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Posts Tagged ‘SMEs’

What Big Ass teach our govt and SME employers

In Corporate governance, Economy on 20/08/2014 at 4:25 am

The recent dip in labour productivity has the govt denying that restructuring is a failure. This and PM’s NDR speech reminded me that on 7 May, BT reported:  The government will help small and medium enterprises maximise their local and foreign workers’ contributions, amid the ongoing manpower crunch*.

They also reminded me about an article I had read about a US SME.

Big Ass is a US manufacturer of industrial and commercial fans. It makes its fans in the US (a high wage country), pays workers’ well (almost 30% above the national average wage, and nearly 50% above the Kentucky average) and is profitable and thriving. Surely it can teach the govt and our local manufacturers something about productivity in a high-wage environment?

The firm pays almost 30% above the national average wage, and nearly 50% above the Kentucky average. It also returns 30% of profits to its 500 employees in the form of bonuses or share programs. As a result, it can hire the best people, and keep them: in 2013 its retention rate was 88%, compared with a national average of 62%. It also gets a lot out of its workers: productivity is up by 175% since 2009 on one industry measure. Any profits that aren’t returned to workers are ploughed back into the firm. “If we have any money over at the end of the year, we’ve missed an opportunity to invest,” observes Mr Smith.

No rocket science or magic formula. It’s about paying gd wages and reinvesting in the biz, not being mean on wages, so that the SME owner can buy more properties or new super cars.

And its about growing “our own timber” (Ngiam Tong Dow, remember him?, not importing FTs:

Mr Smith’s biggest challenge today, he believes, is ensuring that Big Ass becomes what he calls “a 200-year company”. Part of that is down to people: he believes in hiring out of college, and moving those new hires through a range of different jobs. “We want young people to understand the whole company, because they’re going to be running it 40 years from now,” he says. Another part is hardwiring long-term thinking into the firm’s processes.

It’s also about spending on R&D

Big Ass invests nearly 9% of its revenues in R&D, more than twice the manufacturing-industry average in America. A lot is spent on hit-or-miss blue-sky research.

And it’s always about the long term future (think LKY in the 60s, 70s and 80s):

Privately held firms are not subject to the short-term whims of shareholders, but they face their own hurdles. Mr Smith’s son, Tristan, works for the company, but will his heirs want to cash out, offshore production or change the culture? To ensure that the firm’s values endure, Mr Smith is exploring ways to separate management and ownership, and embed the way the company does business into its formal structure. He has spent a lot of time looking at long-lived firms in Germany, Japan and elsewhere for inspiration. “For me, this is the most complicated and difficult problem to solve.”

http://www.economist.com/blogs/schumpeter/2014/04/making-it-america

If Big Ass was a local SME, it would have brought in FTs by the container-load so that the owners could buy that Ferrari and luxury pent-house.

—-

*This was Prime Minister Lee Hsien Loong’s assurance to firms at the Malay-Muslim Business Conference held on Wednesday.

He said the government cannot ease up on the limits it has imposed on foreign worker inflows to Singapore.

However, Mr Lee added that the number of foreign workers in the country is still growing, though not as fast as before. [Interpretation: FTs will grow by the 747 and A380 cattle class, not by the container-load.]

He noted that small businesses are very worried about manpower and that many of them want more foreign workers. Those unable to find workers have had to turn away business.

Mr Lee’s advice to firms was to offer higher wages and exciting jobs as the best way to attract good people.

He noted that this is only possible if companies raise productivity and climb up the value chain.

Mr Lee said firms can tap the various government schemes available to do that.

He also encouraged companies to venture overseas, with the government’s help.

 

SCCCI SME Survey proves LKY’s point?

In China, India, Indonesia, Malaysia, Vietnam on 17/08/2013 at 1:41 pm

Indonesia has overtaken China as a preferred investment destination for small and medium-sized enterprises (SMEs), This was a key finding of the Singapore Chinese Chamber of Commerce and Industry (SCCCI) SME Survey 2013, which polled 516 companies in June and July.

Of the 63% SMEs which are venturing into markets abroad, 39.9% favour investing in Malaysia and 28.1% Indonesia, a hair’s breadth more than the 27.2% looking towards China.

One reason given is that as the Chinese economy develops and wages rise, Indonesia could stand to position itself as an undertapped source of low-cost labour. As I blogged here, a few days back, LKY said that SMEs would flee S’pore if FTs were not allowed in by the cattle-truck load: they want cheap labour. The survey indicates that securing cheap labour is all that SMEs care about?

Other Asean-round up news:

Express link to KL

M’sia should talk to billionaire inventor Elon Musk. He wants to build a Hyperloop that would cut travel time between SF and LA to 35 minute. 12 minutes to KL based on the 35 minutes time

http://www.bbc.co.uk/news/technology-23681266

Shrimps

THe US Commerce Department declined to set duties on shrimp imports from Thailand and Indonesia. It has imposed duties on shrimp imports from five nations.

The ruling applies to about US$2bn of shrimp imports, from India, Ecuador, China, Malaysia and Vietnam. The Commerce Department found that those nations had been subsidising their shrimp producers.

Malaysia faces the highest duties of up to 54.5%, the lowest were set for Vietnam which faces duties of up to 7.8%.

A final approval is needed by another government body, the International Trade Commission (ITC), before the duties can take effect, The ITC will consider whether US producers have been threatened by the imports and make its decision in September.

Fighting inflation the Indon way

Bit like the way they fight the haze: wayang all the way.

Indonesia’s central bank held its benchmark interest rate on Thursday and took steps to contain loan expansion to battle inflation without taking any more steam out of slowing economic growth.

Many economists do expect another rate hike later this year but the central bank faces a tricky combination of surging prices, a falling rupiah, a stubborn current account deficit and slowing economic growth.

SMEs: Problems getting finance, but govt U-turn on FTs?

In Banks, Economy on 31/01/2013 at 4:53 am

http://sbr.com.sg/financial-services/news/over-half-singapore-smes-application-financing-got-rejected-in-2012

And wonder if the SME financing target mentioned in this BT report from sometime in the middle of 2012, was met. As not heard any more, I suspect not.

UP to $175 million of the $250 million the government has earmarked for investment in small- and medium-sized enterprises under the first phase of its public-private co-investment funding programme for local SMEs will be seeded with private equity funds by year-end.

The programme includes a fund-of-funds called the SME Catalyst Fund, which the $175 million investment falls under, and a direct co-investment fund called the SME Co-Investment Fund.

This means that some $350 million will be placed with the PE funds by the end of this year for investment in SMEs, as the private sector has to match dollar-for-dollar what the government is putting with the PE funds.

The $350 million is part of the first phase of the co-investment fund that is expected to come up to $500 million – $250 million from the government, and the other half from private sector capital.

As to whether the White paper on population reflects a U-turn on the policy of starving SMEs of cheap FTs, only time will tell. Watch and wait. Remember the WP was bitching in parly about the shortage of labour among SMEs. Chinese-owned SMEs fund the WP.

Time for a SME bank?

In Banks on 22/09/2012 at 5:58 am

Even the  govt in UK is setting one up to bring together ‘alphabet soup of existing schemes’ http://www.guardian.co.uk/business/blog/2012/sep/03/business-bank-george-osborne.

http://www.bbc.co.uk/news/business-19641548

We too have  ‘alphabet soup of existing financing schemes’ to help SMEs. But SMEs are always asking for more for whatever reason.

And this. A new institute has been set up to offer subsidised business consulting for SMEs. United Overseas Bank (UOB) and the Singapore Management University (SMU have set up the UOB-SMU Asian Enterprise Institute,  which aims to equip local firms with information and expertise to help their regional expansion.http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1227153/1/.html

A reason not to help SMEs

In Economy, Political economy on 09/03/2012 at 7:43 am

Well when PAP and WP MPs. SDP activits and Tan Jee Say are worried about the fate of SMEs,all saying shumthing must be done to help the SMEs, then something must be done to help them?

Maybe not: Where small firms are most common, as around Europe’s southern periphery, their prevalence is sign of uncompetitive markets and low productivity … examines the problem of the stunted European business http://www.economist.com/blogs/freeexchange/2012/03/productivity

Ah, what about the German SMEs? Well the Germans are different. They stated two world wars in the 20th century, lost both of them but 67 years after failing to create a Third Reich is now the dominant European power; restructured their economy when Eurozone interest rates were too high for Germany (they cut real wages and welfare payments, and raised productivity, unlike the lazy, lying, thieving Greeks who only know to riot, lie and steal); and sell to China the machinery to make goods that China exports.

S’poreans are not Germans. For starters, the German government, like the Germans, doesn’t believe in FTs to solve Germany’s vanishing workforce problem: 20% over the coming decades. The Germans believe in robots and moving manufacturing to eastern Europe (their M’sias and Indonesias).

Also unlike our SMEs, the most succesful German SMEs are global leaders in their very specialised fields. Finally most of our SMEs would not fit the German definition of SMEs. Ours would be classified as micro enterprises

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