Thursday, December 27, 2012

Former Singapore Armed Forces (SAF) officers train their sights on solving SMRT's rail woes

When people lose their faith in management direction of entities linked to Singapore's investment arm, Temasek Holdings, the price erosion that follows is often the best-case scenario.

For entities like SMRT Corporation, Singapore's largest train and bus operator, the blast radius resulting from a loss of faith extends far beyond a drop in SMRT's stock market fortunes.

SMRT stakeholders include commuters who get around using its mass rapid transit rail system and bus routes, the government regulator as well as political appointees tasked with regulating Singapore's transport network. A loss of faith among commuters could come back to haunt the Establishment when people mull over the government's track record in assorted lifestyle areas and decide whether or not they deserve that "X" in the box.

This is why SMRT is a vehicle which is too large to fail.

A two-front war
For the handful of former Singapore Armed Forces (SAF) who have or will soon step aboard SMRT, the battle to stabilise the company will be one of the most challenging and high-profile tussles they have ever waged.

Leading the charge is former Chief of Defence Force Lieutenant-General Desmond Kuek who has or will soon be joined by at least four former SAF officers.

Interestingly, the SAF Armour Formation's footprint in SMRT will grow substantially from 2013.

Senior among the ranks is SMRT's CEO himself (ex-54th Singapore Armoured Brigade, ex-4 SAB, ex-41st Battalion Singapore Armoured Regiment). He will be joined by Colonel Gerard Koh (ex-46 SAR) and Lieutenant-Colonel Tan Kian Heong (ex-4 SAB, ex-441 SAR), both of whom are from the SAF Armour alumni. Indeed, half of the four new hires come from the Armour Family, giving the Singapore Army's arm of decision an overwhelming presence in SMRT compared to other combat and combat support arms. (Purists would also count former SMRT Senior Vice-President Communications & Services, Colonel Goh Chee Kong (ex-8 SAB) as part of Armour's contribution to SMRT. COL Goh has since left the company.)

As SMRT's revamped management grapple with the complexities of rolling stock and train ops, heartware issues with SMRT staff and commuters who have had to bear the brunt of service disruptions will make this a two-front war where satisfying one side may come at a cost of sacrificing the other.

Swift and decisive management intervention will earn the SAF oodles of goodwill and respect from market watchers who are convinced militarymen can serve meaningful careers in civvie street.

The average commuter probably couldn't give a hoot who is in charge so long as their buses and trains run on time and fares stay reasonable.

As for SMRT's shareholders, they are likely to watch the state of play closely. Having tasted years of healthy dividends under the previous management, any deviation from this course could draw incoming fire during the next annual general meeting with shareholders.

Sceptical audience
The new management's battle for investors' confidence may be complicated by the sceptical yet influential audience that awaits them among market watchers. Such scepticism stems from years of experience watching certain Temasek-linked counters tank despite management statements that sought to calm or reassure the market.

It is important to remember that a good dozen or so research heads and fund managers who started their respective careers in the late 1990s have lived through the 1997 Asian Financial Crisis, 2000 Dotcom bubble, 9/11 attack in 2001, SARS crisis in 2003 and the 2008 sub prime crisis.

Having witnessed the negative impact of various recessions on TLC's share value, these market movers, who are mostly in their late 30s and 40s, are understandably wary of management who try to charm market watchers. They have heard it all before and will not be an easy crowd to win over with platitudes.

Industry veterans would recall how counters like Chartered Semiconductor and ST Assembly Test Services never quite recovered from value erosion after the tech bubble burst despite their Temasek parentage. Promises of a turnaround never materialised and many of these then-young industry watchers had a tough time explaining to their clients how these one-time market darlings became stock market rejects.

"Shareholders would hold on to the safety of such transport utility companies as they have a guaranteed market (the riders), a built-in inflation proof-pricing mechanism which allows them to give off good cashflow ( since projects are well-funded) and be operationally sound. If they can give decent dividends (approx 3% ) SMRT just has to ride this out. In 6 months time it will be forgotten," said one industry player who had his baptism of fire during the Asian Financial Crisis.

"SMRT does not require “new” sources of capital from the public. Nor do people have an alternative. In fact when theres no news on SMRT I think that’s probably when thigns are running well!"

It will take more than the usual public relations charm offensive to convince industry sceptics that SMRT is on track to better times.

Indeed, with new management blood, everyone recogises the TLC is at a turning point: they are just understandably wary as turning points can swing both ways.


Sgcynic said...

What is your view on the CDF/CEO's vacation within 2 months of taking office, his absence when the illegal strike/mutiny occurred and subsequent response? Doesn't really reassure that the SAF generals will be able to get a grip on the corporate hot potato does it? Correct me if I'm wrong, but wasn't there speculation that it was the infusion of military personnel and culture that had led to some executive turnover at SIA? Would SMRT be different?

Anonymous said...

Senior SAF officers are conditioned to obey orders without question. None have any intelligence or initiative, much less to say the requisite experience or expertise to perform outside the military arena.

David Boey said...

Hi Sgcynic,
I had the impression new joiners had to wait till after probation (usually 3 mths) before Annual Leave could be consumed. But HR practices differ from company to company and for different levels of seniority. :)

re: SQ. It is said that there was one RSAF alumni in particular who ruffled feathers among RSAF pilots who fly for the airline. I believe the intent was good, i.e. making everyone gel together as a team and give back to the nation.

However, the manner in which it was done was said to have been inconsonant with how one should respect the professionalism and dignity of one's co-workers.

When you get your message across by treating co-workers like school children, expect a backlash. This applies especially with co-workers who are fighter pilots and thus hardwired not to take this sort of nonsense.

I wonder if El Al ever has this sort of issue?

Best regards,


sgcynic said...

Thanks for your reply.
Best regards:)

Anonymous said...

The new tagline for SMRT will be "Swift and Decisive". Or we might be looking at a new transport option during open mobilisation. Station staf will be wearing black berets. Are we really that short of management talents or I suppose SMRT is a hot potato that private sector is fearful of handling.

Anonymous said...

I would settle for cheaper, better, faster!

Anonymous said...

anonymous above:

any engineer will tell you that that's impossible. Choose 2.

Anonymous said...

Minister say can.

Anonymous said...

i tend to agree that essential services of National Security concern need to "fall back" to Singaporeans' hands. The former CEO of SMRT do not have this credential (i.e. NO NS experience and not born in SG).

Not only SMRT but even NOL is now local hands.

My only reservation is these leaders are for Singaporeans and NOT only for a certain political party self interest.

Pray for good Men and Women who are impartial enough and have the courage enough to care for Singaporeans and not the self preservation of a certain political party.

Anonymous said...

cont'd from above, i think former SAF men/women knows how to gel civil resource into the Total Defence Plan in the event of war.

i can imagine SMRT rail lines and SBS buses used as civil resource for the defence of Singapore, especially with the former network of underground tunnel complexes.

As with NOL, the tankers and cargo ships can be used as staging plateforms thereby extending our forward deploy forces. Can you imagine a future squadron of F-35Bs jump jets landing and taking off from NOLs tactical lily pads hahaha...crazy!