The Business Times – Going the distance to fuel production, value

Bus-maker SC Auto moved its manufacturing plant overseas to increase its production capacity and make room for more value-added activities in Singapore. Fiona Liaw finds out how they broke the geographical barriers to venture into Myanmar.

While many firms struggle with raising demand for their products, SC Auto used to face the opposite challenge:

The bus-maker lacked the capacity and manpower to handle the sheer volume of its business.

“The younger generation is not interested in this sort of work,” lamented Mr Tan Siow Chua, chairman of SC Auto Industries (S).

The firm’s difficulty in finding suitable labour, coupled with land constraints in Singapore, made it challenging for it to increase its scale of production here.

SC Auto had grown steadily since being established in 1981. Although initially a private transport provider for schools and chartered buses, in 1992 the company moved into the market for bus design and body building as well.

Its goal, from the start, was never to compete based on price but to focus on quality. With this vision at the forefront of its strategy, SC Auto quickly built a reputation for high-end products boasting both reliability and durability.

Today, SC Auto is a one-stop shop for bus owners. Apart from designing, manufacturing and selling buses, the firm also provides hire purchase financing, vehicle insurance and claim services, as well as accident repair and after-sales services.

Aside from servicing the Singapore market, SC Auto also has a branch in Hong Kong, and approximately 50 per cent of its products are exported to countries such as China, Myanmar and Indonesia.

But as the firm’s client base and reputation grew with time, its production line struggled to keep up. Mr Tan realised that in order to meet demand, he would have to relocate SC Auto’s labour-intensive manufacturing plant overseas.

The benefits, he felt, would be twofold. First, in a country with better access to land and labour, SC Auto would be able to increase production to meet the demand across South-east Asia.

Second, with the labour-intensive work concentrated elsewhere, the Singapore office could place a greater focus on high-tech machinery for robotic welding and automation – hopefully attracting some fresh talent in the process.

After a period of researching overseas sites, Mr Tan set his sights on Myanmar. The newly opened-up market there welcomed foreign investment and had an abundant supply of both land and labour at a lower cost.

Also, with buses forming the primary mode of transportation in the country, SC Auto would gain direct access to a huge potential market. Mr Tan also noted that a successful move there would make SC Auto the first bus manufacturing company in the country – giving the firm a huge edge over competitors.

This potential strength, however, also turned out to be a weakness. SC Auto needed to obtain a business licence from Myanmar Investment Commission to start work, but being a first mover in the market meant that the Myanmar government was unfamiliar with SC Auto’s work. At the same time, the company found Myanmar laws equally foreign.

Mr Tan explained: “There were many departments to deal with. They had many questions and it wasn’t a straightforward process with information you can easily find online.”

His team laboured for over a year, even hiring a Myanmar consultant to help them – all to no avail.

It was only when IE Singapore stepped in that the application process became smoother. With its strong global network, the agency quickly connected SC Auto to the right parties. Within three months, SC Auto had flown to Myanmar to present its business plan and secure the necessary licence.

This, together with the IE Singapore Global Partnership Grant, enabled SC Auto to set up an office in Myanmar and locate a plot of land for a new plant that will increase its production capacity fourfold.

Construction of the plant is commencing this year and, with such high capital costs, failure is not an option.

“Every business has a different strategy, so changes depend on what their goal is and what risks they are willing to take. We will have to do the best we can,” Mr Tan said.

But with IE Singapore assisting SC Auto each step of the way – whether by introducing them to legal experts or providing regular updates on market information – the future looks promising.

“IE Singapore wants to help us grow. They help us whenever they can, and we welcome their partnership,” Mr Tan concluded.