The problem with Proton: There goes our money - OVER & OVER AGAIN!

Perusahaan Otomobil Nasional or Proton does not belong to, neither is it controlled by, anybody who is really interested in making cars and profit. The main interest of everyone connected with the running of Proton appears to be to make money out of the national car project.

The employees, from the lowest level to the CEO and shareholders are only interested that by the end of the month they will get their salary, bonus and yearly dividends. The ordinary employees are also just hoping for increments and promotions, and when they are hospitalized, they will demand the best medical benefits and claim the highest hospital bills. Every year like their CEO, they too hope for windfall bonuses too.

The vendors supplying the over three thousand components are also interested in making money. They will bribe anybody in Proton they have to in order to secure their deals. Their products are mostly of lesser than specified quality but they will do all sorts of tricks like holding Proton at ransom by delaying delivery of the components until the critical stages of production.

In other words, Proton executives desperate to meet production targets will close and eye since there is no time to wait for fresh deliveries. Proton has no choice but to accept poor quality products and incorporate these into the cars they produce. Guess who is the ultimate 'beneficiary' or victim - yes, it is the BUYER!

False efforts

When DRB-Hicom bought a 42.7 per cent stake in Proton from Khazanah Nasional Bhd for RM1.29 billion in January this year many people were skeptical whether Proton would succeed in turning itself around.

They were indeed right to expect negative results because DRB-HICOM does not have the much-needed money to inject into Proton. No one in the market was surprised when a week after the deal went through, the first order of business for DRB-Hicom's managing director Mohd Khamil Jamil was to go to Maybank asking for money, if not begging for it.

In any huge venture, it would be most prudent to study, scrutinize, monitor and understand the business inside out so that a viable plan could be raised and implemented before pouring so much money into the venture. Unfortunately, it appears DRB-HICOM did not do its homework well! After taking over Proton, DRB-HICOM simply does not know what to do with it!

“Everybody is waiting to see what DRB-HICOM plans to do with Proton. We are working on a plan now and hope to come up with it by next month,” admitted Proton’s CEO Che Khalib Mohamad Noh after the MICPA-Bursa Malaysia Forum 2012 in Kula Lumpur.

“DRB-HICOM Bhd will come up with a new business plan for Proton Holdings Bhd next month.”

But the fact that Khalib declined to elaborate clearly shows that DRB-HICOM does not have a plan! Yet it refused to employ people who really are interested in making cars and profits.

Both Khamil and Khalib are ordinary top management individuals who have no experience in car manufacturing. Khamil has said at the group’s annual general meeting recently that the conglomerate plans to introduce a foreign partner to Proton. This clearly indicates that both of them are really blur and need foreign help badly.

They should know that foreign partners won't be easy to come by given Proton's political connections. Who isn't aware Proton is a 'connected' conglomerate that makes money by manipulation, bail-outs and not real business? Who would want to risk their investment in Proton then?

Learn from other troubled car makers

Lee Iacocca was the”moving force” behind Ford and he revived the troubled Chrysler when he was its CEO. The same thing with Carlos Ghosn of Renault where Nissan appointed him as the CEO in 1999 and he succeeded in turning the losing car manufacturer's USD6.1 billion losses into a net profit of USD2.7 billion within three years.

DRB-HICOM's own dilly-dallying in trying to revive Proton shows how entrenched public scorn and cynicism is for this project. To many Malaysians, the only thought in the minds of the Proton top management is how to pull out and make as much money as possible from the Proton shares they will eventually dispose of.

No doubt, Proton can expect 'deja-vu' to recur. It will again be left like an unwanted orphan and UMNO will then use taxpayers’ money to bail it out on the pretext of national interest. But 'national interest' my foot! The deal certainly seems to be all for UMNO leaders and cronies.

Malaysia Chronicle