Observations: Has manufacturing gone sunset?

Singapore has sailed through the past 5 decades with incredible success. Fueled then by strong demand for manufacturing, it saw rapid growth.  But with China as the workshop of the world today, Singapore’s leaders must reinvent the country on many fronts.

It is not only China that worries the Republic. Vietnam, Cambodia, Thailand, the Philippines and even Myanmar are seeing growing levels of economic activity. From building strong infrastructure, attract sizable investments and with access to a skilled, low-cost and very hungry workforce, there is fervent competition in the region.

Ambitious regional projects are sprouting up. Big names such as Foxconn, PT Astra Honda Motor, Tata Steel – all are pouring billions of dollars into setting up facilities to capitalize off the rising economic activity in the region. In Rayong, Thailand, Ford Motor Co. has invested in a $450m passenger vehicle plant that will begin manufacturing next-generation Ford Focus’ in 2012 for domestic and export markets.

A quick snap shot at the manufacturing output statistics show that overall output continues to grow.

This data shows that manufacturing is not dead nor stagnant in this country. What is apparent, is a shift from low-tech manufacturing (ie. textiles and woodwork) to a more high-tech one. In a human resource point of view, the work now require more complex skills. This spells trouble for the tens of thousands of Singaporeans trained in simpler skills and depend on these industries to survive. To cope with this shift to high-tech work, the country must evolve to do a few things: invest in complex infrastructure and technologies to gain the trust of businesses in these markets.

Evolving Skills and Education

The market place is always changing. In the early 70s up until the late 80s Singapore was the go-to place for making toys, textiles and consumer electronic items. The sun was shining and hay had to be made. Our own workforce was hungry, low cost and eager to work – lifestyles were also much simpler. It is a very different Singapore today. Our way of life has become more epicurean, more complex. There are now more products competing for a share of our wallet. A Singaporean in their 40s and above today and still relying on low-tech industries to fund their livelihood, would pretty much find opportunities a little more restricted than the younger Singaporean. This is the result of a country that has faced such rapid progress in such a short period of time.

To help this segment of people, Singaporean leaders are embarking on a suite of programs to change mindsets and encourage the people to be open to change and upgrade their skills. This include Workfare (a financial aid program), subsidized retraining courses and job placement through e2i – a program by the Labor Movement. Such is easier in theory than done. To the individual, what he sees is wealth pouring into the country – being human, this person would also be very upset that the rate of dollars entering his wallet is not consistent with the rate of progress happening in the country. The result of which, is political turbulence.

The Road Ahead
For the past 5 exciting decades, Singapore had built it’s economic progress on four main pillars: Exports, foreign investment, asset investment and security (in the fields of politics, asset preservation, and the law). Entrepreneurship and domestic consumption are two fronts that has not been fully exploited and these could be new economical pillars that could be raised. Domestic consumption requires disposable wealth from the country’s residents – this means that salaries must increase. Entrepreneurship is spurred by an appetite for risk and/or for reducing exposure to risk. These are all programs that the country can pursue and push for.

It will not be realistic to expect Singapore to make sweeping changes in labor, individual wealth and skills all across society overnight. Reinvention require much more than simple policy making – it requires policy selling, education and the participation of a majority of it’s citizens.

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