By Aaron Low

FOR a company facing the prospect of a 25 per cent drop in business in difficult economic times, the temptation to retrench employees would be hard to resist.

But Seiko Instruments (SIS) opted to cut costs in other areas before even considering retrenchments.

The company, which makes parts for watches and employs 590 people here, decided instead to delay a $600,000 investment in a waste water treatment plant.

It has also postponed its dinner and dance in January to save $60,000. It may hold the event at the end of next year.

SIS corporate affairs general manager Lee Chok Sin said the company will also shave overtime hours, sell two company vans - which will net $40,000 - and monitor stationery use in a bid to cut costs.

'The company will explore all options... before we even think about retrenchments,' he said.

Its willingness to take the more difficult route earned praise from National Trades Union Congress deputy secretary-general Heng Chee How yesterday.

Speaking to reporters after a visit to SIS, he said the company's decision to be open helped it to garner support from its union and its workers.

'What is key to them is how they can rally the people together and overcome those challenges as a team,' he said.

Highlighting the need for companies to be open in communicating with workers and unions in the downturn, he urged bosses not to keep their staff in the dark.

'The one thing that frightens people and gets people to assume the worst is not knowing what is going on,' he said.

'Share whatever you can in terms of where this business is going, what we are doing and the belt-tightening that needs to be done and why.'

Union leaders with Mr Heng agreed, saying that they hoped more companies will be like SIS in being proactive in preventing retrenchments.

Metal Industries Workers' Union executive secretary Jessie Yeo said that while it would be impossible to stop all retrenchments, companies should at least discuss available options with unions.

Open communication is also an approach appreciated by Mr Affandi Marzuki, 46, an assistant supervisor at SIS, earning about $2,000 a month. Even though he faces potential of salary cuts of $100, he is happy the company has informed him about the measures to be taken.

'At least I know I will hold on to my job. That is most important,' said Mr Affandi, who has been at SIS for 22 years.

The loyalty displayed by workers is another reason why SIS considers retrenchment a last resort, said SIS deputy managing director Ho Wai Heng. 'We see our workers as important assets with skills, whom you cannot easily replace,' he said.

This article was first published in The Straits Times on 25 November, 2008.