GLCs are managed by PAP-appointees who had no prior business experience before landing in the company’s top management with a parachute.
Their board of directors and senior management include a disproportionate number of former military generals/civil servants/MPs/ministers.
In the domestic market, GLCs run monopolies and could make unbelievably wide profit margins effortlessly.
But when it comes to international competition, our book-smart PAP-appointees have proven to be failures. 😉
For example, low-cost carrier Tiger Airways had to endure 4 years of losses amounting to hundreds of millions before it was taken over by SIA.
And 48-year old NOL had coincidentally racked up 4 years of losses amounting to more than $1 billion before being sold to CMA CGM.
Many foreign acquisitions have also gone under but remained undisclosed.
Former NOL CEO Ng Yat Chung was surprisingly frank and had admitted to his own incompetence: “NOL did not adapt fast enough. The world has changed … a bit slow and reluctant to change”.
Ng appears to be describing other GLCs as well because adapting to a fast-changing world would require GLCs to remove deadweight from their boards and senior management.
However, it’s still business as usual at GLCs.
And so dismal results continue to be produced, examples in the table below.
Top of the list and potential failure is SIA. Its revenue has in fact shrunk and FY2016 net income is lower than FY2012. Lost market share is unlikely to return simply because of investments in new hardware. SIA management continue to be top heavy, have not realized its service has deteriorated and live as if Singapore Girl did not age. 😦
Over the same period, Keppel Corp’s revenue has halved, with net income collapsing almost 90%.
A number of GLCs may soon be in dire financial straits, confirmation that all is not well.
CEOs of GLCs are not just “a bit slow and reluctant to change”: they bury their heads in the sand until it’s too late.
Without meaningful change, GLCs will continue to dig their graves. Their collapse may have already begun. 😦