ASEAN KEY DESTINATIONS
Singapore firms cut staffing and expenses to stay afloat
AS SINGAPORE’S economic slowdown weighs on sentiment and sales, local companies are taking a very close look at costs in a bid to keep afloat.
“Nobody has been spared, especially in my industry,” said energy services provider Mencast Holdings chief executive Glenndle Sim.
“We thought the downturn (in the oil and gas sector) would be cyclical, but it hasn’t been,” he added. “We need to recognise the fact that we're in this for the long haul, and have to look at what we can do to redeploy resources.”
The company has had to let go of about 30 per cent of its workforce — which has helped with lowering costs — but Sim noted this approach has its limits.
“Manpower makes up the bulk of our costs since we're a service company. But we also don’t want to lose people with essential skills and intellectual property,” he said.
Lau Tai San, chairman and managing director of speciality metals supplier Kim Ann Engineering, said the company has cut back on overtime pay.
The resulting dip in salaries has resulted in some foreign workers leaving the company. The firm’s foreign workforce has fallen by 30 per cent.
“Overtime pay can come up to double workers' basic pay in good times. But when the economy is bad, we want to cut down as much as possible,” said Lau.
The company has been hit hard by the slowdown in the oil and gas industry, which makes up about 40 per cent of its business.
The general manager of a company in the semiconductor industry, who declined to be named, said that his firm has “taken a prudent step” of not hiring replacements for staff who leave. Its staff count has fallen by 10 per cent to 15 per cent this year.
“We're also consolidating senior management roles so the company is less top-heavy, and freezing wage increments for management. We're tightening belts and preparing for worse times to come.”
Sim said the company is also trying to divest assets, restructure loans, and negotiate to defer payments like rent.
Companies are also cutting back on discretionary expenses such as corporate gifts and dining out.
Kim Ann Engineering’s annual company dinner is usually held at a hotel but Lau opted to have it at the National University of Singapore Society's clubhouse last year.
Pacific International Lines managing director Teo Siong Seng said the company is being more discreet in its spending. such as entertaining clients only when needed.
The shipping industry has been hit by the slowdown in global trade and Teo said his company has outsourced labour-intensive manual work to centres in India and China.
He expects the company's cost-management efforts to be temporary.
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