30 November 17 The Business Times
A MULTI-YEAR downturn has taken a toll on job numbers in Singapore's offshore and marine (O&M) sector.
With foreign workers and seafarers making up the bulk of headcounts on hire, tracking down the overall job losses in the sector is virtually impossible. As far as the headline numbers go, it is safe to assume that at least tens of thousands of jobs had been lost. The estimate is based partly on the figures disclosed by the two largest employers in the sector here, Keppel Corporation and Sembcorp Marine.
Keppel O&M's global headcount stood at about 16,000 compared to over 36,000 at the start of 2015, the group's third-quarter results statement showed. Sembmarine had trimmed about 9,000 jobs in total since 2015, including employees and subcontractors, the yard group said at its Q1 results briefing without giving a breakdown for its Singapore numbers.
Singapore is far from being the only country which saw job losses from a protracted downturn, sparked by a collapse of oil prices in 2014. No one active in the upstream oil and gas space is spared - not even the onshore contractors or operators, which presumably have been shielded by their lower cost structures.
The Centre for Pipeline Knowledge in a Linkedin blog post noted that the Canadian pipeline sector has taken a one-two punch to its labour force, with skilled workers having moved to other industries in this downturn.
But with oil prices holding above US$50s and signs pointing to the upstream O&G sector bottoming out, oil companies have been revisiting deferred projects.
Following massive retrenchments, the challenge at hand now is meeting labour demands over the next 10 years, the Centre for Pipeline Knowledge noted. Others have also argued that the time has come for Singapore-based industry players to selectively re-hire and re-build the capacities needed for the next upswing.
But IHS Markit's Asia-Pacific head of research, head of yards and fabrication, Ang Dingli, pointed out that Singapore's O&M sector has mostly recruited engineers and skilled labourers from abroad. So it's harder for those companies which want to re-hire them for Singapore-based operations.
Some have questioned the value-add foreign-skilled labourers and seafarers, who make up the bulk of layoffs in this downturn, bring to Singapore's economy. On the contrary, as M3 Marine's managing director Mike Meade warned, foreign yard workers, who have benefited from years of training in Singapore, could bring their skills back and help build O&M capacity in their home countries.
On the engineering front, Singapore has already lost out to Malaysia, with heavyweights, including Saipem, McDermott and Technip, having elected to headquarter out of Kuala Lumpur.
For Kim Heng O&M and other vessel owners which are still operating out of Singapore, it can get increasingly tougher to hire engineers to commission vessels, its executive chairman Thomas Tan remarked.
Those wanting to stick it out with Singapore's O&M sector, including Keppel Corp, which has further diversified for instance into management and operations of data centres and sustainable city developments, can also still look forward to one opportunity: Even with Malaysia and other regional O&M hubs now catching up, Singapore can still pull away from the pack by filling up unmet gaps.
IHS Markit's Mr Ang suggested that oil companies, in a bid to shave costs, are now opening up to alternatives outside the traditional engineering houses.
With this in mind, he said the two yard groups can look at taking on more in-house engineering work tied to EPC (engineering, procurement and construction) contracts, which would also enable them to better manage their contract execution and scale the value-chain.
M3 Marine's Mr Meade conceded that the Chinese shipyards have caught up with Singapore on rig-building, but indicated that they are still not as good at commissioning and maintaining rigs.
Perhaps more importantly, for the long-term health of Singapore's O&M sector, industry players need to draw one key lesson from what has been perceived as the worst-ever sectoral downturn - and that is, those capable of maintaining a core workforce would stand to gain an early advantage when the market recovers.
Considering this, Mr Ang argued for O&M players to make use of the opportunity offered by slower business activity in a downturn to undertake more research and development and work out new prototypes and concepts.
This is when you can redeploy project teams for the purpose of improving on processes ahead of a market recovery, he said.