National Steel Corporation (Philippines)
 | |
| Private | |
| Industry | Steel |
| Founded | 1951 |
| Headquarters | Iligan City, Philippines |
| Products | Steel, flat steel products, long steel products, wire products, plates |
National Steel Corporation (Philippines) NSC (1951 - 2004) was Asia's largest multinational steel-making company headquartered in Suarez, Iligan City, Philippines. "NSC" was founded as National Shipyards & Steel Corporation on 1951. On 1962, it was acquired by a private entity, the Jacinto & Son, a Filipino family corporation and later then renamed as "Iligan Integrated Steel Mills".
Foundation of National Steel Corporation
National Steel Corporation was organized on 22 February 1974 from the assets of Iligan Integrated Steel Mills (IISMI) when the later was subsequently foreclosed by the Development Bank of the Philippines (DBP).
NSC acquired the cold rolling facilities of Elizalde Steel (ELISCON) in 1978 and its tinning lines three years later. In 1981, the National Development Company (NDC) assumed full ownership of NSC. Two phases of Five-Year Expansion Projects in 1983-1988 and in 1991-1992 brought steel production capacity from 151,000 tons in 1974 to 800,000 tons in 1988 then 1,200,000 tons in 1992. Prior to liquidation, NSC’s manufacturing plant occupied 450 hectares in Iligan City and 11.8 hectares in Pasig City.
Installation of a Corex slab-caster in lieu of a Basic Oxygen blast furnace, the purchase of a Continuous Annealing Line or High-Convection Furnaces, as well as Computerization Level 3 (the replacement of the Mainframes, purchase of Computerized Maintenance Management System for Facilities Management and SCADA for Utilities), among several others were planned and considered for the next Five-Year Expansion Projects.
Aside from being the country’s leading producer of billets, the raw materials for rebars and wire rods, NSC was the dominant flat-rolled producer in the Philippines and was the country’s only tinplate producer. Flat products consist of hot-rolled coils, hot-rolled plates, cold-rolled coils, and tinplates.
History
1951-1962 National Shipyards and Steel Corporation (NASSCO) [Government-owned]
NASSCO was authorized by RA 1396 [1] to set up pig iron smelting plants with ₱50 million appropriated for the purpose, and to borrow $62.3 million from Export-Import Bank of the United States to buy an integrated plant including hot and cold rolling mills and blast furnaces. Unfortunately the money was withheld because of the objections of US Steel Corporation, and thus, in exchange, the Philippines got irreversible concessions: the franchise of RCA and Globe-Mackay to the year AD 2015; third frequency landing rights for Pan American and Northwest Airlines; plus a partnership arrangement with the Government controlling 51 percent ownership, but the relinquishing management to the 49 percent participation of the private sector (Henares, 2006)
1962-1974 Iligan Integrated Steel Mills, Inc. (IISMI) [Private]
In 1962, NASSCO was completely sold to the Jacinto family. The Macapagal government guaranteed the Eximbank loan of $62.3 million,[2] plus a peso loan of ₱30 million (Henares, 2006). On September 21, 1972, martial law was declared, and on October 14, Marcos directed the military to take over IISMI (LOI 27). This time Marcos extended the assistance he denied the Jacintos: tariff protection (PD 34, dated October 29). Unfortunately, even though the corporate name included “Integrated”, IISMI was nowhere backward integration.
When President Ferdinand Marcos declared Martial law in the Philippines in 1972, things turned for the worst for the Jacintos. The government confiscated all their assets. The Jacintos fled to the US. They left behind a padlocked steel factory and foreclosure proceedings initiated by the Development Bank of the Philippines. The foreclosure was eventually completed, and the firm was renamed anew to National Steel Corporation (NSC).[3]
1974-1994 National Steel Corporation (NSC) [Government-owned]
The NDC-managed NSC was undoubtedly the glorious years of a national steel endeavor. Compared to NASSCO, a ten-year national steel company, NSC became the premier steel company of the Philippines for twenty long and illustrious years! From a primary capacity of 300,000 metric tons in 1975, NSC expanded its facilities to nearly 2 million metric tons primary capacity by 1994. There were plans for backward integration, but the Philippine government decided to privatize NSC first, then let the new owners deal with integration.
1994-1996 National Steel Corporation [Wing Tiek-NSC] [Private]
Most people in Iligan, where the plant is sited, knew what happened to this era, but few really knew the real score. An attempt to explain what had happened to Wing Tiek-NSC.
In 1992, NSC enjoyed considerable leads in domestic flat-rolled market shares, particularly hot rolled coils (29%), cold rolled coils (72%) and tinplates (53%). By 1999, moreover, market shares slid down to 0%, 22% and 18%, respectively. From a 53% market share of flat steel in 1995, NSC only garnered 10% of the total flats market by 1999.
During its 20th Anniversary on February 1994, NSC adopted —Steel Better at 20— as its slogan. After another 10 years, NSC would be resurrected as GSPI by December 2004. Four years later, in 2008, the same slogan would take a new form: “Steel Bitter in 2008”.
1996-2004 National Steel Corporation [Hottick-NSC] [Private]
The downtrend started in 1997 primarily attributed to the dumping of cheap imported steel products into the country (NSC, 1997) . Suits filed by NSC before the Tariff Commission against, CIS/Russian hot-rolled coils on 23 September 1998 (Tariff Commission, 2000)[4] was dismissed on 30 August 2000 concluding fair competition from normal imports. The case of Taiwanese CRCs on 28 June 1999 (Tariff Commission, 2001) sacked on 24 April 2001 for lack of merit; and South Korean tinplates on December 1996 (Tariff Commission, 1999)[5] similarly rejected on 18 October 1999 citing excess domestic and shift in demand from Electrolytic Tin Plate sheets to coils.
Three facilities produce the flat products of NSC, namely: hot strip mills, cold strip mills and the electrolytic tinning lines. Refer to Appendix C for a complete list of facilities for flat steel production.
The Hot Strip Mills, which process slabs to hot-rolled coils and hot-rolled plates, consisted of Hot Strip Mill No. 1, Hot Strip Mill No. 2 and a Plate Mill. Brazil, Australia, Korea, Mexico, Europe, Russia and China supplied NSC with slabs on a spot market basis, but the Asian crisis in 1997 frustrated NSC’s attempt of a slab supply agreement. Commissioned on 17 July 1993, President Fidel V. Ramos in his speech during the inauguration ceremonies said, the 1.2 million tons per year Hot Strip Mill No. 2 is “the final phase of NSC’s expansion effort and the vital link to the full integration of the steel industry in the Philippines” (NSC News, July 1993) .
“NSC’s foray as a private enterprise from 1995 under Wing Tiek then under Hottick has been a tumultuous phase; its flat steel production was subject to forces that would prove fatal to its corporate existence. NSC liquidation in 2000 brought rippling economic effects to the immediate community, in particular, Iligan City, and in general, the Philippines; as well as changed the legal environment for the Philippine steel industry; and threatened Philippine trade relations, especially with Malaysia.”
Timeline
Production
Three facilities produce the flat products of NSC, namely: hot strip mills, cold strip mills and the electrolytic tinning lines. Refer to Appendix C for a complete list of facilities for flat steel production.
The Hot Strip Mills, which process slabs to hot-rolled coils and hot-rolled plates, consisted of Hot Strip Mill No. 1, Hot Strip Mill No. 2 and a Plate Mill. Brazil, Australia, Korea, Mexico, Europe, Russia and China supplied NSC with slabs on a spot market basis, but the Asian crisis in 1997 frustrated NSC’s attempt of a slab supply agreement. Commissioned on 17 July 1993, President Fidel V. Ramos in his speech during the inauguration ceremonies said, the 1.2 million tons per year Hot Strip Mill No. 2 is “the final phase of NSC’s expansion effort and the vital link to the full integration of the steel industry in the Philippines” (NSC News, July 1993) .
By 30 March 1995, Hot Strip Mill No. 2 attained its all-time highest daily production of 5,182 metric tons. Hot Strip Mills annual production slid from 792,767 metric tons in 1996, an increase from the all-time high year production of 644,552 metric tons in 1994, to a meager 91,601 metric tons in 1999. The decrease can be attributed to the fact that only the Hot Strip Mill No. 2 was operational by 1999, while the 500,000 metric tons per year Hot Strip Mill No. 1 was mothballed due to economic reasons, although plans were made to dedicate it to hot rolled plates production and to cater to special steel markets.
The Cold Strip Mills produced coils, sheets and tin-milled black plates from NSC’s Hot Strip Mill-produced or imported hot rolled coils. The hot-rolled coils are reduced in either the 0.250 million tons per year four-stand or 0.600 million tons per year five-stand tandem mills. Finished products at Cold Strip Mill reached its daily peak on 23 November 1994 with 3,448 metric tons. Annual production volume fell more than 75% from 513,002 metric tons in 1995 to 121,514 metric tons by 1999, compared to an all-time high of 415,420 metric tons in 1993. Again, the dumping of cheap imports allegedly caused the production slowdown.
The Iligan-based 150,000 metric tons per year Electrolytic Tinning Line No. 3 produced tinplates from its local Cold Strip Mill production or imported tin-milled black plates from Japan, Korea, Australia and Brazil. Electrolytic Tinning Line No. 3 production output in 1995 of 81,464 metric tons, the highest since 80,506 metric tons was attained in 1992, declined to 26,926 metric tons in 1999. Excess domestic demand was blamed for the downward trend. The Electrolytic Tinning Line No. 2 in Pasig was closed in May 1998 due to economic factors (NSC News Special Bulletin, 20 April 1998) . After the 1983-88 NSC’s Five-Year Expansion Program, Electrolytic Tinning Line No. 1 was decommissioned by 1992 because of technological obsolescence.
The steel industry (Austria, 1998) particularly the basic iron and steelmaking integrated with slabmaking, and flats production, among others, were considered pioneer status in the Foreign Investment Act of 1991 (Republic Act 7042). With this law in place, the Philippine government allowed greater foreign investors’ participation in local steel production facilities. On August 8, 1991, the President Corazon C. Aquino signed into law Republic Act 7103, Iron and Steel Industry Act. RA 7103 called the state to provide the boost in making the industry “the springboard and basis for launching Philippine industrialization” through the full and efficient use of the country’s human and natural resources considering its critical impact on employment, indigenous resources utilization, foreign exchange and balance of payments position.
Privatization
Privatization [6] plans for NSC began as early as 1990. It was successfully approved by the Philippine government with Malaysia’s Wing Tiek acquiring controlling interests in November 1994. Privatization was pushed by the National Government to limit its financial exposure on the myriad of government-owned and controlled corporations, such as NSC. The next year, NSC retrenched about 500 personnel for the first time since 1974. The reduction was premised on building a leaner organization. Wing Tiek sold its entire 69.2% stake to Hottick in December 1996 while NDC optioned its own 12.5% stake to the latter on February 1997. On 15 October 1997, the Board of the Philippine Economic Zone Authority (PEZA) declared NSC as a Special Economic Zone, pending Presidential Proclamation, with downstream steel products manufacturing and fabrication industries and related sectors as preferred industries (de Lima, 1999).
Prior to privatization, NSC launched its own-version of the Total Quality Management program. NSC’s TQM encompassed the Total Production Management System based on a 5S Program, the Operator-Mechanic-Inspector concept, a series of Corporate Culture seminar-workshops, and Quality Management Systems. The Operator-Mechanic-Inspector concept, dubbed as “1:7 in ‘97” program, was a quest for a leaner structure characterized by a decentralized, autonomous, and accountable organization by reducing superior-to-subordinates ratio by 1997. The Seven Basic Habits and Interaction Management were held for supervisory and managerial positions; while Self-Enrichment Workshops for the rank-and-file. Kaibigan seminar-workshop culminated these various seminars into an all-employees Corporate Culture development. Quality Management Systems included Statistical Process Control and ISO 9000 certification.
By 1995, the Cold Strip Mills and the two Electrolytic Tinning Lines, including the Billet Steelmaking Plant, were ISO 9002:1994-certified. The Hot Strip Mills were in the process of certification prior to NSC closure.
In 1999, amidst proposed backward integration plans, equipment and technological modernization, and employee value-enhancement programs, NSC officially underwent a liquidation plan resulting in the retrenchment of 1,400 employees, while a number opted for earlier retirement.
When NSC closed shop, the scrap iron business lost ₱1.4-billion and the Refractories Corp. of the Philippines lost 30% of its market. Mabuhay Vinyl Corporation, supplier of NSC’s chemicals, was severely hit, and the National Power Corp. lost ₱720 Million in sales yearly (Philippine Star, 17 May 2002).
President Fidel V. Ramos Controversy[7] For Selling National Steel Corporation to Malaysia
On October 2000, the Securities and Exchange Commission ordered the liquidation of NSC citing that it was unable to make repayments on its debts, which were about $350 million (Lyday, 2002). In his privileged speech during the First Special Session of the Thirteenth Congress of the Senate, Joker P. Arroyo (2005) stated, “National Steel, for the record, was sold to an undercapitalized Malaysian firm which, in turn, borrowed heavily from local sources. President Fidel V. Ramos was accused of selling the National Steel Corporation with huge kickback or a personal favor.[8] The Malaysians left and the government is left holding the bag.” Global Steel Philippines (SPV-AMC), Inc. acquired ownership of NSC’s assets in 2004.[9]
Furthermore, in comparison with other SEASI members, the crude steel production from 1994 to 2000 exhibited a downward trend for the Philippines, in terms of crude steel, HRC and finished production. Steel trade, however, showed that exports were down; while imports reached top marks in 1997 and 1999 (SEAISI, 2004).
Shutdown and Revival
National Steel Corporation (Philippines) NSC went bankrupt and shut down its operation in November 1999[10]
As the national government has chosen a hands-off policy over the mothballed National Steel Corp. (NSC), the local leaders of Iligan City have decided to take things into their hands to put once Asia’s largest steel mill facility back on its feet after being abandoned for 14 years. ligan City Mayor Regencia has signed Executive Order No. 119 S. of 2014 creating the NSC Working Group (NSCWG) with the primordial role to rehabilitate, operate and integrate the steel plant, which used to employ as many as 4,200 mostly highly skilled Filipinos.
The EO was issued on July 21, 2014 following an agreement with Iligan Rep. Vicente F. Belmonte Jr. of the lone district of Iligan City to work as one to find a viable solution for the NSC, which is now dilapidated, looted and cannibalized while bank creditors and investors are locked legal conflict.
“Being the largest stakeholders in the plant facilities of NSC, the Iligan City must avail of all legal remedies to collect real property taxes, and to have the plant rehabilitated, operated, and thereafter integrated by a qualified investor or consortium to be vetted, qualified and chosen by Iligan City,” stated the EO signed by Regencia. Aside from the creditor banks, Iligan City is the second largest stakeholder of NSC, whose debts are in the form of unpaid real estate taxes. NSC owes Iligan City over P2 billion in unpaid real estate taxes. [11]
References
- ↑ The LAWPhil Project REPUBLIC ACTS (RA) 1396
- ↑ Export-Import Bank (EXIMBANK) for a $62.3 million loan Supreme Court En Banc
- ↑ President Marcos declared martial law in 1972, things turned for the worst for the Jacintos. National Steel Digest
- ↑ DBP Tariff Commission, 2000
- ↑ DBP Tariff Commission, 1999
- ↑ Google Book National Steel Corporation Sold to Malaysia
- ↑ Google Books Controversy surrounding Renong - National Steel Corporation
- ↑ Rebuilding for a Better Philippines Ramos Killed NSC Asia's Biggest Steel Factory in ILigan City
- ↑ Chanrobles - 16th Congress Sen. Santiago Fidel Ramos Sold NSC to undercapitalized Malaysian firm
- ↑ Cement Manufacturers Association of the Philippines (CeMAP) The fall of the industrial giant
- ↑ Manila Bulletin (CeMAP) Iligan City to revive mothballed NSC