CARMAKER Hyundai's latest investment in Singapore could help build an ecosystem surrounding the development of electric vehicles (EV), a move that would diversify the Republic's manufacturing base while creating more high-value jobs for Singaporeans, industry observers said.
On Tuesday, the South Korean firm announced a S$400 million Hyundai Motor Group Innovation Center, which may produce up to 30,000 vehicles per year by 2025.
The 28,000-square metre facility, which will be located at Jurong Innovation District, is expected to help Hyundai pilot new manufacturing models to meet the demand for mass personalisation of cars through small-scale factories in urban areas.
Speaking at the centre's groundbreaking ceremony, Singapore's Prime Minister Lee Hsien Loong said siting the facility here takes advantage of Singapore's strengths, for example in advanced manufacturing and logistics.
"EVs have a different supply chain, fewer mechanical parts and more electronics, which plays to Singapore's strengths," Mr Lee said, adding that automotive activities are becoming viable in Singapore once again. "We did not think that Singapore would one day be manufacturing cars again. But Singapore is where we have made the impossible possible."
He noted that Singapore is "no stranger" to car production, having served as a base for car assembly for Ford and Mercedes Benz from the 1940s to 1980.
Song Seng Wun, economist at CIMB Private Banking, said this development indicates Singapore is constantly on the lookout for how manufacturing can continue to be an important growth driver, even as the country looks for ways to diversify its manufacturing base.
Noting the importance of maintaining a diversified economic structure, DBS senior economist Irvin Seah said manufacturing is what's driving Singapore's growth at the moment, given that the Covid-19 crisis has hit the services sector hard.
At the same time, industry observers said Singapore is well-placed to develop an EV ecosystem, while attracting wider green manufacturing activities, given the conducive business environment that houses researchers, technology partners and skilled labour here.
"The fact that these products are not low cost means the cost factor doesn't play that crucial a role, and hence Singapore still has its advantage," Mr Seah said, noting that critics have long said the Republic is "too expensive" for manufacturing activities.
Instead, Hyundai's decision to set up a facility here reaffirms multinational corporations' confidence in Singapore's manufacturing sector and its overall value proposition.
PM Lee - noting that global companies that produce automotive electronics like Delphi and Infineon have been in Singapore for some time now - said he hopes this will open up new growth areas for the economy and create exciting jobs for Singaporeans.
"Young Singaporeans may not have these skills in the first instance, but they will learn from the engineers that you bring here from Korea and elsewhere in the world, as we did in the past," Mr Lee said, adding that he is confident in building up a Singaporean workforce with these skills.
Kevyn Yong, chief learning officer at the Singapore Institute of Management, believes an EV innovation cluster would be able to enjoy synergy with the existing aviation innovation cluster in Singapore.
Giving an example on the development of batteries, Dr Yong added: "The kind of thinking and problem-solving it takes to making an aeroplane fuel-efficient can be transferred to making an electric car battery-efficient." This presents an opportunity for Singaporeans with deep skills in other manufacturing industries to shift and innovate in a new industry, he noted.
© 2020 Singapore Press Holdings
This article was written by Sharon See from The Singapore Business Times and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.
