29 September 17 The Business Times by AMIT ROY CHOUDHURY
LAST week's launch of the Electronics Industry Transformation Map (ITM) by Minister for Trade and Industry (Industry) S Iswaran has been welcomed by the electronics cluster as a step in the right direction to prepare the sector for the changes that are sweeping through it, thanks to Industry 4.0. Within the manufacturing sector, an ITM for the precision engineering cluster was launched last year.
The electronics manufacturing cluster is the glamorous part of the manufacturing sector which is why the ITM for the cluster has garnered a lot of visibility. In 2016, electronics manufacturing accounted for 4.4 per cent of Singapore's GDP (gross domestic product), contributing close to S$90 billion in manufacturing output and employing about 70,000 workers.
ITM will use a two-pronged strategy to ensure that electronics continues to grow, with the aim of a manufacturing value-add of S$22.2 billion and 2,100 new PMET (professionals, managers, executives and technicians) jobs by 2020. According to the Singapore Economic Development Board (EDB), the manufacturing value-add for the sector in 2015 - the latest year available - was S$19 billion.
In order to understand the ramifications of the electronics ITM, one needs to first understand what is Industry 4.0.
A problem with the technology sector has been that it has a penchant for fancy acronyms and terminology to describe technology trends. As a result, the implications of these trends are not always clear to people who are not part of the sector. The cascading effect of this is, while the government and experts get it, it is often hard for an outsider to understand why a particular policy decision - in this case, the electronics cluster ITM - is so vitally important for Singapore's growth.
As a result, a couple of questions arise. One is, does Industry 4.0 only affect the electronics manufacturing sector? Actually, it doesn't. Industry 4.0 is one of those disruptions that affect every cluster of manufacturing.
The ITM is focused on a sector that employs 70,000 workers, out of around 491,600 that are employed in activities that are categorised as manufacturing in Singapore. Manufacturing itself accounts for 13.4 per cent of Singapore's workforce, while services takes the lion's share at 73.1 per cent.
So why is the electronics cluster so important? To answer this, let's look at just what Industry 4.0 is.
A good working definition is the fusion of automation, robotics, sensors and data networking in the manufacturing process to build a "smart factory". This is a factory where systems and processes monitor production and a host of other things. At times, these systems and processes can take action based on data analysis, sometimes without human intervention.
The individual parts that make Industry 4.0 possible, such as robotics, sensors, automation, mobile and data analytics, to name a few, have been around for some time. However, what's new is the fusion of these technologies into one system; this is a case where what we get from the sum of all the parts is greater than the individual parts themselves.
The central point is that Industry 4.0 is changing the way a modern factory functions and workers as well as managements need to learn new skills and new ways of doing their jobs. In many cases, human machine interface (HMI) solutions in their manufacturing processes will become the norm. Adjusting to such a new reality requires a lot of adaptation and training.
This why the ITM for the electronics cluster is so important. To look at size comparisons, in terms of employment, of the electronics cluster vis-ï¿½-vis the entire manufacturing sector is a case of missing the big picture.
The electronics cluster plays a big role as a driver of growth. According to government numbers, the manufacturing sector grew by 3.6 per cent in 2016, a reversal from the 5.1 per cent decline in 2015. This growth was underpinned by contributions from three clusters: electronics, biomedical manufacturing (BMS) and precision engineering. Out of these three, electronics contributed 4.4 percentage points (pp) to the overall manufacturing growth. Biomedical contributed 2.6 points and precision engineering, 0.1 point. This shows the importance of the electronics cluster.
The other reason for focusing on the electronics sector is that it has a head start in technology proficiency. It is a cluster that has reinvented itself several times, going up the technology value chain, to stay relevant and improve productivity. It has shown the chops to adapt and grow as technology changes. Success in Industry 4.0 is also underpinned by an innovation culture where new skills and technologies are put to use for new outcomes and here again, the electronics cluster has shown the ability to innovate.
Under the electronics ITM, the government will work with companies to improve their manufacturing efficiency and adopt advanced manufacturing technologies. The ITM targets for 100 per cent of manufacturing plants in Singapore to be best-in-class compared to their global operations. It is hoped that advanced manufacturing will also bring about new skilled job roles in manufacturing such as systems engineering and automation.
For the ITM in the electronics sector to be successful, it will have to be a collaboration between all stakeholders - the government, research and tertiary institutions, industry associations, employees and managements. A successful electronics ITM will ensure that a vital sector of the Singapore economy remains globally competitive and contributes to the GDP. It will also serve as a test-bed to develop the methodology as well as expertise - especially in reskilling the workforce - to pull the entire manufacturing sector into Industry 4.0.
That's why it's vital that the ITM delivers on its promises. Singapore's continued mastery over manufacturing hinges on its ability get the electronics cluster world-class in Industry 4.0.