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Tat Hong's towering ambitions
WHETHER he's landed in Shanghai, Bangkok, or Sydney, it is no longer unusual for Roland Ng to be greeted by the familiar green of a Tat Hong crane towering by expressways as he makes his way from the airport into the city.
It speaks, he says, of the infrastructure boom that continues to unfold across China and South-east Asia, and is picking up again in Australia. It also speaks of how Tat Hong has grown from the small battery and tyre shop founded over 60 years ago by his father, who spotted a market for leased cranes and heavy construction equipment in fast-developing Singapore back in the 1970s, says Mr Ng, the company's current managing director and group CEO.
Ever since heading abroad four decades ago, Tat Hong has started operations in Australia, China, Malaysia, Thailand, Indonesia, Hong Kong, Vietnam, Myanmar and Papua New Guinea. Its rental model means that Tat Hong cranes have been deployed in other locations such as India and Africa too.
Its fleet of more than 1,550 tower, crawler and mobile cranes - which range from 50 tonnes to as large as 1,600 tonnes - makes it the largest crane-owning company in the Asia-Pacific region, and the ninth worldwide. Apart from standard construction and engineering works, these cranes are also used by customers in the oil and gas, petrochemical and power generation sectors.
FY2019 revenue for the group - which the family took private last year after 18 years on the Singapore Exchange's mainboard - exceeded S$500 million and it hires more than 4,500 people globally, including freelancers.
Excellence above size
Size is not the goal though, Mr Ng stresses. "At the moment, we're downsizing our assets, to concentrate more on branding and services."
It is part of a broader strategic shift to steer Tat Hong towards a more asset-light model, which began several years ago. Instead of expanding its own fleet of cranes, which inevitably accumulates depreciation on the company's books, Tat Hong now aims to capitalise on the reputation it has built up to procure cranes from other companies for its customers.
Emphasising the service and solutions it can offer in tandem with crane rental - over and above the hardware of the cranes - is another key prong of this strategy. "Why do people come to you? It's because of good service, because you can offer better safety features, offer solutions specific to their projects, advise on what sort of cranes to use, what lifting methods to use," says Mr Ng.
In China, where competition with local heavy equipment rental companies is stiff, Mr Ng even views growing "too big" as risky. "When it comes to the China market, there is no need to be number one. We want to do things excellently and do things well - that's how we'll grow," he says.
That requires building teams of engineers and designers with a thorough understanding of varied projects' needs. "These solutions are our intellectual property. For example, in building a large coal power station, how would you position the crane inside the chimney to build it up? How would the cables be tied?"
In part a response to the uncertain global business environment, the shift also came about as Tat Hong's wide geographical footprint meant that the company has had "a lot of ups and downs" in the past few years. That was also what drove the decision to take the company private last year.
"We had to look at corporate restructuring and do it fast. But while we were listed, there were many constraints, we couldn't do much and at the speed we needed," says Mr Ng.
Divergent performance from the three main regions Tat Hong operates in - China, Australia, and Southeast Asia - meant that the group's overall reported results masked the value that there was in individual business segments. "Delisting gave us more flexibility to look at true business performance. There's more value for the company that way," he says.
Privatising the company has generated the desired outcomes, Mr Ng says. In particular, it is now more nimble and able to respond to opportunities in various markets. "As a whole, we're quite excited about business prospects."
Optimism across regions
China remains the star performer for Tat Hong - even amid the US-China trade war and deepening economic slowdown. "China's domestic market players related to construction - contractors, equipment suppliers, rental companies - they are all experiencing significant growth now compared to the past few years. I think this trend will continue for the next two to three years," says Mr Ng.
Stepped up government spending on infrastructural projects - to stimulate domestic demand - is behind this, and ought to boost demand for Tat Hong's cranes, he adds.
Similarly, while South-east Asia too has seen economic activity slow, markets such as Thailand, Indonesia and Philippines remain bright spots for the company. "These are very traditional markets for us, we have been there for a long time. And, in the longer term, there will be tremendous infrastructure growth over the next one, two decades," says Mr Ng.
Tat Hong's business in Australia has also begun to pick up again, as the mining and energy sectors benefit from rising export demand for resources.
"Since last year, we've started to see rising confidence and more infrastructure projects. There is demand not just from China but also South Asia - India, Bangladesh - for more coal."
Singapore remains Tat Hong's headquarters and finance centre, but as a market it contributes to less than 10 per cent of the group's turnover. It's no surprise then that Mr Ng is a strong advocate of local companies being deliberate about heading overseas. "If we didn't head abroad, set up offices in cities across Australia, and then go to China ten years ago, I think we would be struggling in Singapore today," he says.
Its internationalisation efforts have been recognised by others too. "In the past 30 years, Tat Hong has successfully transformed the business into a regional enterprise. They went international way before it was fashionable and did it well by being persistent, taking that time to localise their operations and, more importantly, by building a strong regional mindset in the leadership team and in the rest of the organisation," says Linus Goh, head, Global Commercial Banking, OCBC Bank.
Tat Hong is not in a hurry to open more offices abroad though. "Vietnam, Myanmar, Cambodia, these markets are also key for Tat Hong but we are not rushing in to set up offices everywhere.
"There is a cost involved. We must have a certain number of cranes operating there, if not, the overheads will kill us," says Mr Ng. Unlike businesses in other sectors that might require a plant and infrastructure, Tat Hong's cranes are also mobile enough to be moved from country to country as demanded by projects secured.
Mr Ng doesn't envision Tat Hong venturing too far from Asia. "I believe in operating within our time zones, at most a one,- two-hour time difference. Within those boundaries, the markets we haven't covered are in South Asia - India, Bangladesh. These could be new markets in future, but I don't think they will be as big as South-east Asia and China are for us now."
Given how critical internationalisation has been to Tat Hong though, it has been natural for Mr Ng to bring that to his work at the Singapore Chinese Chamber of Commerce and Industry (SCCCI), where he was re-elected as president in January. "Companies like ours, we've gone overseas for decades now, it's very easy for us to share our experience." SCCCI also has offices across in China to help Singapore companies, especially SMEs, find business partners there more easily.
Equally, he says, he has learnt a lot from being part of the chamber. He appreciates its history and how it has provided a platform for local entrepreneurs from various sectors to network with each other, while facilitating networking with international Chinese business people too.
He also appreciates SCCCI's role in preserving and promoting the Chinese entrepreneurial spirit, and its four pillars of "integrity, loyalty, innovation and giving back to society". Apart from partnering with the government to encourage local enterprises to digitalise and go global, Mr Ng sees the promotion of these values as a key goal for the chamber.
These are also values that he has personally embraced in leading Tat Hong, especially in his dealings with people.
"Throughout our journey, we have encountered at least five crises. You won't have smooth-sailing times all the way. So, it's important to have good partners and good communication with them," he says.
For instance, being "very frank" with the company's bankers. He recalls surprising his bankers a few years ago when he told them that the business was in dangerous territory and must downsize. Selling off assets allowed Tat Hong to rake back a few hundred million. "We need to tell them how good, how bad things are . . . what the plan for managing the problem is. Then, the bank is able to see how to help you," says Mr Ng.
Such openness and transparency applies to employees too. "Tat Hong is very open. We employ many professionals; we don't have to have our own people running the operations. It's a family business, but we can be shareholders and not run the operations," he says.
Succession planning is crucial to ensure the business continues to thrive, but need not be a family affair of grooming a third generation of Ngs to take the reins. Of his three children, only one son works within Tat Hong at the moment as the managing director of its Australian operations.
"If one of the third generation has what it takes to lead, they've got to prove it in front of the professionals, by their own merit," says Mr Ng.