PROTON'S 'DEADWOOD STAFF' TAKES IT TO THE BRINK OF BANKRUPTCY: MALAY 'SUPREMACY' AGAIN?

Here is something from The Star. Before that, the info I have is that Proton sells about 50,000 cars a year - which is hardly enough to pay the salaries of its workers, especially the many General Managers and Senior Managers who populated Proton and have not taken the company anywhere.

Here is Dato Mustapha Mohamed in The Star :

http://www.thestar.com.my/business/business-news/2016/06/10/5year-lifeline-for-proton/

My comments follow.

Five-year lifeline for Proton

Mustapa: Govt soft loan RM1.5bil to ensure Proton sustainable

management of Proton has five years to improve its financials

Proton need to repay RM1.5bil with 4% per annum in five years

Proton to find strategic partner and implement turnaround plan

be closely monitored by a task force (may I sit in that Task Force)

Govt step in with cash injection for ailing car manufacturer.

"..company in dire need of liquidity to pay its vendors,” he said

Last week Proton received RM1.5bil in cash assistance

March 31 last year, Proton’s long-term borrowings RM847mil

existing lenders’ consent would be required

further delaying crisis faced by Proton vendors

existing lenders would request early retirement of their loans

financial assistance, according to Mustapa, has punitive terms

if Proton decide to convert RCCPS, Govt receive 87 sen per share

This is 46% below Proton’s current NTA per share of RM1.86.

(Huh ?? So how is this punitive? Syed Mokhtar Bukhari pockets 99 sen buta !!)

Govt approve "soft loan" of RM1.5bil

strategic partnership : Volkswagen, GM none materialised

Cabinet in 2007 shot down Volkswagen strategic partner

latest strategic collaboration with Suzuki

deal to encompass products, technology, people, market still work in progress

also talks with Peugeot Citroën and Renaul

My comments :

Proton has a few options.

1. The Proton must be sold cheaper than other cars or at market prices without any duty protection against imported cars.

2. To source cheapest parts, immediately free up Proton to source parts from anywhere and anyone. So Malaysian vendors must compete wth foreign vendors. No such thing as five years. Its been 32 years since the first Proton rolled off the assembly. That is long enough.

3. Sell Proton to VW, Suzuki, Peugeot, Renault, GM or whoever. The Proton "brand" may not survive but at least the factory and equipment will be used. The Proton workers will still have their jobs.

We may not have a Proton but we may get a brand new automotive industry, all over again.

Imagine this - Volkswagen the world's largest car manufacturer that sells over 6 million cars a year (versus Proton's 50,000) ultimately manufactures say 500,000 VW cars here for the Asian market, using the Proton plants at Tanjong Malim etc.

Proton will have to employ 10 times more workers and engineers, there will be 10 times more Proton vendors (if they can meet VW's requirements) etc. The automotive industry will be 10 times bigger.

One of the reasons Proton has failed to negotiate any strategic partnerships is because the strategic partners (VW, Citroen etc) want a say in manpower planning and hiring / firing of staff. There is said to be stiff resistance here because Proton has plenty of deadwood senior management. This is what I hear from people in the know. Too many overpaid GMs and senior GMs running a company that is driving itself into the ground.

I have never been against Proton. I have been completely against all the "protection" for Proton that has burdened the Malaysian consumer over the past 30 years.

It is because of Proton that Malaysian car prices are among the highest in the world. The gomen wants to protect Proton and the local car industry. In the end both have gone nowhere. And the poor Malaysian consumer has been impoverished because we have to pay for the tariff protection for Proton.

To add salt to the wound, Proton cars sell at much cheaper prices outside Malaysia, especially in the UK. The Lotus Elise (which is owned by Proton) sells for RM178,000 in the UK versus RM348,000 here in Malaysia.

(I know the "what is buy low sell high" folks will start sending their comments - including the one about taxes collected from car sales help build hospitals and schools). All countries build hospitals and schools especially the UK. But they have much less, very little or no duties on their cars.)

A car is no more a luxury. A car is not even a necessity. It is an absolute essential.

Malaysia is well placed to become a huge car manufacturing country - yes even after Norway, India, Netherlands and others ban fossil fueled cars between 2025 and 2030. We can do it. But it may not be a local brand name like Proton.

It could be VW, Peugeot, Renault, General Motors, Suzuki ALL TOGETHER making Malaysia their car manufacturig hub in Asia. We have to look at the larger world. Correction : We have to be part of the larger world.

Instead we have narrowed our focus and really messed up the lives of millions of Malaysian consumers.

Here is Rule No 1 : People First. The peoples' welfare comes first.

Proton, hudud, religion, islamic banking etc can sit somewhere at the back.

The people's rights always come first. People First. - http://syedsoutsidethebox.blogspot.my/