Manufacturing Company Case Study: a Frontken Corporation

This case study conducts an in-depth research on Frontken Corporation, the objective is to discuss their key factor of their success and further investigate the business capabilities and potential of the company, and what challenges will it face with the rising of Industry 4.0

Founded in 1996, Frontken Group started off as Frontken Singapore Pte Ltd, operated in a rented factory space with merely 12 workers. Frontken only grew from there to become a top service provider for various industries internationally which includes semiconductors, power generation and oil and gas services. For a long time, companies have relied on Frontken for their support as it has helped them push the limits of what is conceivable by reinvigorating their parts and equipment. With the trustworthiness for brilliant results, Frontken was privileged with continuous development since it kicked off in 1996. Adaptation and adjustment were their biggest test and Frontken has demonstrated on numerous occasions to have the option to give the best answers for its clients for any industry. Today, boasting more than 1000 employees internationally, Frontken remains providing the best possible engineering solutions for industrial challenges throughout various sectors. (Frontken Corporation, 2018)

Frontken would be classified as a service led producer. They are a trusted technology partner and service provider to the global semiconductor industry. A leader in providing next generations of precision cleaning and coating technology to their customers, allowing customers to enter production quickly with their services and provide customers with competitive advantage in their products and yield performance.

Capabilities and Technologies for Delivering Their Business in Singapore

Precision cleaning is a cleaning process where cleaning is done to a specific standard, making sure that there are no leftover microscopic particles or contaminants. Components that operates in heavily regulated environments require high level of cleanliness. Precision cleaning is a prerequisite for newly-manufactured parts prior to assembly in many high-tech precision industries, this delicate process is also a routine maintenance activity that prevents particle contamination on valuable products that can be costly to manufacture. Effective precision cleaning and surface preparation goes a long way and it is a common operation in semiconductor manufacturing. As nano-contamination control requirements increase, device dimensions decrease, material removal limits reduce, and three dimensional nano-scale features become more common, it has been hard to meet these standards. However, Advanced Precision Pico-Cleaning is one of the major factors which will cause a large impact on Productivity, Defects and Contamination for all semiconductor manufacturing from PVD, to Etch, to Diffusion and related processes. Frontken’s Pico-cleaning process is unique because it relies on the optimal combination and effectiveness of both physical and chemical removal mechanisms together with advanced Manufacturing Companies Case Study: Frontken Corporation metrology and data analytics. The final baseline results on the process kits show substantial contaminants removal efficiency of up to 100 percent.

Thermal spray coating is the R&D focus and key technology of Frontken's Surface Metamorphosis Technology philosophy. They are the leader in Southeast Asia’s market in providing thermal spray coatings services, offering the most comprehensive range of coating processes and capabilities customizable for their customer’s applications. Frontken's coating services allow maximum cost-effectiveness, improving the value and in-service performance of your components and equipment through upgrading and life extension capabilities. Frontken provides technical consultation for recommendation of material + process combinations, allowing deposition of virtually any type of materials such as Metals, Alloys, Ceramics, Cermet, Polymers, Composites or graded materials for your repair, maintenance & upgrade requirements. Thermal spray coatings are usually applied for worn surface reclamation, wear resistance or corrosion prevention. It can also be used to reduce losses in frictional energy, acting as a diffusion barrier, thermal insulation and electrical insulation etc. Frontken also provide other types of surface treatment such as ceramic composite coating, providing corrosion protection in seawater, freshwater or chemical environment for mechanical parts, plating and conversion coating, where it provides intermediate or long term protection to shield your components from external harsh elements, allow lubricity to enable maximum potential of manufacturing production, enhance grip on surfaces and more.

Frontken do provide other services in the manufacturing industry as well, like specialized welding, abrasive blasting, machining and grinding, heat treatment, metal stitching and laser alignment.

Core Business in Singapore

In the most recent years, Frontken redirected its focus from heavy oil and gas-related services to semiconductor services. This has brought upon improving financials. These results were due to improved performance by Frontken’s subsidiaries in Singapore and Taiwan. Semiconductors have been a huge contributor to the development of Singapore’s economy shortly after the nation’s independence in 1965. Singapore’s first semiconductor facility opened in 1968 was a result of the efforts made to attract foreign companies to set up their manufacturing facilities in Singapore. There were National Semiconductor, Fairchild and Texas Instruments, they created more than 7000 jobs in just a span of three years. Singapore’s semiconductor industry continued to grow over the years. Anchoring more and more activities across the production value chain which includes wafer fabrication, integrated circuit (IC) design, assembly and testing as well as harnessing the latest manufacturing technologies and processes. 

Frontken’s semiconductor business in Singapore saw strong improvements in their businesses with an increase in revenue of 26.0% compared to FYE2017. while the semiconductor business delivered respectable numbers, although their engineering business were not doing so well.

With the growth of the semiconductor businesses, existing customers saw the increased demand for their products, Frontken can take advantage of the market and cater to the needs of these businesses by providing a comprehensive range of services such as advanced precision cleaning and advanced surface treatment.

If there is growth in the semiconductor businesses, Frontken will be able to develop their business as there will be a demand for their services. The consistent quality of their work has proven that they are the obvious choice for customers when it comes to precision cleaning and other support services in the semiconductor industry.

The world is changing fast with advanced technologies. The semiconductor industry's growth trajectory will level as demand for consumer electronics saturates. However, Automotive, Internet-of-Things (IoT) and Artificial Intelligence technology are the emerging segments that will provide semiconductor companies with abundant opportunities to grow. Although the semiconductor industry was expected to be softer in 2018 and 2019 compared to the 40% growth experienced in 2017. That does not mean the industry will experience zero growth, the levels will just not be as high as 40% in the coming years. Even if growth rates are cut in half over the next years, there will still be strong growth within the industry above 10%.

Many of the world’s top EMS companies are in Singapore, including Venture, Solectron, and Flextronics. That makes it a lucrative industry which provide a solid base for value-added manufacturing activities. New product lines, such as wearables, IP cameras, smartwatches, and gaming consoles will continue to drive orders and demand to keep revenues high. Singapore has a trade-dependent economy. Its flourish or failure are dependent on the worldwide market for specific products. Since the semiconductor industry is a cyclical industry, growth may reach recession levels in the following years, particularly if there is a drop-in demand for electronics.

The chairman of Frontken addressed shareholders in the company’s 2018 annual report, stating that while the semiconductor business delivered respectable numbers, the engineering business have not been doing well although Frontken “saw some light at the end of the tunnel” towards the second half of the year. Frontken did manage to overcome the challenges, working diligently on cost reduction strategies and improving productivity in all areas of operations, which paid off as can be evidenced by the recovery of our engineering business.

That means Frontken will benefit as a support service company if the semiconductor industry is able to flourish, not only in Singapore but internationally. Even if there are not much growth seen in the semiconductor business, and Frontken having channelled their focus towards this business, they still have a financial backup as they provide other services to manufacturers that were mentioned earlier.

Key Success Factors

Frontken was successful in their business because of their technology in developing sustainable products and services, such as precision recycle cleaning, refurbishment, re-coatings for critical parts that extend the parts life, products that prevent corrosion and conserve natural resources. They research, develop and build advanced technology to support and extend the critical production processes for their customers’ businesses. Based on the company’s Sustainability Report Financial Year 2018, which highlights Frontken products and services that contributed to their customers’ sustainability goals by improving its green production methods to counter the rising concerns of climate change. Despite the growing complexity in their work processes, Frontken still managed to increase their production capacity, unit production average power usage is 11.91 kWh per part produced; the unit production average water usage is 0.14 cubic meter per part; and unit production average waste produced is 0.00043 ton (0.43kg) per part. Frontken also implemented 268242 KW of green power, directly supporting renewable energy. They introduced new methods to recycle waste water, making it a reusable resource and lowered reliance on outsourcing By complying with regulatory requirements, prevention of pollution and waste reduction, Frontken continue to see success in their business.

The coming of the Fourth Industrial Revolution or “Industry 4.0” has significant ramifications for the work industry, it is highly likely that we will see a change in jobs – the birth of new jobs and the end of others. Businesses, governments and workers must proactively seek a new vision for the future market. Big manufacturing companies are pouring resources towards Industry 4.0 because traditional productivity techniques will soon be exhausted. The rise of automation signals a need for workforce transformation, and this is where manufacturers start scratching their heads in order to keep their competitiveness.

The World Economic Forum’s study into The Future of Jobs saw that companies are expecting a shift in the human-machine frontier within existing work tasks. The report showed roughly 70% of total task hours across the 12 surveyed industries are performed by humans, 30% by machines. By 2022, a shift is expected where humans will perform 60% of task hours and machines will occupy roughly 40% of the task.

In Singapore, manufacturing has long been viewed as a key pillar of economic growth, in order to stay competitive, Singapore needs to pump resources into the research and development of the manufacturing industry, harness new technologies, and develop a high skilled workforce as Industry 4.0 unfolds. When this industrial revolution fully kicks in, the manufacturing sector will become more efficient, where automation will reduce human error, increasing the precision and quality of work. Smart and connected technologies like Internet-Of-Things from Industry 4.0 will allow manufacturers to keep data on their production chain, not only speeding up the process of production but giving manufacturers end-to-end visibility throughout. The availability of Big data will allow companies to have more room to analyse and interpret information, which can be useful in decision making for companies when it comes to investments. All this will eventually lead to reduction in production cost and higher profit margins. 

Frontken’s research and development team have already started to work their way towards the industrial revolution. However, there are other ways that they can take into consideration to better prepare themselves. Unlike previous industrial revolutions, Industry 4.0 is not about replacing a certain existing factor in production, it is about integrating more advanced technologies into current capabilities and making things more effective.

The rise of automation will change the workforce. Frontken needs to seek out new talents that are proficient with the new technologies to join their company. Not only that, Frontken also need to reskill and upskill their existing set of employees so that they are able to operate new manufacturing techniques and/or systems. Frontken needs to recognize that human resource as an asset, and not a liability. It is crucial to adopt new technology, which drives business growth, create new jobs and boost existing jobs, provided there are a pool of motivated and agile talent in the workforce, where they can take advantage of new opportunities by equipping themselves with futureproof skills through upskilling and retraining.

The only way to eliminate inefficiency in a value chain is if they are detected and documented, in Frontken’s case, the processes that they carry out needs to be recorded digitally as real-time data. Data there were collected at some point of production may become useful in later parts of the value chain, Frontken should adopt a system where it can record data of their processes start to finish. This can be done by substituting sampling-based measurements with sensors and measurement devices during the production to collect information for every single piece of work, which quicken the process of quality control. Also, by implementing artificial intelligence, the digital data collected can be analysed automatically, it can used in decision making which may not need to involve humans anymore.

Conclusion

Moving forward, Frontken Corporation appears to be showing overall improvements in their business year after year, approaching new challenges openly and optimistically. Providing a highly specialised service to one of the bigger contributors of Singapore’s economy, semiconductor manufacturers, it is important to invest in research and development of better technologies in order to stay in the game. The manufacturing sector in Singapore is crucial to economic development, Frontken among other companies need to step up to the challenges that the future industrial advancement brings, they need to take the initiative and be proactive in reacting to new technologies.

References

• Frontken Corporation. (2018). Annual Report 2018. Annual Report.
• Frontken Corporation. (2018). Who Are We. Retrieved from Frontken Corporation Website: www.frontken.com
• McKinsey & Company. (2015). Industry 4.0: How to Navigate Digitization of the Manufacturing
• Sector. McKinsey Digital. Retrieved from https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Operations/Our%20Insights/Industry%2040%20How%20to%20navigate%20digitization%20of%20the%20manufacturing%20sector/Industry-40-How-to-navigate-digitization-of-the-manufacturing-sector.ashx
• Singapore Semiconductor Industry Association. (2018, November 14). Singapore’s Semiconductor Industry Celebrates 50 Years of Innovation and Manufacturing Excellence. Singapore.
• The World Economic Forum. (2018). The Future of Jobs. Insight Report.
• Wagh, M. (2018, August 1). How Manufacturing Companies Can Prepare Their Entire Workforce For Industry 4.0. Retrieved from eLearning Industry: https://elearningindustry.com/industry-4-0-manufacturing-companies-prepare-entire-workforce