IT is too early to revise national targets for productivity gains, said Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam yesterday.

Mr Tharman, who is also the chairman of the National Productivity and Continuing Education Council (NPCEC), was speaking at the sidelines of a visit to two local small and medium-sized enterprises (SMEs) in the precision manufacturing sector operating in JTC Space @ Tanjong Kling, one of the next-generation factories being rolled out. Firms in the precision engineering and food manufacturing sectors provide examples where productivity has increased by more than a quarter in just four years, noted the minister, even as he acknowledged that overall productivity figures are still weak.

"One reason is construction, which has been a laggard," said Mr Tharman. "But, for the non-construction sectors, they are no longer at zero per cent . . . There are a lot of stories on the micro level, so you just have to wait for them to filter through the system as a whole."

One of the SMEs visited, Chan Kian Metal Works, designs and fabricates hydraulic manifolds with integrated circuits used in offshore/marine equipment and construction machinery. Upon moving into the facility in January this year, the company installed a goods handling system within their three-storey factory which has enabled them to integrate their production line vertically through the movement of raw materials and final products between floors.

This, says the company, has allowed it to enjoy immediate improvement in land productivity by three times. The unit also provides the company with sufficient space to take on higher value-added activities such as the sub-assembly of hydraulics systems. The result is an increase in production space of about 300 per cent which outpaced rental increase of 40 per cent. The other SME, Delta optics, manufactures lens moulds.

JTC Space @ Tanjong Kling is developed by JTC Corporation and comprises 18 units of three-storey factories. The project incorporates structural provisions to allow companies the flexibility of installing their preferred material handling systems to move goods and machinery between floors. As operations can now be integrated over multiple floors, companies enjoy lower land rentals without sacrificing their gross floor area, optimising industrial land usage.

On average, industrialists located there have been able to lower their land rental costs by about 30 per cent, reduce set-up cost, and improve land productivity, thereby enhancing their competitiveness in the process, said JTC. Certain industries are growing their productivity rates faster than others and likewise, within industries, certain firms are moving faster. It is simply a matter of time before the firms that are upgrading gain market share and begin to exert pressure on their peers, said Mr Tharman.

"Then, you find that the whole industry starts moving to a different beat," he said.