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Doing well, quietly but surely
WHEN Chye Thiam Maintenance was setting up its new material recovery facility at Sungei Kadut last year, the environmental services firm didn't change the sign outside the building to its own until the facility was up and running.
Through an interview with chief executive officer Edy Tan, the homegrown company's second-generation boss, it also became evident that Chye Thiam keeps its financials equally close to its chest.
Chye Thiam, whose core business is in cleaning, is keen to keep a low profile in a traditionally competitive industry.
"Why we are faring a little bit better than other companies is because we are always taking the lead in terms of technology, innovation," Mr Tan told The Business Times.
"But again, we always say, we must be always not just one step, but two steps, or even three steps, ahead of our competitor.
"Because if we are not so many steps in front of them, very soon they will catch up with us and we won't have this competitive edge any more," said Mr Tan, who leads more than 1,600 employees.
Chye Thiam is probably not alone in feeling the heat in the industry, where Mr Tan estimates there are about 1,400 companies, both large and small.
Another industry player, 800 Super - before it delisted from the Singapore Exchange's Catalist board in August - had seen net profit for the quarter ended March 31 halved year-on-year to S$1.95 million, weighed down by surges in the purchase of supplies and disposal charges, and employee benefits expense.
In its outlook, 800 Super had written: "The industry which the group is operating in . . . is highly competitive. The group is competing on the basis of pricing, quality and timeliness of service delivery as well as past track record."
The key pressures have come from increasing manpower costs and falling tender pricings, according to Chye Thiam's Mr Tan, who formally joined the business in 2002 after returning from further studies in the United Kingdom.
"I guess everyone is hungry. Everyone wants to have a contract especially those that have a higher local headcount ratio," he surmised.
"Why they need all this local headcount is because they might actually want to convert all this to foreign quota, which is coming down in the next couple of years as well," he added.
The cleaning industry is labour intensive and locals tend to shy away from the industry, no thanks to its unglamorous image. Meanwhile, cuts to the foreign labour quota for the services sector are set to kick in from next January.
A new challenge has also come up this year, on the back of the government's shift towards outcome-based contracts.
Such contracts focus on the outputs and outcomes that can be carried out which, in the long term, can resolve manpower issues and reduce costs. This differs from traditional, manpower-based contracts where a fixed number of workers is deployed.
But, for now, there is still a "very imbalanced mindset between price and quality", Mr Tan said. In tenders, customers may expect pricing to be lowered, if the reliance on manpower is lessened. But bringing in technology has its costs; so does training workers to handle the new technology.
Chye Thiam typically sets aside up to 5 per cent of the budget every year for investments into new technology and equipment.
The industry and customers alike will need time to adjust, he said, adding that he is now seeing "hybrid" contracts.
Nonetheless, Chye Thiam has managed to retain most of its existing contracts and secure new ones this year so far.
Commercial contracts tend to span three years, with an option to extend services for another year.
The Esplanade and Resorts World Sentosa are among the existing contracts Chye Thiam has retained this year. The firm had clinched the first contract for both iconic projects when they were completed.
Among the firm's latest coups are the contracts for Jewel Changi Airport and Gleneagles Hospital. The latter also marks Chye Thiam's foray into the healthcare segment, where standards are expected to be higher.
"I believe we're still targeting an increase in our revenue," Mr Tan said. Last year, Chye Thiam recorded over S$90 million in revenue.
"With all this innovation, all this enhancement in terms of workflow, (and) introduction of equipment, we are able to bring down the cost of labour."
To further grow the 40-year-old business, Mr Tan and his team are devoting their attention to internationalising.
Chye Thiam is part of Scale-up SG, a 2.5-year programme that aims to help aspiring, high-growth companies to scale rapidly and expand abroad. It was launched by Enterprise Singapore (ESG) in July.
The programme will see ESG work with partners from both the public and private sectors, with the inaugural programme run together with anchor partners McKinsey & Company and PwC Singapore.
"(There are) a few Asian countries that we're exploring and basically, what we intend to bring out of Singapore are our experience and our expertise, but not necessarily the manpower. Because those countries we're looking at, in fact they have lots of (it) - they have a big population," Mr Tan shared.
Chye Thiam is hoping the programme will help it to be clearer about the countries and sectors it can target overseas. With the consultants and ESG's support, the hope is also that the learning process can be cut shorter.
In a turn from tradition, the company decided to enter the Enterprise 50 (E50) Awards this year, to coincide with its 40th anniversary as well as E50's 25th year.
"I thought the numbers are actually quite nice," quipped Mr Tan.
Over the last few years, Chye Thiam had been more focused on the business, he explained; the company also had to settle down after moving into its new headquarters last year.
Taking part in the E50 awards this year "will let us know where we stand and where we've come, how far we've come," he said. "I think that will be a good gauge for us."