Following Dyna-Mac’s turnaround since FY2020, led by the company’s executive chairman and CEO Lim Ah Cheng and his team, the Singapore-based tier-one specialist in modular construction that focuses on the fabrication of offshore and onshore modules is now reaping the rewards of the team’s efforts.
“Our business contracting model is unique, such as reimbursement on cost-plus and work re-measurement (per ton, per piping dia-inch) basis,” says Lim. “Most other yards may take on engineering, procurement and construction (EPC) work involving various products, such as merchant vessels and substations, and offer many services, such as vessel conversion, repairs, floating production storage and offloading (FPSO) integration, but Dyna-Mac’s sole focus is modular construction and fabrication.”
This year, Dyna-Mac stood out among companies in The Edge Singapore’s Centurion Club 2024, which ranks listed companies with market capitalisations between $100 million and $999 million. The company scored the highest returns to shareholders over three years within the applied resources + chemicals + energy – fossil fuels + mineral resources + renewable energy + utilities sector.
In an interview, CEO Lim shares his hopes, goals and more.
1. When you led the company’s turnaround in FY2020/FY2021, what were your initial hopes and goals for Dyna-Mac?
At the time, we were very clear on what we needed to do to stabilise the company, such as focusing on super-prudent cash flow management, tight and diligent project executions, and proactive engagement of customers and stakeholders. At the same time, we wanted to build a culture that prioritised safety, sustainability and long-term value creation.
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After stabilising our businesses, we aimed to drive sustainable long-term growth by strengthening operational efficiency. We strived to be the best-in-class contract module fabricator by modernising tools and upskilling the core team. We also prioritised financial discipline to build up our balance sheet and to be ready for mergers and acquisitions (M&As), acquiring companies that can provide recurring income and positioning ourselves as a leader in the market.
Future-proofing our business is key. As such, we placed a strong focus on green strategies, incorporating sustainability into our core business model. This turnaround has laid a solid foundation, with growth coming from our core FPSO market and strategic transition into cleaner energy sectors like liquefied natural gas (LNG) and hydrogen or ammonia. These are businesses that we understand and we can use our core skill sets to help them.
2. Dyna-Mac has seen consistent growth in earnings and margins. What do you attribute to the company’s ongoing success?
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Our success stems from our commitment to operational excellence, safety and disciplined financial management. We have improved efficiency through lean principles and enhanced safety standards while securing higher-quality projects.
Our disciplined approach to spending is reflected in how we prioritise investments. Rather than spending on office aesthetics, we focus our capital expenditure on modernising facilities, upgrading equipment and expanding production space — investments that directly enhance our capacity and construction capabilities.
This focused approach to module fabrication allows our team and craftsmen to continuously improve their skills, resulting in higher quality work and safer practices.
3. The company has an impressive zero lost-time injury (LTI) record. What safety measures and operational processes have contributed to maintaining this record?
Safety is deeply embedded in our corporate culture through stringent protocols, continuous training and proactive risk assessments. Our zero LTI record reflects this commitment. At Dyna-Mac, we recognise that our people, their skills and our systems are our key assets. Beyond profit optimisation, keeping our workforce safe and earning their trust is paramount.
We maintain strong relationships with the National Trades Union Congress (NTUC) and the Shipbuilding and Marine Engineering Employees’ Union (SMEEU) while actively engaging with subcontractors and clients. Our management team regularly conducts yard walks, visits worker dormitories, and hosts recognition lunches to reward exemplary safety and quality practices.
All these initiatives reflect our belief in the principle of “Do Well, Do Good, Do Now”, underscoring our commitment to safety, quality, and the well-being of our workforce.
4. How has your emphasis on safety and operational efficiency impacted overall productivity and employee morale?
Our safety-first culture has fostered a sense of pride and responsibility among our staff. So far, we have seen enhanced productivity through minimised disruptions and downtime, improved employee morale, reduced absenteeism, a positive workplace culture, and increased engagement through regular interactions between the company’s management and staff.
5. How does Dyna-Mac measure up against its competitors in the FPSO market and beyond in terms of operational excellence?
It is not meaningful to discuss how Dyna-Mac measures up against its competitors, but more importantly, how our clients and competitors assess Dyna-Mac. Here are two instances.
During a site visit, a senior oil company executive remarked that he thinks Dyna-Mac is now the leading module fabrication yard globally, citing our exceptional safety standards, quality, speed and adaptability. While I was happy to receive the compliment, I dismissed it.
Later, over lunch, the chairman of a Chinese competitor yard, whom I have profound respect for, acknowledged that Dyna-Mac had surpassed his company in FPSO module fabrication over the past four years.
I consistently remind our team that we must work harder than our evolving competitors to maintain our position. Success is never permanent.
6. You have mentioned streamlining your operations. Could you share more details on what specific areas you focused on and how this has improved efficiency?
The additional 70% land space we got in January provides us with opportunities to expand capacity and adopt new construction methodologies to build faster.
We have focused on lean manufacturing principles, reducing waste, optimising workflows, and automating certain processes where possible. Additionally, we have consolidated our procurement and logistics operations to ensure cost savings and faster project deliveries.
7. Looking ahead, what are Dyna-Mac’s growth plans? Are you exploring markets or sectors beyond your core business, and what’s driving this expansion?
Our plans include scaling up our core operations while expanding into new revenue streams, such as plant servicing maintenance, which will provide recurring income.
We’re also actively exploring opportunities in renewable energy sectors, including LNG, hydrogen, and ammonia piping, to align with the global shift towards cleaner energy sources.
8. With an order book of $681.3 million extending through FY2026, how do you see this shaping your long-term growth strategy?
Our focus remains on selecting projects that ensure a healthy cash flow and align with our financial stability and strategic growth objectives.
Our order book is poised for further expansion, with future projects related to blue hydrogen and ammonia expected to contribute to greater growth. We have over $308 million of net cash, which gives us the flexibility to pursue potential strategic initiatives, including M&As, to generate recurring income and further expand our business and order book.
We also prioritise steady growth to avoid the pitfalls of overexpansion, such as increased errors. To this end, we are heavily investing in enhancing productivity and training of our staff, especially in middle management.
9. Could you explain how Dyna-Mac’s cost-plus model supports the company’s financial stability, especially in volatile market conditions?
I have experienced several cycles. In business, cash flow is number one. We must ensure sufficient cash flow to tide through any crisis and seize opportunities.
Our cost-plus model provides a buffer against market volatility. It ensures that our costs are covered and profits are based on a predefined margin. This approach allows us to maintain financial stability and predictable returns even when market conditions fluctuate.
With our strong balance sheet, we are focusing on enhancing our core capabilities, exploring new technologies to improve efficiency, and expanding into new markets, such as renewable energy and plant maintenance services, to diversify our revenue streams.
10. Speaking of market conditions, what shifts do you foresee that could impact Dyna-Mac’s top and bottom lines?
We anticipate strong continued demand for FPSOs, LNG and renewable energy infrastructure, which should drive revenue growth. While commodity price fluctuations and changing energy policies may affect our margins, we manage these risks through operational efficiency and careful cost management. Our back-to-basics approach emphasises strategic machinery maintenance and targeted equipment upgrades to ensure optimal performance.
Rather than investing heavily in robotics, we focus on practical improvements to enhance productivity and reduce workforce hours. Our experience shows that well-planned maintenance and strategic upgrades effectively meet our efficiency goals.
We are committed to strengthening our engineering and technical capabilities. However, given the high cost of retaining skilled engineers in our industry, we’re taking an incremental approach. This aligns with our asset-light strategy, emphasising collaboration with EPC players and engineering houses.
11. With growing demand in the FPSO market, how is Dyna-Mac positioned to capitalise on this trend, and what key developments are you observing in the sector?
We’re seeing a significant shift from lease-and-operate to EPC models in the FPSO sector. This change is driven by challenging financing conditions, such as limited access to bank loans and interest rates between 7% and 15%, which make EPC more attractive to oil majors. The development of larger oil fields in West Africa, Brazil and Guyana also demands bigger topside FPSO modules.
The industry’s preference for newbuild FPSOs over conversions, supported by regulatory frameworks and economic incentives, has energised the market. The shortage of skilled contractors has further strengthened market conditions.
Looking ahead, we expect sustained growth in the FPSO market over the next five years. With FPSOs requiring up to four years of preparation before first oil, current industry data and discussions point to a healthy project pipeline and favourable supply-demand dynamics.
12. What role does sustainability play in Dyna-Mac’s long-term strategy and how do renewable energy opportunities fit into your broader business model?
The growing focus on ESG presents an excellent opportunity for Dyna-Mac. Our expertise in modular construction and exotic piping serves traditional FPSO modules and emerging green technologies like carbon capture and storage (CCS), hydrogen, and ammonia production.
Sustainability lies at the heart of our strategy, and we’re actively reducing our environmental impact through energy management and solar power solutions. In 2023 alone, we generated 1,646,485 kWh of solar power.
We’ve adapted our facilities to support the green hydrogen sector while developing CCS capabilities. As a leading SME, we encourage our supply chain partners to adopt sustainable practices, creating a broader environmental impact across our network.
