When James Dyson, the British billionaire and inventor of the bagless vacuum cleaner, revealed his plan to construct a bagless vacuum cleaner electric automotive factory in Singaporehe raised a number of eyebrows.
Not only does the land-starved city have a number of the highest average wages on this planet, nevertheless it has also been almost 40 years since Ford closed its Singapore plant, effectively ending automotive production on the Southeast Asian island.
“It’s a bit of a surprise because of the cost base and there’s no other car manufacturing plant here,” said Shantanu Majumdar, regional director at consulting firm J.D. Power.
Dyson said on Tuesday (Oct. 23) that the choice was based on supply chains, access to markets and availability of experience, which offset the fee factor.
But what other aspects may need influenced this decision? Why not go straight to the world’s largest electric vehicle market, China, like rival Tesla?
Here are some less obvious benefits and drawbacks:
1. HIGH COSTS V GENEROUS INCENTIVES
According to research by Deutsche Bank, in comparison with other cities on this planet, Singapore has a number of the highest average after-tax salaries on this planet. Land available for industrial use is scarce and expensive, so it ranks high in overall cost of living indicators.
However, beyond expert engineers and scientists, for a high-tech company like Dyson, Singapore offers generous incentive programs.
Some programs include tax credits for five years with an option to increase them, and grants that may cover as much as 30 percent of the fee of projects that improve business efficiency. Singapore declined to comment on whether Dyson had benefited from such programs.
To boost productivity in its manufacturing sector, which accounts for lower than 1 / 4 of its output, Singapore has focused efforts on attracting high-end manufacturers and those that implement automated production processes.
/https://www.thestar.com/content/dam/thestar/business/technology/2018/10/23/dyson-to-build-electric-car-in-singapore-aiming-at-china/dyson.jpg "In this file photo taken on October 11, 2018, British industrial design engineer and Dyson founder James Dyson poses with products during a photo shoot at a hotel in Paris. British electrical pioneer Dyson said it has chosen Singapore as the location for its first electric car factory. Photo: Christophe Archambault/Getty Images")
2. SMALL MARKET V CHINESE GATE
Dyson could have chosen to supply electric cars in Singapore, but few individuals are more likely to drive here – or anywhere in Southeast Asia, for that matter.
The number of personal electric vehicles in Singapore is in the only digits, and Tesla CEO Elon Musk has criticized Singapore for its lack of support for electric vehicles.
Singapore is one of the vital expensive places on this planet to own a automotive because the federal government tightly controls the vehicle population, charging owners a variable rate for the appropriate to own and use a vehicle for a limited variety of years.
By comparison, sales in China are forecast to succeed in nearly 700,000 vehicles this yr, greater than double the combined sales from the United States and Europe.
But with considered one of the world’s busiest ports on its doorstep, Dyson can roll a automotive off the production line in Singapore and be on its method to China or other major EV markets like South Korea or Japan inside an hour.
3. KNOWLEDGE V A NEW FRONTIER
Dyson’s history in Singapore probably also played a job.
It already employs 1,100 people in Singapore and produces 21 million digital electric motors per yr. It also has production centers in Malaysia – connected to Singapore by two road bridges – and the Philippines.
“It’s a surprise, in fact, but since Singapore is in the center of Southeast Asia, Dyson can be one of the best place to source many components from neighboring countries and locally assemble and produce a high-tech automotive here,” said a company banker who deals with multinational firms within the region.
Another option for Dyson might have been to follow rival Tesla into its largest market, China.
But China is becoming a crowded marketplace for electric vehicle production, and the federal government is cutting back on subsidies.
Meanwhile, Singapore has an in depth free trade agreement with China that features various kinds of cars and auto parts in a tariff reduction schedule.
J.D. Power’s Majumdar said mental property can be one other factor Dyson will consider.
“Intellectual protection in Singapore is very strong… This is definitely an advantage. Being in China… you might not feel very comfortable about it.”
Source : Reuters
