12. The second area is in enhancing capabilities. SPETA, together with SIMTECH, has developed a simulator for training computer numeric control machinists, which can significantly reduce the hours and machine resources required, compared to traditional training methods. In other words, trainees would be able to practice different and more types of machining requirements within the same allocated training time. With this additional preparation, trainees would have a shorter learning cycle when they start working with the companies. I am pleased to note that the Institute of Technical Education (or ITE) is already in discussion with SPETA to integrate this simulator into their training curriculum.

1. Speech by the Minister of State for Trade and Industry
Mr Lee Yi Shyan
at the Showcase of SPETA LEAD Projects
at Yishun SAFRA
on Wednesday, February 7, 2007, 10.15am
Distinguished Guests
Ladies and Gentlemen
Good morning
Introduction
1. It is my pleasure to join you this morning to view some of Singapore Precision
Engineering and Tooling Association’s (or SPETA’s) projects that are
supported under the Local Enterprise and Association Development, or LEAD,
programme.
2. SPETA is one of the first industry associations to embark on the LEAD
programme, and I would like to commend SPETA for taking the lead in
enhancing the competitiveness of Singapore’s Precision Engineering or PE
industry.
Significance and Challenges of the PE industry
3. The PE industry is a key pillar of Singapore’s manufacturing sector. In 2005,
the industry generated an output of $20 billion and contributed to 12% of
manufacturing value added. It is also one of the largest contributors of
manufacturing employment, accounting for one out of four jobs in the sector.
The industry is expected to generate an output of $28 billion and double its
value-add to $10 billion by the year 2018; as Singapore develops itself into a
Centre of Precision Engineering Excellence offering cost effective
manufacturing solutions for a diverse range of applications.
4. Our PE industry has played a critical role in attracting and retaining the key
manufacturing clusters in Singapore by providing vital support for a wide
spectrum of manufacturing industries ranging from the traditional electronics
sector to new growth sectors such as medical technology and aerospace.
5. Over the years, our PE industry has established an international reputation for
quality and reliability. Today, Singapore commands a sizeable global market
share for several PE products. Our companies account for 70% of the global
market for semiconductor wire bonder units, 60% for auto axial insertion
machines and 10% for household refrigerator compressors. We are also home
to 10 major semiconductor and industrial equipment manufacturers.
6. Last year, 19 Singapore companies made the Forbes Asia SME list, a ranking
of the top 200 companies in the Asia Pacific with sales below US$1 billion.
Amongst these 19 enterprises, four were from the PE industry, namely,
Unisteel, First Engineering, Micro Mechanics and MMI Holdings. This speaks

2. well of our PE companies’ standing and potential in the international
manufacturing arena.
7. The PE industry is expected to grow in size, scope and relevance worldwide.
Increased industrialization and economic growth, especially in the emerging
economies of Asia, will lead to more business opportunities. Fueled by the
soaring domestic demand of the growing middle class in China and India, the
demand for PE components in electronics, automotive and other industries is
expected to rise significantly. Under the leadership of SPETA, I am confident
that our PE industry will be able to capitalise on these opportunities at our
doorstep.
8. Notwithstanding the positive global outlook and our PE sector’s growing
international repute, the industry still faces challenges.
9. A key challenge is the stiff price competition in the region. As a small
economy, Singapore lacks the natural resources to match our competitors,
such as China and India, which can offer lower land and labor costs as well as
huge domestic markets.
10. To remain competitive, our PE companies cannot compete on cost and
efficiency alone. Instead, they must differentiate themselves by providing
products and services which cannot be easily duplicated, and enhance their
technical capabilities to move up the value chain. By engaging in higher value
added activities such as product design and development, and supply chain
management, our companies will be able to offer a wider range of services
and even total solutions which our regional competitors cannot match.
Concurrently, our PE firms must seek new growth markets to make up for the
loss of low value-added production. They must also continue to attract and
retain talents and upgrade the skills of their workers who will otherwise be
lost to competition.
11. In addition, I would like to urge companies to band together to sharpen their
competitiveness collectively. Together, they can combine their resources,
complement their product offerings, achieve economies of scale, reduce time-
to-market and pursue bigger projects. This will enable the industry to capture
a larger share of the burgeoning market.
SPETA’s LEAD
12. Strong industry associations, such as SPETA, are the backbone for vibrant
industry clusters, and ultimately, a competitive economy. Industry
associations that are constantly updated on the latest trends and business
needs of their industries, are also in the best position to grow and develop
their respective sectors. I am happy to note that SPETA is implementing a
number of initiatives under its $5.6 million LEAD programme to address the
challenges faced by our PE industry. The projects will cover four key areas:
13. First, SPETA will generate more business opportunities for our Precision
Engineering companies. It will facilitate strategic partnerships with overseas
companies with good technical capabilities, or access to growth industries. I
am told that to date, SPETA has brought more than 10 companies to the US
and Japan for trade exhibitions and has also arranged one-on-one business
matching sessions for 5 local companies with 3 overseas companies. These
activities are expected to generate sales of more than $20 million over the
next three years.

3. 14. The second area is in enhancing capabilities. SPETA, together with SIMTECH,
has developed a simulator for training computer numeric control machinists,
which can significantly reduce the hours and machine resources required,
compared to traditional training methods. In other words, trainees would be
able to practice different and more types of machining requirements within
the same allocated training time. With this additional preparation, trainees
would have a shorter learning cycle when they start working with the
companies. I am pleased to note that the Institute of Technical Education (or
ITE) is already in discussion with SPETA to integrate this simulator into their
training curriculum.
15. The third focus is to leverage on technology to raise the efficiency and
responsiveness of tool rooms, and to streamline operations at various
locations. In collaboration with SIMTECH, SPETA will be looking into
developing user-friendly, cost-efficient web-based applications for enterprises
to implement and maintain an integrated tool room management system.
16. Lastly, SPETA will help companies to explore new markets, to ride on the
rapid growth of these sectors. One such market segment is the automotive
industry, which has grown from S$480 million in 2003 to S$640 million in
2005. I have been informed that SPETA has already initiated discussions with
the Regional Vendor Development arm of Lotus Engineering, a leading
automotive engineering consultant for Original Equipment Manufacturers
(OEM) and Tier 1 suppliers, to identify potential automotive collaborations.
This project will complement Auto Ignite, a multi-agency programme
launched in 2005 to encourage Singapore enterprises to move up the value
chain by supplying automotive sub-systems and modules.
17. These LEAD initiatives, when fully implemented, are expected to bring about
an increase in value-added of $150 million for the Precision Engineering
industry over the next three years. I shall leave it to Director of SPETA, Mr
Koh Seng Chee to provide further details about SPETA’s LEAD projects.
Conclusion
18. In conclusion, what the Government can do and has done through the LEAD
programme is to provide some resources to encourage our industry
associations to embark on upgrading efforts for their members. The rest is
really up to you, the industry and the enterprises. I urge all of you to leverage
on the SPETA LEAD award to expand, upgrade and move up the value chain.
With the various SPETA LEAD initiatives in place, I am confident that the PE
industry will continue to sustain good growth and spur the development of our
manufacturing clusters in Singapore.
19. Thank you.