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Poised for an Upturn

1075_1The Singapore marine and offshore engineering (M&OE) industry is on the mend, as crude oil prices, in which its fortunes are inextricably linked, have strengthened on improved demand-supply balance, and with it the sentiment of the industry. Industry leaders are casting their sights on the future to prime for better days ahead even as they address near-term challenges with government’s assistance.

While the demand for ships and rigs may have eased because of overcapacity, fresh opportunities have opened up in related fields. The shift towards cleaner energy has fueled the requirement for liquefied natural gas (LNG), and with it the requirement for LNG hardware such as LNG tankers, floating LNG vessels (FLNGVs) and floating storage regasification units (FSRUs). One estimate placed the global expenditure on LNG at over US$280 billion by 2021.

Offshore wind farms are spreading beyond their traditional home in Europe as wind power is gaining traction as a renewable source of energy. While the cost of offshore wind power has historically been higher than that of onshore wind generation, costs have tumbled in recent years, encouraging adoption. Wind farms are now found in North America, East Asia, India and elsewhere. By 2023, the offshore wind market is projected to reach over US$130 billion.

With their extensive experience and expertise in offshore projects, Singapore-based companies are positioning themselves to pitch and secure contracts in these emerging areas.

Strategies for Growth
As the M&OE industry is a key player in the Singapore economy contributing S$3.6 billion to the national gross domestic product, S$12.3 billion in total manufacturing output and employing more than 23,000 locals, the government is working with the industry to develop strategies to preserve core capabilities nurtured over decades and foster growth.

Speaking at the launch of the M&OE Industry Transformation Map (ITM) in February 2018, Mr S Iswaran, Minister for Trade and Industry (Industry), said, “The sector has been through a difficult time over the past three years, with oil prices falling from the highs of US$112 per barrel in 2014 to below US$30 in early 2016. While prices have recovered to some extent, oil companies remain cautious in their exploration and production (E&P) activities. McKinsey estimates that capital expenditure on E&P has shrunk by 45% over the past five years, which has adversely affected our M&OE industry.”

To address near-term challenges, SPRING Singapore reintroduced the Bridging Loan while International Enterprise Singapore (IE Singapore) enhanced the Internationalisation Finance Scheme (IFS) to help companies finance their operations and bridge short-term cash flow gaps. Administered in partnership with local financial institutions, the two schemes have catalysed nearly S$700 million in loans to more than 100 borrowers, of which 80% are small and medium-sized enterprises (SMEs). By enabling companies to ride the downturn, they are better placed to seize new opportunities as they arise.

To drive industry transformation and capture long-term growth opportunities, a new roadmap has been developed. A collective effort of the M&OE Industry Tripartite Committee comprising government agencies, trade associations, unions and industry leaders, the M&OE ITM identified three key thrusts:

• Preparing for the upturn through innovation and productivity improvements;
• Pursuing new growth areas; and
• Equipping Singaporeans with relevant skills.

Through the ITM the M&OE industry expects to contribute S$5.8 billion to Singapore’s gross domestic product and create around 1,500 new jobs by 2025.

Preparing for the Future
Advanced manufacturing has been identified as a key development area for Singapore as it helps companies to hone their technological capabilities and ensure that they remain globally competitive. Under the Research, Innovation and Enterprise 2020 plan, the government is committed to spending S$3.2 billion in research in advanced manufacturing and engineering.

This has direct implications for marine companies. At its Tuas Boulevard Yard, Sembcorp Marine is working with the National Additive Manufacturing Innovation Cluster (NAMIC), A*STAR’s Singapore Institute of Manufacturing Technology and quality assurance and risk management company DNV GL to test laser-aided additive manufacturing to fabricate large-scale structures for newbuild offshore and marine construction. The technology has the potential to give greater flexibility in translating designs into actual products, save on material costs and reduce production lead-time.

Unlike traditional manufacturing processes which involve subtractive manufacturing, where materials are removed from a large material template to form a shape or an item, in additive manufacturing items are built upwards, layer by layer, into a three-dimensional shape.

With grants from NAMIC, the partners will also explore additive manufacturing technology in printing replacement components for ship repairs.

Sembcorp Marine is working with DNV GL to develop drone technology for close-up inspection of newbuildings and ships undergoing repairs.

With the help of SPRING Singapore, Mencast Energy, a regional engineering and maintenance, repair and overhaul solutions provider, has invested in automation to enhance processes for blasting, cleaning and painting of oil storage tanks. Mencast Energy is now working with SPRING Singapore to explore more automation opportunities in other business areas.

Digitalisation is transforming industries across the world. As the global industry increasingly explores digital technologies to optimise its operations and generate new revenue streams, Singapore is supporting companies in developing next-generation M&OE solutions that can enable remote monitoring, provide predictability and support decision-making.

Said Mr Iswaran, “We will support the in-house research and development (R&D) initiatives of companies, as well as public-private R&D collaborations through research institutes such as the Technology Centre for Offshore and Marine Singapore (TCOMS).”

TCOMS is a joint initiative of A*STAR and the National University of Singapore. Developed at a cost of S$107 million in 2016 when the outlook for the industry was still uncertain, the centre integrates public research and industry expertise to co-develop innovative concepts and infrastructure for M&OE.

A key feature at the centre is its next-generation Deepwater Ocean Basin. When completed in 2019, the facility is equipped to simulate harsh ocean environments at ultra-deep waters of up to 3,000 metres and facilitate the development of innovative concepts such as intelligent floating platforms and ships, autonomous systems, marine robotics and subsea systems. This will enable M&OE companies to undertake higher-value activities through global partnerships with industry, research institutions and academia.

Pursuing New Growth Areas
The transition to a low-carbon economy is offering fresh opportunities for companies in LNG and renewables. The government is committed to helping companies to diversify their operations and access these new business opportunities. “We will do this by connecting companies with stakeholders and resources, and supporting business partnerships with companies in overseas markets,” said Mr Iswaran.

NauticAWT has drawn on the assistance of IE Singapore to venture beyond its traditional oil and gas domain into the renewable energy space. In 2017, the company undertook its first offshore wind farm substation installation and grouting operation for a wind farm in Binhai in the Jiangsu Province developed by China’s State Power Investment Corporation. It supplied the grouting crew and materials for the offshore grouting operation.

Following the successful completion of its contract, NauticAWT is now exploring similar business opportunities in other parts of Asia.

Equipping Singaporeans with Relevant Skills
As the M&OE industry transforms, new skills will be needed. Under a new Skills Framework for Marine & Offshore developed by SkillsFuture Singapore, Workforce Singapore, the Economic Development Board and SPRING Singapore, individuals can explore career advancement opportunities along or across seven career tracks. The framework covers 29 job roles in the industry. It also identifies several emerging skills needed in growth areas such as digital products and services, and offshore renewables.

The framework complements the SkillsFuture Series, which is a curated list of short and modular courses to reskill or upskill the workforce in emerging and priority skills areas required, such as advanced manufacturing and data analytics.

Workforce Singapore has also introduced three Marine Professional Conversion Programmes (PCPs) to help new industry entrants or existing professionals and managers taking on different job scopes. Since October 2016, more than 300 PMETs have been reskilled through the marine PCPs. The Association of Singapore Marine Industries (ASMI) is the programme manager for the marine PCPs.

As the champions for companies and employees, the ASMI and Shipbuilding and Marine Engineering Employees’ Union (SMEEU) are key in catalysing the industry and implementing many of the initiatives. The SMEEU is working with employers to help companies design progressive human resource management initiatives and talent development plans.

A Programme Office is being set up within ASMI to drive the various initiatives identified in the M&OE ITM and work with M&OE companies, including SMEs, to implement productivity solutions and encourage innovation efforts.

Said ASMI President Mr Abu Bakar bin Mohd Nor, “As the industry champion, ASMI has contributed to the M&OE industry’s evolution from its beginning as a regional centre for shipbuilding and repair to its current achievements today of being an international centre of distinction for marine and offshore repair, conversion and newbuilding projects. With the M&OE ITM, we hope to expand and upgrade our expertise and services further so that Singapore remains a premier centre of choice for customised solutions, quality products, value add and reliable services in the global M&OE market. The Programme Office will work with various government agencies and relevant partners to drive initiatives to develop capabilities in the growth areas identified in the ITM to transform the M&OE industry for the future.”