with Chris Lee, Managing Director, Swanlin Group
The Swanlin Group started many years ago as a company doing ship blasting, painting and steelwork fabrication until its direction changed completely with a shift in focus towards electrical engineering. What pushed you to direct this change in 2004 and to look into new niches?
It was my father who started the business as a blasting company. In the recession of 1998, I went to Dubai for a few months where you could see all the rigs coming in to support the oil and gas industry. Upon my return to Singapore, I founded Swanlin2000, Swanlin International and so on. I started to recruit a lot of people and had them trained in local shipyards, so that they would be well trained by the time the company would start on its own three years later. Swanlin started taking care of all the electrical applications for the oil rigs at the KEPPEL FELS, Sembawang and PPL shipyards. After some years, the company had grown significantly. In the past year, the company has completed work on about 18 rigs with an average of 4 to 5 rigs per year.
Today you try to be one-stop-shop solution provider to the industry. What is your core competency and how do you see this evolve in the future?
Nowadays, Singapore wants Swanlin to do more research and development. Swanlin is looking into training and developing its workers to provide them with specific skills. At the moment, the market is rather quiet but the current pipeline offers sufficient work until 2012. In the meantime, because of strong manpower in the company, Swanlin decided to send half of its workforce into training while the other half is still working on the rigs for KEPPEL FELS, Sembawang and PPL shipyard. This training will allow the workers to become more productive. For the last projects covering 5 to 6 rigs, approximately 500 to 600 men were used. The aim for the future is to do the same job with less manpower.
In a 2006 interview with IE Singapore, you expressed your desire to attract the best people from within and outside the industry. How did that go so far?
Swanlin tries to attract electrical engineering students from ITE (Institute of Technical Education) by offering them a first practical experience during their holidays. After this training these students can either move on with their acquired knowledge or stay within the company and develop further, an approach that has worked well so far.
It is a known fact that Singaporean engineers are well qualified. What are the main skills of the engineers you recruit and train here?
Once the electrical system has been put in place, newly recruited engineers at Swanlin handle the automation phase to make sure the project is terminated to the needs of the owners. Swanlin wants to go beyond the electrical engineering process by providing a full service that is only complete once the ship sails out.
Your mission is also to ensure competitive pricing and project completion. How do you manage this in a cost-competitive industry where on budget and on time delivery are crucial factors?
At Swanlin, on the job management allows for budget allocation to the various supervisors in the yards, which is controlled throughout the project by weekly progress meetings. To stay on budget, it is important for the workers to be efficient and for them to not have a need for overtime work. The workforce thus needs supervisors to coordinate this on a daily basis, where the training of these supervisors is therefore crucial to the business. In addition to that, the Swanlin management goes to the shipyard very often to observe the activity at an operational level and assist in the cost control of the project. This system is robust in such a way that the budget is always set for the entire year, protecting the company from volatile conditions as observed during the global financial crisis. Continuous training further allows Swanlin to become more efficient, decrease costs and stay competitive in the industry.
Despite being a relatively small company, Swanlin has been recognized by large players such as Keppel and PPL. Why do they ask for your services and why do they trust Swanlin?
A crucial factor is that Swanlin always delivers on time. These large players have very good management teams which, combined with Swanlin’s skills, ensure successful execution. Even when the clients demand Swanlin to push a project deadline to an earlier date, it can do so because of its manpower.
Another important aspect is the skilled workforce in place. Not only does Swanlin manage a large workforce, but the workers themselves are well trained to provide quality work. This results in customer satisfaction and recommendations from the clients for future projects. Swanlin also has its own safety officer to make sure the projects are executed in an accident-free manner. This is very important to Swanlin and its customers.
Do you see Swanlin ahead of the industry safety policies, or does the company take them as a prerequisite to operate?
The company is now progressing into OHSAS 18001 which means Swanlin is recognized worldwide for its safety standards. Swanlin spends significant resources on safety of which a certain amount is subsidized by the government. It is a priority for the company.
This will obviously add to your credibility when expanding internationally. What are Swanlin’s plans to go international?
At the moment, we do not intend to expand internationally but if an opportunity arise, it would indeed be considered. Swanlin does envision to expand its activities in China and acquire some factories for switchbox systems, heat exchangers and so on. The current economic climate in China can create opportunities for Swanlin to look into new acquisition targets.
Do you aim to grow Swanlin up and down the value chain or will the company rather grow horizontally?
At the moment, the company needs a yard with about a hundred metres frontage but because of the many constraints, it has not managed to do so. This yard will enable us to under take fabrication work before handing over to the larger shipyards for implementation.
In a past interview, you commented you were expecting tremendous growth in the midst of the years 2000 and you targeted to have SGD10 million in revenue by 2007. How did that go and what is the situation today in terms of finance, revenue and orderbook?
The orderbook today is within reasonable standards, with approximately eight rigs in the pipeline. By the end of 2010, three to four of those should be completed. For 2010 and 2011, the company will be in balance and can take the time to train its people further. Next year will likely be a good year because of the problems with BP in the Gulf of Mexico. The safety standards will be set much higher while there might also be a trend towards replacing and upgrading existing rigs.
Many of the trade associations we met in Singapore informed us that Singapore is a great base to expand within the region. How does being a Singaporean company help you doing business not only in Singapore, but also in the region and all around the world?
Singapore is a good place offering strong support for SMEs that want to expand in markets like China. One strength for Swanlin is that the company knows what it wants. In China for example, the company is looking at high-end solutions such as automation, engineering and so on. This is necessary because you cannot compete on cost when you enter that market as a Singaporean company. It is crucial to offer something that the Chinese players do not have.
Looking at the company’s different projects, which elements best represent Swanlin’s capabilities?
A key aspect is what is to come in the future and what is going on today. At the moment, Swanlin is working on the new N-class rigs. This is the latest generation of rigs of which one will be completed this year and two more in 2011. These projects are very challenging for Swanlin because they require a lot of modifications.
How do you imagine the company in the coming five years?
Swanlin would like to build something of its own, such as modules for example. But again, the company will need a shipyard to do so. Waterfront land is already becoming very expensive and it will entirely depend on the government on what becomes available. In the meantime, Swanlin will keep training its human resources and take on new projects.
On a more personal note, you took the company over from your father and now your son is involved as well. What do you want to leave as a legacy?
My son is currently under training to take the company over in the future. Because of the cyclical nature of the industry, you have to be well prepared. The following year will likely become a good year for the rigs, so a lot of effort and resources will go to R&D to serve this segment better. Swanlin has people that it can grow with, and will keep doing so in the future.
If you would give advice to a foreign investor looking into setting up a business in Singapore, what kind of advice would you want to give?
Singapore is a good country to get started because the nation fosters good and hard working people. The country is very welcoming and offers a stable climate of good governance and management. In particular for the oil and gas industry, my advice is to go out of the office and into the business. I tell my son the same thing. In this industry, it is crucial to be present where the execution takes place. The most important aspect of the business is the people and by going into the shipyards, one gets to know the workers, can listen to their problems and make sure these people are trained and rewarded appropriately while in return, they work hard for the company. To maintain this policy, it is essential to have an open-door policy and transparent governance. Furthermore, by giving out bonuses for project completion and providing continuous training, the company can build a successful future.