Risk and Threat Analysis in the Steel Industry

We just had our Planning Conference and the theme is "We are in a crisis mode." Everybody is.

Scanning the current steel environment, with the effects of the global financial crisis looming in the domestic front, one may be able to see the major risks and threats which should be strategically addressed.

First is the prolonged global recession which is highly probable to happen. Another is the influx of cheap (and probably low quality) imports as neighboring countries will try to look for export market to unload their inventory surplus, which will surely result in the lowering of prices and making the market highly competitive. Such products have already in fact in the past and current year entered the Philippine market. This will force production to attain highest levels of efficiencies, especially on cost reduction.

On the financial front, bank credit facilities will be tightened putting pressure on working capital and may result in material procurement delays, longer collection periods, etc. Liquidity becomes extremely important and significant. Add to that the possible peso depreciation and we have indeed a scenario of business survival.

Obviously, those that may be able to properly control these risks and threats and convert them into opportunities will surely come out as the winners.