The Grey Chronicles

2008.September.5

Now: The Resurrected NSC: GSII to GSPI, 2004


With the SPV Law in place, this paved the way in dealing with the four-year old NSC question. Like the mythical phoenix, NSC rose back from bankruptcy through the acquisition of its plant assets by a subsidiary of Global Infrastructures Holdings Ltd. (hereafter referred as GIHL). GIHL, the sister company of India’s Ispat International Industries Ltd (IIL), acquired NSC through its subsidiary then called Global Steelworks Infrastructures, Inc. (GSII). It officially changed its corporate name to Global Steel Philippines (SPV-AMC), Inc. (GSPI) “reflecting the company’s commitment to the Philippines but also presented a clear, strong, and unified brand presence for Global Steel’s operations in Asia, Africa, and Europe,” as its own press release on 25 August 2005 stated.

Its sister company, Ispat Industries Limited, is headquartered at Mumbai, employs a total of 2000 people and is the India’s leader in special steels market. IIL’s core competency is the production of high quality steel employing cutting-edge technologies and stringent quality standards. It produces world-class sponge iron, galvanized sheets and cold rolled coils, in addition to hot rolled coils, through its two state-of-the art integrated steel plants, located at Dolvi and Kalmeshwar in the state of Maharashtra (IIL’s corporate web site, accessed 10 October 2006). The 1,200-acre Dolvi complex houses the 2.4mtpa hot rolled coils plant combining the Conarc process for steel making and Asia’s first compact strip process. It hosts a 1.4mtpa sponge iron (DRI) plant commissioned in 1994, a 2MTPY blast furnace and a mechanized multi-functional jetty for raw material handling. Kalmeshwar complex houses a 0.5mtpa cold rolling including a galvanized plain/galvanized corrugated (GP/GC) lines and India’s first color coating mill.

After a brief rehabilitation phase, NSC facilities were promptly put into commercial operations in 2005. Mill by mill, the former NSC facilities was operated after a month or so rehabilitation phase.

McLellan Consultants were initially hired in December 2004 to conduct a due diligence and come up with a rehabilitation plan. McLellan’s services were officially terminated by GIHL three days after a plant tour cum due diligence. GIHL sequestered the NSC-Liquidator PFP’s rehabilitation plan and became its own tentative rehabilitation plan. The original PFP-prepared rehabilitation plan, at US$:P53 exchange rate, amounted to P935million (US$18M) for the first stage alone, plus a P530million (US10M) for start-up spares needed to operate the plant in the first quarter, the first year (Interview, 2008).

GIHL claimed to have spent US$20 million in 2004 even before the deed of sale was finalized, to rehabilitate the plant then promised to invest $15 million in 2005, and another $10 million in 2006 (Philippine Daily Inquirer, 13 September 2004).

Many operations supervisors and maintenance planners involved during the GSPI’s rehabilitation phase of NSC facilities, and subsequently resigned thereafter, observed that although the PFP rehabilitation plan formed as basis, most of the activities in that plan were scrapped to its barest minimum as capital investments were deemed unnecessary for the respective facilities rehabilitation. A typical example was if the PFP plan called for a replacement of essential parts with new spares, especially imported spares, the replacement was deferred and a repair of the installed part was pursued instead. In addition, instead of procuring some required spares from either the NSC central warehouse or the retrieved spares from ARTAF, if similar parts—from bolts, electronic cards, cylinders to pumps and motors—were available somewhere in the various NSC plant facilities; these were then transferred from one facility to the other. This latter practice continued up to the present day.

GSPI registered with Board of Investments on 07 December 2004, making it 13th place in the top 100 companies of the BOI during the current administration. It is the only steel manufacturing firm registered with BOI from January 2001 (PCIJ, 2006).

From 2004, it also embarked on several management initiatives, such as Total Productive Management, Six-Sigma, and in 2007 initiated ISO9002:2000 certification for its Cold Rolling Mills. On 12 March 2008, GSPI received the TPM Excellence Award—1st Category from the Japan Institute of Planned Maintenance (JIPM) after successfully hurdling its quest for certification with Yoshitaka Murase, JIPM Senior Counselor (GSPI Flash TPM, February 2008).

In December 2005, however, it dissolved its Iligan-based Business Strategy department, tasked to analyze its corporate presence in the domestic and global market; and instead relied its corporate planning through directives from the Managing Director and his trusted advisers.

Several attempts to secure GSPI production data for the purpose of this study, however, were denied by a number of key holders of GSPI management positions. Even the simple request to view the GSPI’s Functional Chart or Table of Organization for the same purpose was received with incredulity bordering on suspicion. This dilemma was even highlighted during the constitution of GSPI’s Core Team for ISO9001:2000 certification of its cold-rolled manufacturing division, formed in 21 March 2007, when the ACTTI consultants requested Management for the same, and after days of fidgeting, the copy was delivered in a sealed envelope with a caution that it should be for the consultants’ eyes only!

In July 2007, GSPI presented to a bank-consortium that it had started operating Hot Strip Mill No. 2 on 02 March 2006, with an initial production of 32,078 metric tons. Furthermore, it claimed 67,570 metric tons exported to ASEAN and China in 2005 plus 82,093 metric tons up to May 2006; while GSPI’s domestic sales grew from 9,121 metric tons in 2004 to 52,166 metric tons in 2005 plus 30,043 metric tons up to May 2006 (GSPI, 2007).


Notes:

Ispat Industries Ltd (2006), “Corporate Profile.” Ispat Industries Ltd. Online. 16 October 2006. http://www.ispatind.com. back to text

Interviews with persons who wished to remain anonymous (refer to Appendix FF), various dates. back to text

Rimando, Lala (2004), “A sleeping giant wakes up,” Manila: Philippine Daily Inquirer, 13 September 2004. back to text

Philippine Center for Investigative Journalism (PCIJ) (2006), “100 Biggest Projects Arroyo Administration.” Manila: PCIJ, 13 August 2006. pp. 1 – 3. back to text

Molina, Gay (ed.) (2008), “GSPI Gets JIPM Confirmation for TPM Excellence Award—1st Category.” Flash TPM. Issue 18. Iligan City: GSPI, Ferbuary 2008. back to text

GSPI (2007), Bankers Presentation. back to text

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