ENGINEERING giant Rolls-Royce will make engines for large commercial airplanes such as Boeing's new Dreamliner here in Singapore.

Europe's largest engine-maker announced on Tuesday that it will invest $320 million to build an eight-hectare factory at the Seletar Aerospace Park which will commence operations by end-2009.

The factory, its first in Asia, will employ close to 330 employees and will be able to produce some 400 Trent 1000 and Trent XWB engines, which are used by large commercial aircraft like the Boeing 787 and Airbus A350 XWB, each year.

After an eight-month evaluation period, Rolls-Royce narrowed down potential sites for a new factory to Singapore and the United States.

Singapore triumphed despite the proximity of a US factory to Rolls-Royce's key clients - US-based Boeing and Airbus, which is located in France.

Its relatively lower cost base, lower rate of inflation and the high skills base of workers will help to offset the higher costs of shipping finished engines to customers in Europe and the US.

On Singapore as its choice, Rolls-Royce South-east Asia regional director Jonathan Asherson told a press conference on Tuesday: 'Singapore was chosen for many reasons, not least of which is the strong industrial heritage we have established here through our partnership with Singapore Airlines (SIA) and SIA Engineering Company (SIAEC).

'We have been working in joint venture with SIAEC for over a decade and the excellent operating results we have achieved in these businesses have given us a high level of confidence in today's decision.'

Economic Development Board assistant managing director Manohar Khiatani said that having Asia's first factory capable of assembling and certifying such large engines was a 'quantum leap' for Singapore's aerospace industry.

'Aerospace engine assembly is a highly complex activity with tremendous demands on reliability and quality," he said.

'This landmark project will have significant spin-offs and create many exciting jobs.

'It also underlines the importance of Seletar Aerospace Park as the cradle for exciting new growth opportunities in the sector,' he said.

Mr Asherson added that one of the attractions of having a presence in Singapore is the proximity to key clients such as SIA and other Asian and Middle Eastern carriers, which make up more than 40 per cent of its 35-billion-pound (S$104 billion) orderbook.

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