challenge.

Apart from licensing, partnering foreign and often bigger arms manufacturers is also good for the firm, said Mr Choy. "I sell our equipment to them, they can add on other accessories before they sell to the final customer."

It is doing this in a major upcoming deal to supply the United States Marine Corps with the ST Kinetics- made Terrex amphibious vehicle. It is bidding for this project in partnership with a big American military and aerospace contractor, SAIC.

The change in strategy has come about because markets are changing. While the Asia-Pacific region has been the company's largest customer base, it is setting its sights on the US market. Partnering is also a good way of getting into the market without having to compete with the big boys of arms manufacturing, Mr Choy added.

He was speaking to The Straits Times after a visit to ST Kinetics' manufacturing complex in Jalan Boon Lay. There, it makes the military equipment that was showcased during the National Day Parade, including the Terrex armoured vehicle and the articulated two-cabin tracked Bronco vehicle.

ST Kinetics, a subsidiary of publicly listed conglomerate ST Engineering, has been making military equipment for more than 40 years. Its products are sold throughout the world.

Mr Choy is also the executive vice-president for international marketing at ST Engineering.

Although it is a small player in the global arms market, the company has an international reputation for developing innovative military equipment used by armed forces in the world. Its armoured vehicles, for example, have been used by the British armed forces in Afghanistan. It is also the world's largest manufacturer of 40mm bullets.

Defence magazine Defence News ranked ST Engineering 43 out of 50 global arms manufacturers this year - up six places from last year. After Japan and India, it is only the third Asian country to be ranked in the top 50.

ST Engineering's other subsidiaries, such as ST Aerospace, ST Marine and ST Electronics, also make military equipment like naval ships and electronics command and control systems.

As a group, ST Engineering has an order book of about $12.4 billion for the next two to three years, of which about 40 per cent comes from defence equipment and the rest from commercial projects.

The company's 28ha Jalan Boon Lay complex is where arms, including bullets, armoured vehicles and howitzers, are made.

ST Kinetics has been successful so far despite its disadvantage of having no track record "since we don't go to war", said Mr Choy.

To create a competitive advantage, it focused on those defence areas where ST Kinetics and ST Engineering have technical might.

The firm also identifies gaps in operations faced by war fighters to provide solutions that other manufacturers are not producing. It also pays close attention to what customers want, often customising military equipment to meet their needs.

A version of this article appeared in the print edition of The Straits Times on October 01, 2015, with the headline 'Singapore-made arms to be produced overseas'. Subscribe