Once touted as future of construction, high-tech precast factories struggling

Storage bottlenecks, competition from Malaysia and changes to government policies, among other things, have made it difficult for firms running integrated construction and prefabrication hubs to turn a profit.

- Wong Yang

Some weeks in an industrial area in Singapore, a public road fills up with as many as 20 illegally parked trailers loaded with building components.

These concrete components are meant for a construction site, where they will be stacked like "Lego pieces" to build homes and offices.

But contractors who ordered them have refused to take delivery because of building delays.

The factory that makes these concrete parts - known as an integrated construction and prefabrication hub (ICPH) - leaves them outside on the road at the risk of fines because it is cheaper to store them there.

"We used to get fined quite often (for the illegal parking)," said an executive from the ICPH, who added that the fines typically amount to about $100 per trailer.

"But we figured it was cheaper to be fined than to try and rent land on a temporary occupation licence, given how expensive and scarce land is here."

Dealing with delivery bottlenecks and scrambling to find room for storage is one of the various challenges that come with running an ICPH here.

These multi-storey, high-tech factories use automated systems to produce precast components concrete parts of a building like walls, facades, bathrooms and household shelters that are made offsite, delivered to construction sites and assembled there.

ICPHs can produce precast components two to three times faster than traditional open precast yards, where workers manually pour concrete into moulds.

But despite an ongoing construction boom, firms that run these ICPHs which can cost over $100 million to build say storage bottlenecks, competition from Malaysia and changes to government policies have made it difficult to turn a profit.

Their struggles illustrate some of the difficulties Singapore faces in boosting productivity in construction, which has long been dependent on foreign labour.

BUSINESS LOSSES