Hong Leong Asia opens precast facility in Punggol to beef up supply chain

INDUSTRIAL conglomerate Hong Leong Asia (HLA) aims to diversify and strengthen its supply chain, and will do this through a precast facility in Punggol that will produce more of its building materials locally.

The company on Friday (Jul 21) opened the 3.8-hectare facility, a joint venture with Sunway Construction Group. HLA has a 51 per cent stake in the integrated construction and prefabrication hub (ICPH), and Sunway Construction, the remaining 49 per cent.

The facility in Punggol, which took nearly five years to build, is the largest of its kind in Singapore, the company said.

Components to be produced there include large slab panels, which are cast and brought on-site to assemble into housing units, as well as precast bathroom units and household bomb shelters.

HLA chief executive Stephen Ho said that during the pandemic, the company ran into “extremely difficult” circumstances when the workers in its plant in Johor could not produce the components required, leading to delays in the company’s construction projects in Singapore.

Since then, he said, the industry has pivoted towards adding local capacity; government agencies such as the Housing Development Board have also pushed for more casting to be done in Singapore.

The new plant will strengthen the company’s supply chain resilience, making it a more vertically integrated player in the construction industry – even though most of its production capacity is still in Malaysia, Ho said.

The company also owns quarries that produce clinker and cement, which go into making ready-mix concrete, key to the manufacture of precast components.

Ho said: “There’s a bit of rebalancing; we cast more in Singapore. The Malaysia capacity is still there, but we need to up this part in order to balance it 50:50.”

Ho added that there are no immediate plans to build another facility.

“It’s a huge investment, so we also want to make sure that we can recoup these investments over time,” he said.

Demand for prefabricated components looks set to rise.

In June 2022, the Building and Construction Authority (BCA) announced that building works on land sold from the second half of 2022 will need to use higher levels of design for manufacturing and assembly technologies and prefabrication techniques.

Minister for National Development Desmond Lee said that with a floor-to-floor height of 15 metres, this facility is the first to be able to produce all the components required in the building of HDB flats.

He added that HDB is exploring greater standardisation of components between flats so that they can be procured from more sources.

“If one source gets disrupted for any reason, builders can easily switch to alternative sources and be assured the new components will fit into their building plans,” he said.

Furthermore, Lee said that the BCA is planning the development of more integrated construction parks around the island, with Pulau Punggol Barat being one such location. Such parks will bring facilities such as ICPHs and aggregate storage yards closer together, reducing the need to move materials from one location to another.

HLA’s building materials segment generated S$585.4 million in revenue in 2022, accounting for 15.1 per cent of the company’s total revenue.

The company expects productivity gains at the new facility, as several processes will be automated. For example, its automated storage and retrieval system can store, locate and retrieve precast components from drawer units.

The company said: “With 26 production lines and two automated precast production systems, overall productivity is expected to improve by up to 80 per cent when operating at capacity.” It added that the facility will be able to supply 100,000 cubic metres of precast elements for 2,500 dwelling units annually.

Solar panels have also been installed on the facility’s roof, which will generate about a quarter of the energy consumed at the plant.

Shares of Hong Leong Asia closed down 1.6 per cent or S$0.01 to S$0.605 on Friday.