Singapore’s MRO sector is seeking to remain competitive by moving up the value chain and conducting more design engineering work and manufacturing.
The city-state has difficulty recruiting technicians locally because Singaporeans generally gravitate toward higher-paying, higher-skilled MRO jobs such as engineering.
The country has overcome its immediate shortage of technicians by supplementing its workforce with overseas technicians, mostly from China and the Philippines, on temporary contracts.
But this is hardly a long-term solution, and with more MRO companies in lower-cost countries offering airframe heavy maintenance, it is becoming harder for Singapore’s MROs to compete.
MROs here are responding by moving into market segments that are less price-sensitive and where they can add value.
ST Aerospace, one of the world’s largest third-party MROs, is taking that route by expanding its passenger-to-freighter conversion business. The company recently launched the A320-family passenger-to-freighter conversion program with Airbus. ST Aerospace already has an agreement with Airbus for A330 passenger-to-freighter conversions, and it performs conversions for Boeing 757s and 767s.
For the A320 program, “Airbus will provide us with the data ,and we’re the one doing all the engineering work,” says ST Aerospace President Lim Serh Ghee.
Airbus, which has dedicated a large portion of its engineering resources to new aircraft programs, was pleased to partner with ST Aerospace to supply the engineering manpower needed.
“We have a very strong engineering capability compared with other MRO companies. The engineering capability puts us above [them],” says Lim.
He also says the passenger-to-freighter conversion business helps the company gain even more airframe heavy maintenance work because heavy checks can be done concurrently with the freighter conversion.
“The initial work on the A320 passenger-to-freighter conversion program will be done in Singapore, but the work can actually be done at any one of our facilities worldwide,” namely Singapore, China and the U.S., says Lim. “One of our advantages is our geographic spread. We can do the conversion [near] wherever the aircraft are.”
The first A320 converted freighter is scheduled to go into service in early 2018, says Lim, who declines to name the launch customer.
ST Aerospace—through the auspices of Germany’s EFW, of which it owns 55%—is responsible for the A330 passenger-to-freighter conversion program. The launch customer for the -200 model is EgyptAir; it holds a firm order for two and options for two more. Entry into service is slated for the end of 2018.
But the -300 model is due to enter service in 2017; ST Aerospace has yet to announce the launch customer. Lim says, “We’re in discussions and hoping that by year-end, or the first quarter of next year, we can announce who it is.”
Another high-value area in which the company hopes to expand is the business aviation sector, particularly maintenance and VIP configurations.
ST Aerospace owns Aeria Luxury Interiors, a U.S.-based VIP configuration company, as well as DRB Aviation, a U.S. company specializing in design, program management and certification of aircraft interiors, avionics and structural repairs.
Lim says ST Aerospace is in the process of establishing a business aviation aircraft interiors business at Singapore’s Seletar Airport, where it will use one of its existing hangars. The company is drawing on its U.S. experience to succeed in this segment in Asia.
The volume of work is less compared with upgrading interior cabins for commercial airlines, but the margins are much higher.
Lim says they have yet to officially launch the business at Seletar because they want to “spruce up the hangar” to have a showroom for business jet customers, but the facility has already performed maintenance and minor modification work on business jets operated by some of Singapore’s casinos.
ST Aerospace decided to make this move because of the many high-net-worth individuals in Asia who were sending their aircraft to Europe and the U.S. for maintenance and modification work.
“But we know they will be attracted to a facility in Asia that is reliable and dependable,” Lim avers.
Singapore’s reputation for reliability and dependability has attracted many original equipment manufacturers to establish MRO facilities in Singapore.
Pratt & Whitney, for example, has several engine--overhaul as well as component-repair facilities here.
Kevin Kirkpatrick, Pratt & Whitney director of aftermarket operations-Singapore, says his company chose to do business here because “the pool of talent is very strong; English is widely spoken; and there is a good education system and logistics infrastructure to support the MRO industry.”
He also says Singapore is business friendly and has an excellent legal system in place.
Many of Pratt’s MRO facilities here don’t just serve the region but the global market as well, says Kirkpatrick, who cites as an example the Eagle Services Asia (ESA) business, which is the only PW4000 MRO facility in the world. PW4000 engines from around the globe are brought into ESA, disassembled, worked on and then reassembled.
After the engine is disassembled, the different bits are sent to specialized component and parts repair shops that Pratt and its major suppliers have in Singapore. Some PW4000 cases and some life-limited parts may be sent overseas, but most of the components and parts are worked on here.
One of the country’s key advantages is that because the MRO industry has developed to such an extent, most of the work can be conducted here, eliminating the need to send so many component and parts overseas.
Singapore is also moving up the value chain by taking on more manufacturing work. Pratt has established a factory here that will manufacture GTF fan blades and turbine disks. It is one of only two sites in the world that will produce GTF fan blades—the other is in Michigan.
Kirkpatrick says the facility in Singapore has yet to make any GTF fan blades for production engines, “because it is still coming up to speed on the machining,” but the plan is for the facility to complete its first machined blade for a production engine by year-end; at that point, the facility will need to master blade assembly. The assembly process includes, for example, the application of coatings and production of titanium leading edges. The assembly-process milestone will be achieved early next year, says Kirkpatrick.
Another aspect of the engine business that Pratt is working on here is Big Data. Kirkpatrick says Pratt & Whitney, tech giant IBM and the Singapore Economic Development Board are jointly pursuing how Pratt’s MRO companies can make better use of data—to track parts and inventory—when managing the volume and movement of engines through an MRO facility. He says this is a very important initiative because Pratt forecasts that the volume of engines going through its MRO facilities will increase dramatically as the GTF engine type becomes more prevalent.
Singapore is also an important MRO center for Rolls-Royce. The engine maker has two MRO facilities here, both of which are joint ventures with SIA Engineering—Singapore Aero Engine Services and International Engine Component Overhaul. The latter serves the global market.
Jonathan Asherson, Rolls-Royce regional director for Southeast Asia and the Pacific, says there are 1,200 employees within the two MRO joint ventures and a further 800 at the engine maker’s manufacturing facility at Seletar Aerospace Park.
Singapore is Rolls-Royce’s global production center for assembly and testing of Trent 900 and Trent 1000 engines. It also manufactures fan-blades in Singapore for these engine types and others.
Because the Rolls-Royce factory is in Singapore, its suppliers have set up shop here as well. U.K.-based RLC has established a facility next to the Rolls-Royce fan-blade factory, to which it will provide titanium sheets.
Singapore company Wah Son has also established a new factory at Seletar. It makes tooling such as engine stands that it supplies to Rolls-Royce.
The British engine manufacturer also announced in August that Malaysian manufacturing company UMW has won a contract to supply fan cases for the Trent 1000.
Asherson says Rolls opted to open a factory in Singapore for several reasons including: access to a skilled workforce; solid national infrastructure; respect for intellectual property rights and other legal ramifications of conducting business; a minimum of red tape; and “investment support programs, including incentive-based setups, through the Singapore Economic Development Board.”
Rolls-Royce also values Singapore as a center for research and development. It has a technology center here and works with the national Agency for Science, Technology and Research as well as the National Technology University (NTU) and National University of Singapore.
“We are developing new repair techniques. For example, we are looking at ways to automate the preparation process that fan blades require before undergoing repair. Also, when we apply coatings on some engine parts, we need to mask certain sections of the part. We are looking at ways to automate that process.”
Asherson says some of the research projects Rolls-Royce is working on with NTU include: power electronics and controls, computational engineering, and precision manufacturing.
Rolls-Royce recently established a customer service center here for the Asia-Pacific region, the first of its kind, according to Asherson. He says the company is now looking at establishing other centers in other parts of the world, such as North America and the Middle East. “These centers are able to engage customers on a technical level. The centers encompass engine health monitoring, fleet planning and operations planning,” and other areas of interest.