Wednesday, May 22, 2013

The State of the Philippine Steel Industry: An initial Look Today

Two Wednesdays ago, I attended the regular board meeting of the Philippine Iron and Steel Institute (PISI) in lieu of our president who was then out of town. Our president has been a long time officer of the board representing the Flat Steel Sector and in times that he is not available, he would send our vice president for manufacturing, or me to pitch in for him in such meetings or in other PISI activities, forums, etc. That  help us get first hand updates of what’s going on in our world of steel from steel gurus and businessmen.

The PISI is an umbrella organization of all steel stakeholders, namely, suppliers, traders/importers, manufacturers, etc. Its membership cuts across various steel industry associations and individual companies. Its objective is to promote, enhance, and protect the interest of its members as well as the steel industry as a whole. Incidentally, the current president, was my close colleague during our years at National Steel Corporation in Iligan City.

A hot topic discussed (which is actually a regular item in all meetings) is the hottest subject which hogged the headlines recently- smuggling. For many years, smuggling or technical smuggling specifically, has always been identified as the menace in the industry. In recent years, it has become rampant to alarming levels. Like other business sectors such as oil, agri- products ( like meat, poultry, and rice), etc.,  the Institute had been expressing outcry and consistently decried the unabated rampant smuggling, most common of which are under declaration or misdeclaration. For 2012 alone, estimated loss due to smuggling reached P1 billion. It has been common that people are already immune to it  and that any news about it is not news anymore. When will that day come when we all can say,” it’s time to play hardball”.

Another main feature of the meeting is the report on imported steel price. From scrap to billets, slabs, hot-rolled and cold rolled coils, plates, tin plates, GI, PPGI, figures from traditional sources namely, China, Taiwan, Japan, Russia, it was reported that  last month’s prices generally went down compared to the previous month. April prices for  (figures are in US dollars per MT) scrap bulk sea cargo was at 375, containerized ex Taiwan at 395, HRC ex Taiwan was 580 and ex China is 560, 0.6mm CRC at 600 and 0.17mm CRC iwa at 700, 0.33m GI at 840 and PPGI at 950. Interestingly, while prices are going down and analysts say demand will be depressed, China increased its steel output by 9.1% this first quarter, year on year. For Jan-March 2013 alone, total China output is now pegged at 192 Million MT.

Next month, SEASI or Southeast East Asia Steel Institute will hold its annual international conference. Every country member presents their respective country report. During the board meeting, a tentative PISI country report was presented for comments, validation, etc. I noted some highlights; first on the  GDP  report where, from the 6.6% GDP growth registered in 2012, in the Industrial sector, it was Construction which registered the highest growth of 14.4% while Manufacturing stood at only 5.4%. In the Services sector, transport was highest at 9.1%. Another notable highlight was in our GI/PPGI/Aluzinc/EGI sector. For 2012, total 2012 importation reached over 530,000MT, around 35%   increase from the previous year level indicated by the updated data from the Bureau of Imports (BIS). This is because, most, if not all galvanizing plants are not anymore producing or are not anymore operating and merely imports these coated products mostly from China. The reason is pure business economics. It is now cheaper to buy imported GI products than buy CRC raw materials  and process or convert them to GI. Sadly,manufacturing of galvanized steel is one sector which has not only declined but is tilting on the verge of extinction.

Friday, May 10, 2013

The Journey Continues: Tale of Steel Companies, Part 2

Fast forward. Four months from now, my 2nd and current company, Union Galvasteel Corporation (UGC) will celebrate in style its 50th year of existence. Center of celebration will be at the place where it all started in 1963, at Poro Plant at Poro Point in San Fernando City, La Union. As the company celebrates its golden years, it is likewise excitedly looking ahead for the next 50 years and perhaps beyond.

Fifty years ago, the company, then named Bacnotan Steel Corporation (BSC), a division of Bacnotan Cement Industries, started with its old, sheet to sheet galvanizing operation producing GI sheets for roofing products. Five years later, another similar type of galvanizing operations was opened in Davao City. It was only in 1990 when it opened up in Calamba City, Laguna which would then become until now as its main plant. It started to expand and modernize with the construction of its coil by coil color coating line in 1993 and the commissioning of its continuous galvanizing line in 1997. The Asian financial crisis took its toll and nearly brought down the company to bankruptcy. But with a bamboo like tenacity and resiliency, brought about by overall restructuring of its operations and strategies, it survived the storm and started to expand more, both in reach and products lines. Today, it has the country’s biggest supply chain and distribution network in the industry with 26 roll forming plants, warehouses, and sales offices strategically located throughout the country from north to south. “Sa Tibay at Ganda, Panalo Ka” has become an institutionalized tagline of the company.

I joined UGC in the latter part of 1996 at the worst time when the financial crisis was hitting the company, the industry and the country real hard. All through these years, I did my fair share, practically in all aspects of the business, from operations, technical/quality assurance, marketing, human resource, training, finance, etc. Externally, I have broadened my scope of knowledge and understanding of the industry, not just locally but regionally as well, through active involvement and regular liaisons with steel industry associations and leaders, government agencies, customers, competition, suppliers, environmental groups, consumer advocates, etc. I even wrote a technical paper about how the company survived the crisis, which I presented at the SEASI International Conference in Kuala Lumpur, Malaysia in November 2002. Indeed, an enriching experience.

Emma A., a dear colleague from NSC who is now happily settled in Canada, once asked us to write about our life after steel. This is what I wrote; “Fortunately or unfortunately, my life is STILL WITH STEEL.

It seems like I have taken my steel career in full circle. But not quite.

Wednesday, May 8, 2013

The Journey Continues: Tale of Steel Companies, Part 1

Two significant events will happen in the next few months to the only two companies that I have been connected (read: employed) throughout my professional career. These events definitely define my “steel journey.”

Eight months from now, the moribund National Steel Corporation (NSC), then the largest steel company in the Philippines, would have been 40 years. It was established as a forerunner of the National Shipyard Corporation in the 1950’s and later on the IISMI or Iligan Integrated Steel Mill Inc. in the 60’s. All the main plants were located in Iligan City in northern Mindanao. Active and loyal “alumni” based in Manila are organizing a grand reunion on its anniversary month, February next year for all its ex-employees from Iligan Plant, Pasig Plant and Makati-Home Office many of whom are already settled abroad. This will surely be big event to enjoy and reconnect. There will be lots of hugs and kisses and embraces and lots of reminiscing, something which will make everybody’s hearts sink. Once upon a past era, these were the “steel trailblazers” who aspired and dreamed of “building the Country”.

I joined NSC as an engineering management trainee (we were then called Industrial Engineers) barely a month after college graduation. I am proud I belonged to this group, which former president Rolly Narciso described in his tribute as “among the best technical and managerial mind of NSC”. When I left 18 years later, already a developed professional, the NSC ship was already sinking and it was only a matter before this steel giant finally closed down 5years later. In that span, many left the company and the city for good. Notably, many migrated abroad to Canada, the U.S, Australia, New Zealand. the Middle East countries and the neighboring ASEAN countries. Such exodus can be aptly described as “the great brain drain”. Still, quite a number, including me, moved to the big city, Manila while some remained and cast their luck with the lamentable Malaysian and later on Indian owners who likewise closed shop without even taking off, weighed down by lack of capital, technological obsolescence, loss of market and overall mismanagement. What happened to the Iligan plant, its once thriving employees’ community called “Steeltown” and perhaps the lives of its people is reflected in the movie and now Broadway and Manila musical, Full Monty.

What a sad ending to a glorious past!