Aerial view of Singapore airport Wikimedia Commons

Singapore Retains Edge As MRO Hub, Experts Say

The labor rates in Singapore are rising, so will this bode poorly for MRO there?

HANOI —Despite rising challenges from other countries in Southeast Asia, Singapore’s MRO industry is still regarded as having valuable advantages and scope for growth. 

A common perception about the well-established MRO sector in Singapore is that labor costs are higher than elsewhere in the region, and space for new facilities is limited. However, industry experts speaking at Aviation Week’s MRO East Asia conference stress that other factors offset labor costs, and new development projects will allow for growth.

Several Asian countries are attempting to grow their MRO industries to replicate the success of Singapore and Hong Kong in this sector. They often have much lower labor costs than Singapore, and fewer geographical constraints.

Werner Aero Services CEO Mike Cazaz says the cost of running a business in Singapore is increasing, particularly because of personnel expenses. This is encouraging the MRO industry to expand towards other countries, particularly Malaysia.

Labor cost is a very important element for MRO businesses, says Martynas Grigalavicius, CEO of FL Technics Asia. However, he notes that other countries in the region are beginning to catch up to Singapore in this regard.

Singapore is starting to lose marketshare to countries such as Malaysia and Indonesia, points out Rahul Shah, AAR Corp. senior VP. For this reason “Singapore has to be watchful of its costs.” However, Shah says Singapore has a very efficient workforce that produces high quality work, which helps offset the higher labor cost. Given this, he thinks that Singapore overall still has an edge when it comes to labor.

Government policy also plays a key role, and the Singapore government “has been very forward-looking in supporting the aerospace industry,” says Chung Mak, aviation advisor to S.F. Express Co. Ltd.

In addition, there are other factors contributing to overall MRO cost, such as customs, logistics and the availability of key support elements, Mak says. Advantages in these areas are “why Singapore and Hong Kong continue to do very well even with high [labor] costs.”

The high concentration of aerospace industry there is a key benefit as well. Only a relatively small amount of work has to be subcontracted beyond Singapore, Shah says.

Regarding the physical constraints, there is enough land development underway to cater to expansion and new entrants, says Sia Kheng Yok, CEO of Singapore’s Association of Aerospace Industries. He highlighted the Phase Three development at Seletar Aerospace Park, and in the longer term the Terminal 5 project at Changi airport that will also provide more space for MRO and other activities.

Sia noted there was a “new wave of investment” in Singapore MRO announced at the Singapore Airshow this year. “There is quite a lot of confidence in the continued viability of Singapore as a Center for MRO [business],” he says.

TAGS: Asia Pacific
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