SINGAPORE ECONOMY

Some SMEs already in process of transforming themselves

Firms in retail, F&B, aerospace and hospitality exploring other avenues of growth instead of just waiting out the crisis

Singapore

LOCAL businesses in some sectors, particularly those hardest hit by the Covid-19 pandemic, have already been taking action to reinvent themselves instead of waiting out the crisis, firms and trade associations told The Business Times.

This is happening as Trade and Industry Minister Chan Chun Sing warned on Tuesday that the economic situation will only worsen if Singapore waits for a return to the pre-Covid-19 normal, after Singapore posted a record 13.2 per cent plunge in Q2 gross domestic product.

Mr Chan said the Republic "must chart a new direction now", noting that global headwinds - such as rising protectionism and geopolitical tensions and supply chain disruptions - have also changed the world "irrevocably".

But already, some firms in retail, F&B, aerospace and hospitality have taken the initiative to transform themselves over the past few months.

Aerospace services firm ECK has been seeking out projects for its cold spray equipment and coating services in the electronics manufacturing and energy industries. It also brought in a robotic arm under the Productivity Solutions Grant to automate its cold spray process, which has not only raised productivity and quality, but also captured the interest of potential customers, said director Koh Pak Keng.

Wah Son Engineering, which has served the aerospace sector for the last 20 years, has sought precision machining and integrated manufacturing work from other sectors such as defence and semiconductor manufacturing instead. The firm also wants to see if it can become a vocational training institute for precision machining and welding, so that "our Singapore youths are employment-ready when our economic vibrancy returns in a few years", said executive director Lim Hee Joo.

In retail and F&B, businesses have embraced "cross-brand and cross-business collaborations, joint promotions, even co-leasing and subleasing retail spaces to share costs", said Singapore Tenants United for Fairness (SGTUFF), an informal group of retail and F&B tenants.

Retailers are cognisant of their greater reliance on local consumption and are thus pricing products and services to ensure repeat spending, added the Singapore Retailers Association. "They are also turning to data analytics to understand their customers better, to offer a more strategic value proposition to drive spending and build loyalty."

Firms in the conventions and events industry are pivoting to handle hybrid events, although they are overall at different levels of readiness to transform, said the Singapore Association of Convention and Exhibition Organisers and Suppliers (SACEOS). For those who have not yet made plans, "we need to help them find out the reasons for their inertia", said president Aloysius Arlando. "The reasons could be determining what their business should morph into and how to do so; or gaps in expertise and time to reskill their manpower and change mindset across all levels."

SACEOS is organising clinics to help companies strengthen business fundamentals and working on a post-Covid guide for the industry.

Meanwhile, the pandemic has sped up the hospitality industry's evolution, although Singapore Hotel Association president Kwee Wei-Lin noted that it "takes time to reinvent an industry". Some hotels have begun redesigning jobs and upskilling staff; they have also gotten creative in generating alternative revenue, such as through gourmet food delivery and bespoke home dining.

But Seah Choon Siang, who owns The Little Red Dot, Chic Capsules and the Bohemian, pointed out that some businesses face limited avenues to pivot to. Hostels are highly dependent on tourists, as Singapore has little domestic travel to speak of, he said.

Also, with firms depending on subsidies to stay afloat while making these changes, the imminent withdrawal of key financial support could threaten progress made. ACP Metal Finishing CEO Michael Oxborrow said the aerospace firm's revenues are 40 per cent below pre-Covid levels, and will likely stay that way for at least six more months. He hopes that the Jobs Support Scheme (JSS) will be extended until market activities are "more predictable", as without it, his company would have had to retrench skilled personnel at all levels.

Association of Aerospace Industries (Singapore) chief Sia Kheng Yok said that the JSS has "blunted the impact" of the pandemic and helped firms in the sector retain staff. "It has also bought time for companies to assess the situation and take action to position themselves for survival and even future opportunities."

Competition will only heighten in the post-pandemic landscape, and Singapore will need its skilled technical workforce to take its aviation and aerospace industry forward, Mr Sia said.

SGTUFF said nearly three in five of its members currently plan to close at least one shop and lay off staff within the next six months, even with the new business ideas, and the JSS' ending "will accelerate and worsen" that.

The group hopes the government will extend the JSS to preserve jobs, as well as speed up enacting fair tenancy legislation to divide the financial burden more equally between landlords and tenants.

The Restaurant Association of Singapore called for extensions to government support schemes like the JSS, foreign worker levy waivers and digitalisation support packages, noting that they have been critical in helping F&B companies to transform and prepare for recovery.

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