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Memperkasa Ekonomi Ummah Melalui Pemantapan Jaringan Tempatan dan Penerokaan Berkesan Dalam Pasaran Global: Persiapan Mendepani Cabaran Baru

Ekonomi Dunia”

Oleh

DATO’ HAJI SYED ZAINAL ABIDIN SYED MOHAMED TAHIRManaging Director

PROTON Holdings Berhad

1. The Evolution of PROTON2. PROTON Challenges 3. Economic Value Chain 4. Conclusion

1. The Evolution of PROTON

PROTON spearheads Malaysia’s Automotive Project Three primary national policy objectives

To spearhead the automotive industrialization process and manufacturing

industries

To acquire and upgrade technology and industrial

skills within the automotive manufacturing

industry

To strengthen the international

competitiveness of Malaysia’s industrial

capability

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Transforming PROTONTransforming PROTON

CKD

AssembleLocalise

50%

High TechnologyHigh Knowledge Application

EngineManufacture

RND

OwnProductDesign

Value Chain

Investment levels

15 years

Regressive

IPIP

HighLabor

Progressive

Proton evolved from Assembly to Design & Manufacturing in 1996, which involves R&D, Product Design and Engine & Tooling Manufacturing

1980 1990 2000

1983 Permodalan Otomobil

Nasional (PROTON) incorporated

1985 Official

launch of National car , PROTON SAGA by Tun Dr. Mahathir

1986 Proton

Saga is first exported to UK and proceeds to win awards at British International Motor Show

1993 WIRA

1994 PERDANA

1995 SATRIA 1996

- PUTRA

- 1,000,000th proton car production

- PROTON acquires Lotus Group

1997 SATRIA GTi andPERDANA V6

2000 WAJA

2001 First unveiling ofCamPro at Lotus, England

2002 ARENA

2004 GEN.2

2003 PROTON Tanjung Malim

2005 SAVVY

2006 SATRIA NEO

2007PERSONA

2008NEW SAGA

MilestonesMilestonesSnapshot of Snapshot of PROTONPROTON’’ss JourneyJourney

1980 1990 2000

1983 Permodalan Otomobil

Nasional (PROTON) incorporated

1985 Official

launch of National car , PROTON SAGA by Tun Dr. Mahathir

1986 Proton

Saga is first exported to UK and proceeds to win awards at British International Motor Show

1993 WIRA

1994 PERDANA

1995 SATRIA 1996

- PUTRA

- 1,000,000th proton car production

- PROTON acquires Lotus Group

1997 SATRIA GTi andPERDANA V6

2000 WAJA

2001 First unveiling ofCamPro at Lotus, England

2002 ARENA

2004 GEN.2

2003 PROTON Tanjung Malim

2005 SAVVY

2006 SATRIA NEO

2007PERSONA

2008NEW SAGA

MilestonesMilestonesSnapshot of Snapshot of PROTONPROTON’’ss JourneyJourney

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PROTON Investments

Contributing to domestic investment: Capital investments in Malaysia to date exceeds RM 8 billion

BuildingShah Alam Plant, Medium Volume Factory, Casting Plant, ETM Factory, R&D Centre, Tanjung Malim Plant

EquipmentAutomated assembly line, cathodic electro-deposition facilities, iron casting & machining, ETM assembly

Research and DevelopmentStyling studio, CAD/CAM facilities, component & materials test labs, climatic chamber, engine development facilities, test track, noise lab

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PROTON OrganizationGroup Manpower Status

Company Manpower Status

Perusahaan Otomobil Nasional Sdn Bhd 5,458

Proton Edar Sdn Bhd 1,974

PROTON Tanjung Malim Sdn Bhd 2,832

Miyazu (Malaysia) Sdn Bhd 312

Lotus Group International Ltd 1,240

Overseas Subsidiaries* 187

TOTAL 12,003

* Overseas Subsidiaries include Proton Edar Indonesia, Proton Cars Australia, Proton Cars UK, and Proton Singapore* Latest as October 2008.

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2. PROTON Challenges

PROTON is prepared to face the anticipated external challenges impacting the global auto industry

1. The Evolution of PROTON2. PROTON Challenges

Human Capital Development Product Innovation and Service Improvements Global Expansion Program

3. Economic Value Chain4. Conclusion

Changing structure of demand to smaller and more fuel efficient vehicles

Slowing growth of demand due to diminishing consumer confidence and stringent financing

Sustaining margins at times of increasing costs and competitive pressures

Volatile currency rates adversely impact operations and margins

Human Capital Development Development and leadership training programs to boost competencies

Product Innovation and Improvement to gain the competitive edge

Global Expansion Program to tap the world market with value for money products

Key challenges facing the industry …

Global OEMs suffering from declining financial results

PROTON’s way of withstanding the challenges

“Hyundai slashes production”

“Ssangyong files bankruptcy”

“Toyota Motor warned it would suffer its first loss since it began reporting financial results 68 years ago”

“Honda shifted into crisis mode, slashing sales and profit forecasts, delaying plant openings, cutting executive pay and axing the NSX sports car program to rein in costs”

“Renault freezes plans for India plant”

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2.1 Human Capital Development

People Development: The right talent should have the right skill sets

Talent Management System at PROTON

BusinessKnowledge

BusinessKnowledge

Global Knowledge

Global Knowledge PerformancePerformance

ValuesValues

Functional Knowledge

Functional Knowledge

INDIVIDUALTALENT

INDIVIDUALTALENT

BusinessKnowledge

BusinessKnowledge

Global Knowledge

Global Knowledge PerformancePerformance

ValuesValues

Functional Knowledge

Functional Knowledge

INDIVIDUALTALENT

INDIVIDUALTALENT

Intellectual, technical & business expertise

Consistently deliver commitments

Cross-cultural & global perspective

Continually build understanding of PROTON’sproducts, business and industry

Caring, honesty, accountability

Executive Development Program training and development programs

Multi-business exposure via: staff transfers secondment special assignments

Career Accelerator

Functional Breadth

to give global experience and corporate exposure

Having the right talents at the right places and at the right time. The system will enable the executives to realize their full potential and talents.

It is tailored to individual role profile and it is divided into 2 programs, which are Career Accelerators and Functional Breadth

Recruitment of expatriates and international employees to assimilate new skills, knowledge & culture

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People Development: Strategic collaboration to develop skills relevant to auto industry

Leadership Development

GOVERNMENT

INDUSTRY

UNIVERSITIES GOVERNMENT

INDUSTRY

UNIVERSITIES

Government policy

R&D grants

Trade protection

Regulations

Development of new technologies

Adding'intellectual capital'

Engagement

Application

Commercialization

1. Universiti UtaraMalaysia

2. Universiti PutraMalaysia

3. UniversitiTeknologiMalaysia

4. Kolej Komuniti5. ..and others

To ensure that organisations have the leadership they need for the future:

Leadership Development

Recruiting & selection

Rewards & compensation

Succession planning Training & development

Career management

- Development programs congruent to the needs of job competency

Performance management

- Plan objectives, performance coaching and review between manager & subordinate

- Measure job related behavioursrequired to meet job responsibilities

- Attracting top talent

- Identify top candidates for the organisation’s most important value-added jobs

- Define a career path for development

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Leadership: Can it be Holistic?

Focuses on Spiritual Aspects of Leadership

Holistic leaders continuously strive towards creating a culture of openness, trust, respect, participation, empowerment, and growth.

Self-awareness, self-regulation, motivation, empathy, and social skills.

Leading from the mind, the heart and the soul

‘Holistic’ Leader

Intellectual Emotional Spiritual

Virtuous behaviour:Sabr (Patience) Hikmah (Wisdom) Tawakkul (Reliance on Allah) Bai'yah (Allegiance) Ihtisab (Accountability)

Technical & business knowledge

Azan (call for payers) in the production and office area

Regular talks on religious and spiritual subjects among employees

Non work related activities

Team building activities Sports & recreational

activities

To create and strengthen the spiritual awareness among leaders and employees

Within the working

environment

Outside the working

environment

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Communication SessionsCommunicating a clear sense of purpose and direction

2.2 Product Innovation and Service Improvements

Moving Towards Platform Optimization

SAGA Pre-production Launch by MD with workers and vendors

Town Hall Session between MD and PROTON executives

Previous

Iswara (B)

SatriaNeo (C)

Wira (C)

Waja (C/D)

Gen.2 (C)

Perdana (D)

7 platforms 3 platforms

Target

MPV

Saga (B)

Persona (C)

Savvy (A)

(A/B)

(C/D)

2 platforms

?

?

Current

Vario

us m

odel

s, v

aria

nts

and

mar

kets

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Enhancing R&D capabilty through collaboration with Lotus

Development of Market Driven Products

Results: Shortening Vehicle Development Time

Market Driven Products

Input from the market is incorporated into the design

Through own research

Feedback from distributors and customers

LOTUS: Company Introduction• Located in Hethel, Norwich

• Colin Chapman built his first racing car in 1948, eventually founding Lotus Engineering in 1952

PROTON acquired Lotus in 1996 to increase engineering and R&D capabilities

Today Group Lotus is organised into 2 divisions:1. Lotus Cars - builds world class, prestige, high performance sports cars for sale 2. Lotus Engineering - automotive engineering consultancy for vehicle manufacturers and suppliers

This allow Lotus to offer the full solution from Concept through to Production

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Results: Help PROTON regained market confidence and enhance brand image

PRODUCT PLANNING

PROTOTYPING

STYLING

TESTING & HOMOLOGATION

ENGINEERING DESIGN

POWERTRAIN

MANUFACTURINGVENDORS

SUPPLIERS

Shortening vehicle development time from 3 years to 17 months

Developing a completely new vehicle is a complex and highly detailed process, usually taking 36 months from initial concept stage, to the production of a road-worthy model.

PROTON’s state-of-the-art facilities combined with the expertise of PROTON engineers mean the process of developing new models has been reduced to 17 months.

PERSONA – Development Period* of 16 months

PERSONA - Best Model of the Year 2008

2008 Frost & Sullivan ASEAN Automotive Awards

PERSONA – 1st Place (Family Car)

Asian Auto – Bosch Fuel Efficiency Awards 2008

SAGA – Development Period* of 17 months

SAGA – ASEAN Car of the year 2008

Autocar Asean

SAGA – Best People’s Car

Asean Auto-VCA Industry Awards 2008

? MPV – Development Period* of 18 months

*From model fix to SOP

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Quality Improvement InitiativesPROTON's tough attitude on quality

Results: Solid team culture as a result of clear direction leads to improved quality

PROTON’s focus in every area of quality improvement:

• produce better products,

• implement more stringent systems and disciplines to abide by the procedures,

• improve the manufacturing and engineering processes,

• practice customer-focused service at showrooms and workshops, and

• extend the practice to vendors and dealers.

Quality is a thrust that PROTON strives to improve upon and it is a challenge which we will have to resolve to make an impact globally

In August 2007, PROTON emerged with the greatest improvement in customer satisfaction according to the J D Power Asia Pacific 2007 Malaysia Consumer Satisfaction Index (CSI) Study.

Concerns per car

% concern-free cars

Improving trendline

55.5% 64.2%

PROTON came out with the greatest improvement in customer satisfaction in J D Power Asia Pacific 2007 Malaysia Consumer Satisfaction Index (CSI)

Study.

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2.3 Global Expansion Program

Global Expansion: Key thrusts for PROTON in the near future

Export Strategy

Establish multiple production hubs• Maximise localisation to reduce cost• Complementation of key components

Move to market driven product development • Adopt a value for money strategy• The right car, right price and right time

Focus on high growth, regional markets• Target ASEAN, China, India and the Middle East

North Africa (MENA) for economies of scale• Leverage trade and cultural linkages to establish

presence

PRODUCTS

MARKETS

PRODUCTION

•

•

••

•.

CHINA

UK

MIDDLE EAST & AFRICA

AUSTRALIA

ASEAN

IRAN

Growth area: Asia (led by

China), Africa and Middle

East

INDIA

PROTON will focus on expanding traditional markets like South Africa, Middle East and develop new high-growth markets i.e. China, India and Indonesia

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Through knowledge, sharing and unity, mutual benefit can be attained

3. Economic Value Chain

PROTON: A Local Company with Global Presence

PROTON’s and Lotus’collaboration with KACST to:

• Effect technology transfer• Assist in setting-up of

Automotive Development Center

• Assist in manufacturing & local parts development

• Relationship established in 2001 for the assembly and distribution of PROTON products

• To date, almost 15,000 PROTON cars OTR• 200 units of Waja taxis currently operating in

Tehran • Gen.2 CKD assembly agreement recently

signed to allow Zagross Khodro to assemble the Gen.2 model

• With a current plant capacity of 15k – 25k (expandable to 50k), Iran can be PROTON’shub for the Middle East – North African market

Signing of Strategic Collaboration Agreement with SAIPA on 2nd Aug 08 governing the following:

• Engine Development: potential localisation and production of CamPro

• Potential joint branding and assembly of MPV LHD

• Model Development: potential development of new model based either on new platform or PROTON’scurrent platform

• R&D Activities: potential engine integration; potential full model change

KEY • Proton own plant (3)• CKD Assembly by

distributor(1)• Distribution

Subsidiaries (4)• Active Distributors (11)

Australia

Malaysia

Taiwan

IndonesiaBrunei

Nepal

Singapore

Sri Lanka

KuwaitEgypt

Syria

UAE

QatarIran

United Kingdom

UKUK

MIDDLE EAST& SOUTH AFRICA

MIDDLE EAST& SOUTH AFRICA

AUSTRALASIAAUSTRALASIA

ASIA & INDIAN SUB-CONTINENTASIA & INDIAN SUB-CONTINENTTurkey

South Africa

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Value Creation in Domestic Market (1/1)

Value Creation in International Market (1/2)

PROCUREMENT MANUFACTURING

andENGINEERING

SALE & DISTRIBUTION

Total Vendor : 220(Muslim Vendor : 77)

Annual Business Volume(for Muslim vendors)

RM 1.3 Billion+

Employee : 8,290(95% Muslim)

Annual Employee Costs(for Muslim Employees)

RM 300 Million

Total Sales Dealers : 232(Muslim Dealers: 148)

Annual Business Volume(for Muslim Dealers)

RM 1.7 Billion*

NON MUSLIM15%

MUSLIM45%

FOREIGN40%

+ FY07/08 COMPONENT PURCHASE VALUE (TOTAL RM2.92 BILLION)

Direct Employees & dependants

22,000 (Muslims only)

Indirect Employees & Dependants

100,000 (Total)

*For Year 2007

MANUFACTURING

Design

Procurement

Assembly

Form collaboration with

• Zagross Khodro

• SAIPA

• KACST

CKD Operations

• Iran ( Zagross Khodro )

• Egypt

• Jordan

• China (Youngman)

Facilitating the collaboration of Malaysia Vendors with Local Vendor in China & Iran

Under discussion

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Value Creation in International Market (2/2)

1. The Evolution of PROTON

4. Conclusion

Conclusion : What makes us different.

Gulf Countries

Egypt

Syria

Turkey

Iran

Indonesia

Others

Business Volume (USD Mil)

6

25

117

25

33

28

22

DISTRIBUTION

• Brunei

• Bangladesh

• Lebanon

• Iraq

• Saudi

• Oman

• Bahrain

• Qatar

• UAE

Point 1

Common Islam believe and value system

Point 2

Muslim etiquette :• trustworthiness • respectful • moderation • humility

• Principle-led business• Highest level of professionalism

• Work-life balance

Muslim

business

partners

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Characteristic of the Ummah

Verily never will Allah change the condition of a people until they change it themselves(with their own souls)

Ar-Ra’d:11 Translation by Yusuf Ali

Thank You