The Grey Chronicles

2008.July.27

NSC: Is It Still Significant?


Considering that NSC, or its resurrection from the dustbins of steel industry, as the Global Steel Philippines (SPV-AMC), Inc., is still the biggest steel industrial complex not only in Iligan City but as well as in the Philippines, if not among the member-countries of ASEAN, the findings of a study of NSC is significant to:

NSC’s former employees and customers. When NSC retrenched almost 1,400 employees in 1999, several suggestions have been offered by these individuals counteracting NSC’s one-sentence explanation of tight financial situation and some reassurance of a probability of recovery after a year. NSC’s former customers were also dumbfounded when news of NSC’s liquidation hit the headlines. The findings of this study could alternatively explain the various propositions and insinuations and a common stance and understanding might be adopted. Examples of these false notions: a consortium was taking over Hottick’s mother company, Renong, including Hottick’s stake at NSC (Kwek, 2000) . Another one was that the Malaysian management pocketed all the revenues somewhere out of the Philippines, thus it could not afford to pursue the ISM project, or even operate NSC on a daily basis (Arroyo, 2005) . Worse, from a flyer distributed sometime in 1999, when NSC was undergoing exit clearance after retrenchment, was that NSC management knowingly ran NSC to bankruptcy so that it could be liquidated and they could recoup whatever they invested?

Iligan City local government and local populace. Iligan City also suffered economically when NSC closed in 1999. To paraphrase an age-old adage: when NSC sneezes, Iligan City catches the cold. This study is significant to the local government of Iligan City, the direct beneficiary of NSC’s presence, because for several years from 1974 until its closure, NSC offered decent and relatively high-paying employment, both direct and indirect, aside from income taxes to the local coffers, and tangible contributions to local communities through NSC’s social responsibility projects, among others. Thus, the findings of this research could provide an insight on the importance of NSC’s presence to the growth and development of the locality.

The Philippine government, in particular, and the Philippines, in general. This study is significant to the Philippine government in assessing the perceived effects of privatization of a vital component of the industry. Lessons learned from NSC’s plight might offer new insights to the privatization of other GOCCs, which are forthcoming this decade. Furthermore, the legislators and political leaders might now tread more carefully in dealing with privatization and similar acts of deregulation on primer industries, such as manufacturing. For the country as a whole, this study is important to the national economic planning based on the premise that industrial production is a factor of GDP, and steel production is a leading indicator in the country’s growth and development.

The current dispensation, Global Steel Philippines (SPV-AMC), Inc., or other potential investors. The implications of this research to the current dispensation, particularly Global Steelworks Philippines, Inc. (GSPI), which acquired controlling interests on all the assets of the resurrected NSC, through the Special Purpose Vehicle (SPV) law under the Asset Management Corporation (AMC) provisions in 2004, would be beneficial inputs to whatever corporate strategy the latter opts to adopt. Consequently, pitfalls faced by NSC then can be avoided by GSPI now. With the advent of global mergers and acquisition, GSPI stands to gain some understanding on the state of the Philippine steel industry, in general, and the sphere of influence of NSC, now GSPI, in particular, to the domestic and regional steel market, as well as the global steel market. Furthermore, potential investors to augment GSPI’s quest to resuscitate NSC’s facilities to commercial operations would be able to see the NSC’s viability and profitability.

The ASEAN member-countries. The budding steel industry of respective ASEAN member-countries, particularly Malaysia, Indonesia, Thailand, Cambodia, Vietnam and Laos, would also gain from this research through an understanding of the difficulties faced by NSC during the Asian financial crises and thus could attempt to avert similar government actions that would endanger their own fragile steel industry. Of the ASEAN member-countries excluding the Philippines, only Malaysia, Indonesia, and Thailand have their respective hot rolling mills. Thus, with the closure of NSC in 1999, the other members relied more on hot-rolled coils, and even cold-rolled coils, supplied by Far East countries (particularly Japan, Korea and Taiwan) and even from Commonwealth of Independent States (Russia, Kazakhstan, and Ukraine). Furthermore, with the boom of construction specifically in Cambodia and Vietnam, this study could also provide an impetus among the ASEAN member-countries to safeguard the regional steel industry as an economic cooperative rather than as a loose aggregation of individual steel industries, such as the Southeast Asia Iron and Steel Institute (SEAISI).

Other researchers. Indisputably, the boom-and-bust experience by NSC is a very interesting and enlightening topic. Unfortunately, aside from the case study conducted by Basilio and Cabasan (2004) entitled, “Local Governance and Economic Challenges of Economic Distress: The Case of Iligan City” with special focus on the impact of the closure of the National Steel Corporation to Iligan City, no other formal research was and is being done, and publicly disclosed since 1999. NSC’s historical records of production data, among other things from as far as back in 1974 to 1999, face the threat of being lost to oblivion due to the degradation of paper-based or computer-based media, or the haphazard attempt to clear the NSC grounds of its recorded past. Although a NSC Museum do exist, it only has space for memorabilia, mementos and other museum pieces but not historical production data and the like. Thus, this research might induce special attention to the expeditiousness of at least saving NSC’s recorded past for use in similar studies by other researchers.


Notes:

Kwek, Kim (2000). “A Rebuttal of Danaharta’s lies.” Kuala Lumpur: The Sun, 22 September 2000. back to text

Arroyo, Joker P. (2005), “Journal of the First Special Session, Thirteenth Congress,” Manila: Senate of the Philippines, January 5-7, 2005 back to text

Basilio, Leilanie, and Jeremiah Cabasan (2004), “Local Governance and the Challenges of Economic Distress: The Case of Iligan City,” Discussion Paper. Manila: Philippine Institute for Development Studies, Series 2004-45, December 2004, p. 2-3. back to text

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