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Rail improvements to put SMRT on fast track

CEO's baptism of fire steels him for exciting challenges ahead

SINGAPORE - When Mr Desmond Kuek went from being permanent secretary at the Ministry of the Environment and Water Resources to heading rail operator SMRT Corp three years ago, some of his close friends told him he was either brave or plain crazy.

"I said there's a fine line between being brave and crazy," the 52-year-old former chief of defence force quipped.

As it turned out, the retired general's mettle was put to the test immediately.

Within weeks of his appointment on Oct 1, 2012, the new Circle Line suffered a major breakdown.

 

The following month, a bus driver strike - Singapore's first strike in 26 years - shook the company to its core.

More rail breakdowns followed, prompting Transport Minister Lui Tuck Yew to express his disappointment publicly.

All these piled pressure on a company that was already in deep crisis after two massive breakdowns in 2011 triggered a costly and humiliating public inquiry.

Mr Kuek, who is not easily fazed, admitted that the task of getting SMRT back on track is "incredibly tough and challenging".

FORGED IN ADVERSITY

Whatever has happened in the past does not faze us - it only makes us stronger.

- SMRT chief executive Desmond Kuek

His earlier assessment of the company was damning, describing it as having "deep-seated issues... managerial, structural, cultural and systemic issues".

One of the first things he did was to assemble a team of senior executives made up largely of former career soldiers. Then he started beefing up the technical staff. In the past three years, SMRT's team of technicians and engineers have grown by 21 per cent and 59 per cent, to 2,169 and 278, respectively.

He reshaped the company's organisational structure and streamlined processes to offer employees clearer career paths, and for them to give feedback and voice grievances effectively. These moves are bearing results, Mr Kuek said, noting that there has been "a clear shift in our staff culture", even though this is "not yet consistent everywhere".

SMRT's train withdrawal rate - where a train is withdrawn from service because of faults - has come down from 3.3 for every 100,000km operated in 2012 to 1.05 last year.

"This is the lowest in seven years," Mr Kuek noted. "And we are targeting to go even lower this year."

He admitted that reducing the number of major breakdowns, or breakdowns that last 30 minutes or more, remains a challenge.

"We have made tremendous progress on many fronts... but there is much more to be done to improve rail reliability."

THE PREFERRED OPTION

Our aim is to be the people's choice - that people will take the train because they want to, and not because they have to.

- Mr Kuek

Most of these works are arduous and span long periods.

SMRT has replaced all the rail sleepers on the North-South Line (ahead of schedule), and is now replacing those on the East-West Line. The Straits Times understands some of the wooden sleepers were in such a bad shape that it looked like they would fall apart when removed.

In the next few months, SMRT will start replacing the power-supplying third rail on the two lines.

The overhaul of older trains has also begun. All these trains will be fitted with new motors from Toshiba. SMRT tested them on two trains last year and found that they used 30 per cent less electricity.

Meanwhile, the network's 30-year-old train signalling system - which determines how tight train service intervals can be - is also being changed.

"This may not sound like anything exceptional to some, but Thales, our contractor, tells me that this is its biggest project on a 'live' system anywhere in the world," Mr Kuek said.

The North-South Line's resignalling is expected to be completed next year, allowing peak-period intervals between trains to be shaved to 100 seconds, from 120 seconds today.

When all the upgrading is done and with the "robust preventive and predictive maintenance regimen" the company is putting in place, Mr Kuek is confident SMRT will rise from its recent chequered history to recapture its spot as one of the world's top metros.

"Whatever has happened in the past does not faze us - it only makes us stronger," he said.

The chief executive officer has also been busy transforming the business. "Sustainability, not simply profitability, is our aim," he said. Since assuming the helm, he has set up a department to look at mergers and acquisitions.

He started a rail engineering subsidiary, which has clinched a deal to market Toshiba train motors, and tied up with France's Faiveley Transport to supply train maintenance, repair and overhaul services in South-east Asia.

In April, SMRT announced it was eyeing a stake in OMG, a new company vying to be Singapore's fourth telco. But it dropped the idea amid mounting criticism that the move might distract it from its core business, even though it intended to be nothing more than a passive investor.

SMRT is also bidding aggressively for new bus operating contracts. Even as its failed bid for the Bulim contract, Singapore's first public bus contract, raised eyebrows among investors for being the lowest, Mr Kuek claimed it would have been profitable.

The company is also negotiating with the Transport Ministry over transitioning to a new rail financing framework that sees the Government owning all operating assets. This will allow SMRT to focus on service quality without being weighed down by huge and lumpy capital expenditure.

Talks have been ongoing for well over a year now, and industry watchers reckon the main impasse is the operating margin that SMRT should enjoy in the new regime, which is deemed to have lower risks.

But Mr Kuek would not comment on this, merely saying the new model is more sustainable, and "we have made good progress in the ongoing discussions".

And although he does not say it outright, it is clear he does not think Singapore can support more rail operators.

"It takes five to 10 years to groom an experienced rail engineer," he said. "The question of who will run upcoming new lines does place some uncertainty on an operator. Should it invest in growing the expertise for the future?

"There is a very real risk of incurring the cost of raising the manpower but not winning the licence."

He looks to Hong Kong as one success story, where a tightly regulated operator derives synergy from a fleet of trains that can be deployed on any line.

"Hong Kong's MTR has a rail plus property model, and an integrated design, build, operate, maintain arrangement that presents it with great flexibility in network design, whole life cycle asset management, and effective decision-making on a host of rail-related issues," he added.

Nevertheless, he concedes that "each city evolves its own system based on its socio-economic and political considerations", and there is no one size that fits all.

"Within our own structure, we are determined to achieve as high a level of operational excellence as MTR's. Our aim is to be the people's choice - that people will take the train because they want to, and not because they have to," he said.

christan@sph.com.sg

A version of this article appeared in the print edition of The Straits Times on June 17, 2015, with the headline 'Rail improvements to put SMRT on fast track'. Print Edition | Subscribe