February 17, 2003
Singapore port operator sheds non-core businesses
PORT operator PSA Corp. on Monday, Feb 17, announced its first lay offs in more than 20 years, saying it will cut 800 jobs by March amid rising competition.
"This will include retrenchment, expiry of contract, non-replacement of staff who retire or resign, as well as transfers to other organisations," it said in a statement.
Details are being worked out but the changes are expected to be implemented in March.
"We have to act now to align ourselves with the market to ensure we can respond swiftly and effectively to the fast-changing market place," said PSA chairman Stephen Lee.
He said that PSA is carrying out the job cuts -- involving 13.3 percent of the total work force of 6000 -- as a last resort.
"This is a very painful measure for all of us," he said.
Deputy Prime Minister Lee Hsien Loong, who is also finance minister, delivered the grim news of the job cuts to PSA union members on Saturday but no figures were mentioned.
The lay offs follow an announcement by PSA on Friday that it will shed its non-core businesses to focus on its main strengths.
The last time that PSA, which operates one of the world's busiest ports, retrenched staff was in 1980, when 300 employees were laid off, according to media reports.
Singapore has seen increasing challenges to its status as Southeast Asia's pre-eminent shipping hub.
The Port of Tanjung Pelepas, in neighboring Malaysia's southern Johor state, has snared two of its prime clients, Danish firm Maersk Sealand and Taiwan's Evergreen Marine Corp.
Last December, Moody's Investors Service downgraded its outlook for PSA from stable to negative, reflecting concerns about its trading environment.
PSA Corp. overhauled its strategy in the middle of last year in a bid to remain the region's transhipment center, including trimming handling charges for empty containers and offering rebates.
A BBC report, Feb 17 said Malaysia's port Tanjung Pelepas has successfully captured some of the PSA's main customers in the last couple of years by offering cheaper tariffs.
Costs in Malaysia can be up to 50% cheaper.
The situation in the port has had little impact on the country's export because Singapore is a major trans-shipment area.
"Singapore is a major entre-port centre so doesn't only handle exports," Mr Mathur said.
"The amount the port contributes to the gross domestic product figures is not very high, but the number of families dependent on people working there is significant," he added.