Dr M: Perwaja failed due to poor management

PERWAJA Steel Sdn Bhd failed because the people who ran it did not fully understand the steel-making process and technology involved, said Prime Minister Datuk Seri Dr Mahathir Mohamad. 

Furthermore, the company’s top managers did not go down to the ground and its cost of production was higher than the price of its product, he said in an interview with Bernama yesterday.  

During the interview, Dr Mahathir was asked to comment on the rapid strides made by certain Malaysian companies on the world stage and he cited Perusahaan Otomobil National Bhd (Proton) as one of them. 

However, there were some failures too, he said, and cited Perwaja Steel as an example. 

Dr Mahathir explained that Perwaja Steel failed not because it was a stupid idea to start heavy industries in Malaysia but because the people who were entrusted to run it did not know how to manage. 

“It was not the idea which was wrong, it was the failure of management,” he stressed. 

The company’s top management was at one time running the operations from Kuala Lumpur although the steel plant was in Terengganu, he pointed out.  

Perwaja Steel was started in 1982 as a joint venture between Heavy Industries Corp of Malaysia (HICOM) and Nippon Steel Corp of Japan. It ran into losses and was taken over in 1996 by Maju Holdings Sdn Bhd, a bumiputra steel company which had proven itself on the local scene. 

Asked how Perwaja Steel had lost money when demand for steel products was at its highest then, Dr Mahathir said that even if there was a demand, one could still lose money if the cost of production exceeded the price at which a product was sold.  

“They (Perwaja Steel) were producing steel which they couldn’t sell and the plant was breaking down. That was what happened to Perwaja Steel,” he said. 

In the case of Proton, Dr Mahathir said the company initially did not do well and he had to bring in some Japanese experts to help manage it. 

“The Japanese put it back on track and today it is doing well,” he added. 

Malaysia is today one of 10 countries in the world with a car manufacturing capability and Proton, which produced its first car in 1985, has announced plans to expand into more foreign markets. – Bernama  

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