MD outlines plans for Proton

PROTON Holdings Bhd yesterday held a media briefing to mark managing director Syed Zainal Abidin Syed Mohamed Tahir's first 100 days as the top executive of the company.
Syed Zainal spoke about the way forward for Proton, which would see the company basically undertaking a total overhaul of its operations.
The message he delivered in a two-hour briefing was that it was time to cut the fat, listen to the customers, improve the quality of its cars and grow its business domestically and internationally.
Report by JAGDEV SINGH SIDHU and LEONG HUNG YEE.
Q: WHEN do you think Proton will be able to compete in terms of quality in a level playing field with other automotive players and in terms of pricing as car prices are coming down?

A: It is a different element. You need to be particular about what a level playing field is. There are very limited things we can do with our current models.
Hopefully, when our new models come out in the next 18 to 24 months, they will be much more competitive and can compete with anybody within the same market segment.
We will have a lot of enhancement in our engineering, in terms of value for money and sharing of platforms. Going forward, I think Proton will be very competitive.
In terms of pricing, we are already low as it is. For example, for the Wira and Iswara, the price is already low. How much lower can you go without sacrificing your margins?

Q: Over the weekend, Naza launched its new Naza Sutera and the government said Naza could challenge Proton. Is that a fair level playing field?
A: We welcome any challenge. Challenges don’t come only from Naza. It is not something new to us. We are faced with challenges and we need to be competitive at all times.
As long as we are comparing apple with apple, we welcome competition. The automotive industry is all about competitiveness, with or without Naza.
We are a manufacturer; it (Naza) is an assembler. It is going to invest RM1bil in its factory. I guess we will just wait and see.

Q: From your first 100 days, you have identified a lot of problems in Proton and they seem to require major surgery. How long will all these changes take to implement?
A: I think the basic foundation is already in place. We cannot implement things if the foundation is weak.
The first 100 days is to get basics in place. We have done almost 90% of our work. Once this journey is finished, we will proceed with implementation.
The implementation will be faster for our internal processes. What takes more time to realise is the external process, such as vendor enhancement, because it involves a third party.
What we will be doing is to select two groups of vendors and hopefully, these vendors will be the role model of consolidation. Each group will comprise three or four companies.

Q: Are you re-looking at your list of 1,700 suppliers and trimming the list?
A: The 1,700 suppliers are not component suppliers. They provide engineering services, pencils and pens, gloves, plastics and everything other than components.
We will not just be cutting them down but we have specific criteria as to who among them that we want to work with.

Q: Does that mean Proton will only deal directly with selected vendors while the remaining have to deal with those who are selected?
A: Basically, it is a first-tier concept. The selection for tier one will be very critical.
The tier-one vendors must have the capability, finance, management skill, quality and research and development.

Q: You spoke about your new platforms - are these from scratch or existing platforms that are already under way and how will this match with your plans to have alliances with India and China?
A: It is from scratch and existing (platforms). Some of this will be for the alliances.

Q: You mentioned about producing an affordable Lotus earlier. How much cheaper will that be and when will it be available?
A: I hope it will be as cheap but not as cheap as an existing Proton. I am really not in the position to say because we are studying our competitors and who our competitors are in that segment. I do not think it will be available in this financial year. I think it will be in late 2007.

Q: Your comment on the consolidation of EON and Proton Edar?
A: Of course there are two consolidations - operational conso-lidation and structural organisation.
The structural consolidation takes a bit more time because we need to address shareholders’ requirements.
We are still discussing on how best to approach this issue but, rather than wait for that, we are looking at operational consolidation.
I think once the momentum gathers, people can see the merits of consolidation. We hope by then, the structural organisation will take place but it will take some time.

More related news!
Proton gets a major overhaul



SHAH ALAM: Proton Holdings Bhd will undergo a total overhaul in the way it runs its business. It must do this to increase sales and make the company more competitive, said managing director Syed Zainal Abidin Syed Mohamed Tahir.
Syed Zainal Abidin, who briefed the media yesterday after 100 days as the top executive of the national car company, said the revamp of Proton was to win back the consumers, improve productivity, lower costs and ultimately boost sales.
“We cannot make any more mistakes,” he said at the briefing that outlined Proton’s multi-pronged strategy for its future.
Number one on Syed Zainal Abidin’s to-do list is to improve the quality of Proton cars, an issue that has not only been a thorn for Proton but also for many of its car owners.
The division that looked after the quality of Proton cars will no longer fall under the control of the factory but will report directly to him.
Proton will also be sending at least 50 of its technical staff to dealers and service centres in various parts of the country to get feedback from customers.
In product development, Proton will now abandon its “silo” approach to building cars so that the good and bad experiences can be shared across all platforms.
Syed Zainal Abidin said Proton would be building new cars – a mix of its own and those in collaboration with other car makers – which would replace some of Proton’s existing models and would use customer feedback in building cars that the people want instead of what the company feels they should drive.
“Some of the models have been on the road for too long,” he conceded.
Proton is also working with its unit Lotus to build a car within the RM100,000 range in Malaysia.
To cut costs and improve productivity, Syed Zainal Abidin said the appointment of vendors would be done via a committee and purchasing by Proton would also be streamlined.
Proton currently has 14 logistics providers and that number will be cut to a maximum of three while the number of vendors Proton will directly deal with will be reduced to between 20 and 30.
Apart from that, Proton will also reduce the 1,700 third party suppliers of raw materials and other non-automotive components and go directly to the source.
“This is to minimise transactions that don’t create any value for the company,” he said, adding that bulk purchases would be done for both Proton and its vendors.
In terms of improving sales domestically, Proton will begin to engage the man in the street in a more active manner. Delivery of cars will be done at the client’s convenience.
Syed Zainal Abidin said Proton would organise more customer get-togethers, car clinics, sales carnivals, the best modified car competition and other programmes that would engage itself with its customers.
He said Proton would now refocus on its export strategy and would balance between volume and profitability when pursuing its export markets.
He pointed out that only between 60% and 65% of export orders were met, and that was because of delays in delivery of exclusive parts and other issues such as agreements.

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