Chain Reactions

The Best Manufacturer in Singapore Is From the U.S.A.

I'm over in Singapore this week, attending that island nation's inaugural Manufacturing Excellence Award (MAXA) conference, which is kind of like Singapore's variation on IW's own Best Plants program. A panel of experts decided that the best manufacturing company in Singapore in 2006 is Seagate Technology, which of course is headquartered in the United States. If you want some more irony, of the five runner-ups, two are also headquartered in the U.S. (Merck and Becton, Dickinson), one in Germany (Leica Instruments), one in Japan (Kenwood), and one in the Netherlands (Philips).

The irony, however, isn't that Singapore's best manufacturers are based somewhere else; it's that Singapore's manufacturing sector is robust and growing at the same time that the parent countries of many of its plants are experiencing declines. In 1960, a few years before Singapore became an independent nation, manufacturing was a S$2.1 billion industry, representing 12% of the country's gross domestic product (GDP). Today, manufacturing is a S$194 billion industry, accounting for 27% of Singapore's GDP. And rather than complaining about how much of that growth is due to foreign investments, Singapore positively celebrates it in fact, 1 out of every 4 people on the island are foreigners.

Singapore's government takes a very active role in pushing its manufacturing capabilities, and in fact government and industry seem to follow the same script when it comes to promoting the country's capabilities. If I heard the words "product development" and "innovation" once, I heard them a thousand times this week. The country realizes full well that it can't compete on labor costs with the massive workforces of fellow Asian nations China and India, so Singapore emphasizes its strengths, namely its geographic position as a logistics hub, and its proficiency in developing innovative products in a handful of key industries (e.g., electronics, biomedical sciences, petrochemicals).

At the MAXA ceremonies, Lim Hng Kiang, Minister for Trade and Industry, pointed out that, "Even though Singapore is a global leader in the manufacture of high value-added products, there persists the misconception that the sector is losing its shine due to challenges from lower-cost countries. The fact is, over the last 10 years, the manufacturing sector's growth has surpassed most of the other sectors and is ahead of our GDP growth." To sustain that growth, the country is planning to increase the amount it spends on funding R&D from 2.5% to 3% of the GDP.

"If you let nature take its course, sometimes it takes too long," Lim observes. To that end, Singapore drew more than 15,000 people to its small island this week to its annual venture capital gathering (of which MAXA was just one event), in hopes of coaxing some more VC out of international investors. Although Lim was speaking just about his own country, I wish I could tape this message to the foreheads of every politician in the U.S.A. in the hopes that maybe they'd actually take it to heart: "Manufacturing investments create jobs across the entire value chain."

I'll share more of my "observations from Asia" in future blogs.

TAGS: Supply Chain
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