Date Published: 02 Jul 2001

Mr Sadanori Sakamoto, Chairman , NH Techno Corp

Mr Shigeru Asanuma, President, NH Techno Glass S'pore

Mr Hiroshi , President, Hoya Corporation Mr Shinkichi Shono, EVP

Mr Teo Ming Kian, Chairman EDB

Ms Chong Siak Ching, CEO Ascendas

Distinguished Guests, Ladies and Gentlemen

1. A couple of weeks ago, I read on FT.com that there were 18 major job cuts in the IT and electronic industries in the month of May. The list included leading corporations such as Dell (4000 jobs, 10% of its workforce), 3Com (3000 jobs, 30%), Siemens(2000 jobs, 1%), Semiconductor(1100 jobs, 10%) and EMC(1100 jobs, 4%).

2. Last Friday, I made another check. There were more job cuts in the month of June. 11 of them. When I checked again the next morning on Saturday, there were two more added to the list. The size of job cuts appeared to be getting bigger. For example, Solectron cut 11,500 jobs, 14% of its workforce; Nortel Networks - 10,000 jobs, 10%; Agere Systems (a spin off from Lucent Technologies) - 4000 jobs, 25%; Cap Gemini - 2,700 jobs, 6%; Maxtor -1500 jobs, 15%; Level 3 Communications -1400 jobs, 24%; and Philips -1200 jobs, 1%.

3. If we add up the numbers, the global IT and electronic industries have lost about 55,000 jobs in these past two months. The worst is probably not over. The global picture is likely to get worse before it gets better.

4. As an open economy and exported oriented industry, Singapore will be affected too. Maxtor has retrenched 700 workers. Last Friday, cut 550 jobs in a revamp of its colour television operations in Asia.

5. However, it is not all gloom and doom. We are also seeing new investments and job creation during this period of slowdown. Just last month, Corporation and Matsushita Electric broke ground for the construction of a new plant at a cost of S$1.85 billion to produce Thin Film Transistor - Liquid Crystal Display (TFT LCD) in Singapore.

6. Today, we witness yet another significant event with the opening of NH Techno Glass' S$300 million TFT LCD mother glass plant. This new plant manufactures 4th generation mother glass that is larger in size and better in performance and quality. It will have the capacity to employ 300 persons and produce 240,000 pieces of mother glass per month, enough to make 1 million units of 20-inch laptop panels by 2005.

7. Some may wonder, what these job cuts and job creation mean to us, especially to those who are concerned about being retrenched and finding employment. I think these developments convey three key messages.

8. The first key message is that the global electronic and IT industries are going through a cyclical downturn, and the downturn is not over yet. Consumers are not spending more. There is excess capacity in the global supply chain today. As the slowdown becomes more protracted, more corporations are forced to downsize their production capacity to cut cost. Hence, the loss of 55,000 jobs in just two months, with more to come.

9. The second key message is that the impact of this cyclical downturn in the global market is more than just cyclical and short term in nature. It is structural with long term implications for countries and economies. Yes, many of the jobs lost in this cyclical downturn will come back again when the global market recovers. But no, they are unlikely to go back to the same locations. In other words, a cyclical downturn in the global market has led to a faster pace of restructuring in the global configuration of industry.

10. For example, the move of colour TV operations out of Singapore by Hitachi is not a cyclical move. It reflects a structural change in our industry. It is important that we make this distinction. Workers who were retrenched by Hitachi's colour TV operations will need to move on to jobs in other areas, because their old jobs in colour TV operations will not come back again when the downturn is over.

11. The third key message is that notwithstanding the cyclical downturn in the global market, there are still new growth opportunities for us to pursue. Investments will continue to flow and jobs will continue to be created globally because consumers are still buying. The global market will also recover and turn around one day. Hence, while the overall level of global investment flow may decline for a short while, it does not drop to zero. We must therefore remain focussed on building new capabilities in our economy, nurturing new mindsets in our business enterprises, and upgrading the skills profile of our workforce. By staying focussed and working in tandem, we stand a much better chance of being able to compete successfully for some of these new and better investments, thereby creating more and better paying jobs for our people as we go through this global cyclical downturn.

12. EDB and various economic agencies are constantly seeking to nurture new growth sectors and seize new opportunities. The LCD industry is one such area as it is in line with our objective to develop the advanced display cluster in Singapore. Starting with assembly and test of electronic products in the 60's, we have moved into wafer fabrication and IC design in the 80's. Last year, the semiconductor industry produced an output of S$25 billion. With this strong foundation, we are well positioned to leverage on our industrial capabilities and enter the LCD industry. 13. Our cluster development strategy for the LCD industry is comprehensive and holistic. It addresses the needs for seamless industry integration, a strong base of supporting industries, efficient infrastructure, cutting edge manpower capabilities, and a fast pace of innovation.

14. Since September last year, JTC Corporation has been working on the setting up of a 35 hectare Advanced Display Park in Tampines. This project is progressing on schedule. The Park will provide prepared land and infrastructure for LCD companies to enjoy faster start up.

15. We have also built up a strong base of supporting industries. The extensive network of semiconductor supporting companies in Singapore now has the capability to support 14 wafer fabrication plants here, as well as other plants in the region. They are able to provide specialised support to the LCD industry in areas such as process chemicals, specialty gases, wastewater treatment and engineering services. The establishment of this mother glass plant in Singapore is another major step forward for our LCD industry. It will offer LCD players a significant competitive advantage because mother glass is the key starting material for LCD fabrication.

16. To meet the manpower needs of the LCD industry, our tertiary institutes have been working closely with the industry to produce the right skill sets in our workforce. They are putting in place modular courses in LCD technology to train 1,000 engineers and technicians every year. Our universities have already started to conduct undergraduate and post-graduate courses. Starting from this month, classroom and hands-on courses are being conducted in three of our polytechnics - Singapore, Ngee Ann and Temasek. Nanyang Polytechnic will join in July 2002. By January 2002, the Institute of Technical Education will also start a new LCD module at the vocational training level. Singapore Polytechnic also has plans to set up a Display Technology Laboratory to provide training in cell and LCD array process, as well as hands-on training in LCD fabrication.

17. Last but not least, we are also strengthening our capability in value creation. EDB is in discussion with leading LCD players to undertake technology development and innovation development in Singapore in areas such as LCD materials know-how, panel design and improved production technology. Over time, we intend to expand into other fields of advanced display such as organic light emitting displays and new display materials. This ability to contribute to the development of intellectual property will enable our manufacturing sector to pursue new dimensions of growth in a more sustainable manner, and address both short and long term needs of a knowledge-intensive and innovation driven LCD industry.

18. In conclusion, while there is not much we can do to alter the course or change the pace of the global cyclical downturn, there is much we can do to improve the competitive positioning of Singapore in the global economy. As we go through this cyclical downturn, our challenge is to minimise the threat of hollowing out existing industry, and at the same time, maximise the opportunities presented by new growth sectors.

19. The development of the LCD cluster in Singapore at a time of a cyclical downturn is a case in point. We are glad that NH Techno Glass has chosen Singapore as the site for this 4th generation mother glass plant. It is a major step forward for us in the development of a new display cluster. I believe it also holds special significance for NH Techno Glass as it is the first overseas plant that is fully integrated, covering both backend cutting and frontend melting processes. As we forge new frontiers together as partners, I assure you that the Singapore government and our economic agencies such as EDB and JTC are fully committed to the long term growth of the LCD industry.

20. Working in partnership, I am confident that we can achieve sustainable growth in the LCD industry for many more years to come as we ride through the ups and downs in the global electronic sector.

21. It now gives me great pleasure to declare open the new NH Techno Glass Singapore LCD mother glass plant. I wish you great success.