Skip Ribbon Commands
Skip to main content

News Details


​Coronavirus: Singapore firms worry production, shipment delays hit manufacturers

Published on: 10-Feb-2020

Singapore manufacturers are concerned that delays in production, shipment and delivery due to shuttered factories and quarantined workers arising from the worsening coronavirus outbreak will prompt their customers to switch suppliers.

They are also worried about rising production costs, given the supply shortfall and backlog that factories will need to clear once they reopen.

OE Manufacturing managing director James Wong said his shuttered factory that makes hydraulic cylinders in China's Jiangsu province - some 735km from the city of Wuhan, the epicentre of the outbreak - may bust deadlines.

"Many delivery deadlines are affected and delayed," he said, without disclosing how much the delays will cost his firm, which has 80 workers in China and 25 in Singapore.

"We are exploring the option of setting up a third factory outside China."

Supply chain disruptions are increasingly rippling beyond China's borders, with global manufacturers ranging from automakers to mobile-phone companies facing temporary shutdowns.

South Korea's carmaker Hyundai said last week that it is stopping production due to a shortage of components. Apple supplier Foxconn is also halting work at its plants.

Extended factory closures within China will similarly have a significant impact on Singapore's manufacturing sector.

Manufacturing makes up about one-fifth of Singapore's gross domestic product, and the impact of the virus outbreak is compounded by "spillover effects to other domestic sectors like transport", said DBS Bank senior economist Irvin Seah in a report last Friday.

Sectors that are more labour-intensive will be hit the hardest, he said, adding: "There is a lot of confusion within China now as well."

Many Singapore firms import raw materials from China for their business, so disruptions could lead to higher production costs, among other issues.

Sin Cheong Containers Manufacturing, for instance, started importing tin plates from China two years ago. This is because the cost was about 7 per cent lower compared with other countries, said Ms Betty Tan, Sin Cheong's deputy managing director. "All of our raw materials are imported because Singapore does not have raw materials (for manufacturing)."


Now, the main worry is the inability to fulfil orders for the rest of the year, said Ms Tan.

Prices that she has been quoted recently are 10 per cent to 15 per cent higher as a result of the outbreak, Ms Tan said, noting that shipment delays have occurred because there is not enough manpower in China to handle the work.

Production in Singapore has not yet been affected because her company has some stock left, but the outlook for the rest of the year has become very uncertain.

"Very soon, we might have to delay our manufacturing in Singapore as well because of insufficient raw materials," said Ms Tan, who has about 30 workers in Singapore.


On the upside, Singapore firms are not as reliant on China as other countries in the region, said DBS economist Ma Tieying.

China accounts for only 14 per cent of Singapore's total exports of semi-finished goods and 5 per cent of total imports of semi-finished goods - lower than the regional average of 26 per cent for exports and 19 per cent for imports, she added, citing the bank's calculations.

"Singapore is among the least vulnerable economies in Asia to the risk of China's supply chain disruption," Ms Ma said.

Associate Professor Geoffrey Chua of Nanyang Business School said manufacturers can diversify their supply chain by procuring parts from various locations to reduce the risk of disruption.

The problems in China are most likely to hit efficient supply chains hardest because the companies tend to have less inventory than those with longer lead times, Prof Chua said.

Firms with long lead times for their supply chains have more leeway to replan when there is a disruption, he added.

"Efficient supply chains, like automobiles and electronics, have shorter lead times than, say, fashion products," Prof Chua said.

But diversity also exists within each industry, which makes it hard to say with certainty which sector will be hit hardest, he noted. "Even among automakers, some Japanese and Korean companies have shorter lead times... compared with automakers in North America and Europe."

Sin Cheong has diversified its supply chain by using suppliers from other countries like India, Belgium, Japan, South Korea and Britain, but the extent of the virus outbreak remains unknown and, "looking forward, if (it) is not controlled well globally, other countries' prices will also be affected", said Ms Tan.

Mr Wong expects operations at his wholly owned factory to start again by the end of this month, after the closure orders are lifted and migrant workers can return to work after being quarantined.

Singapore Manufacturing Federation president Douglas Foo urged manufacturers to take advantage of supply chain opportunities in the region as Asean is a rising manufacturing powerhouse.

"The South-east Asia region continues to hold promise for our manufacturers as the region continues to grow rapidly over the next decade," he said.

Trade and Industry Minister Chan Chun Sing recently underscored the importance of firms diversifying their supply chains.

He noted last week that China is more intertwined with the global economy than when Sars or the severe acute respiratory syndrome hit in 2003.

Mr Chan added that the Government has emphasised the need to diversify Singapore's economy so it is not overly dependent on one market or a particular industry.

He said: "To be frank, everybody will be impacted by (the virus outbreak). It's a matter of degree.

"The key is who will recover faster and how people respond to the crisis."

Source: The Straits Times, 10 February 2020

Back to listing

Not sure which programme to go for? Use our programme finder
Loading header/footer ...