The Grey Chronicles

2008.September.11

Recommendations for Future NSC: Weaknesses


Some NSC’s weakness remained with GSPI’s taking over specifically, its dependence on imported raw materials and the outdated NSC’s business networks and e-commerce. Moreover, based on the four-year GSPI’s management of NSC facilities, new threats are emerging, e.g., lack luster remuneration scheme versus global standards; perceived instability at the top, insecurity at the bottom; and weak marketing of products to domestic markets.

W1. The Hitch of Imported Raw Materials: From the start, NSC has been importing raw materials, slabs and HRCs, from various international steel suppliers through accredited traders, thus, subject to market fluctuations (NSC News, 28 February 1993). The decline of the privatized NSC under Hottick was augured by its inability to secure a long-term agreement with its slab and HRC supplier. GSPI relies on an agreement with Stemcor and Steel Traders Corporation (STC) for its HRC needs and sourced slabs from foreign suppliers, too, claimed one STC employee. While it considers Ispat International Ltd with slabmaking facilities as its mother company, the latter does not supply GSPI with slabs, but ironically GSPI gets its slabs on spot basis from various international sources, consequently this makes GSPI’s supply subject to market fluctuations and traders mark-up. Thus, initiation of a long-term agreement with traditional suppliers of slabs and hot-rolled coils becomes imperative.

W2. Lack luster remuneration scheme versus global standards. Before and after privatization, NSC offered competitive salaries to its employees which were the envy of other Mindanao-based companies. Some ex-NSC employees even considered working for NSC, with their compensation comparable to worldwide standards, as similar to working abroad from the comforts of one’s home country! When GSPI took over management reins, they offered rehired ex-NSC personnel their 1999 salary levels with a gentleman’s promise of adjustment when the company tided over to commercial operations. An attempt of a review of the corporate compensation package took effect in 2006, yet disparities among same level of work receiving different levels of pay triggered the formation of a union among the rank-and-file personnel. On the supervisory and middle managers level, the same is also true, but differences are great. Some former NSC assistant managers and others at supervisory level then are now occupying the same positions, doing the same supervisory tasks, at GSPI. Another disparity is the fact that most expatriates occupying various positions were hired with prevailing salary rates in 2004 or later, thus much higher than the local personnel who remained stuck at receiving their 1999 salary levels. In present terms, the locals’ salary levels are almost a decade-old compared to expats’ salary levels.

W3. Outdated Business networks and e-Commerce: The business computer systems of NSC are outdated and old-fashioned. Business reporting was done mostly through the relatively slower channel of communication: telephone, fax, and courier systems.

Dr. Bill Torres, a part time consultant to NSC on Information Technology since 1985, claimed that NSC stopped acquiring new information technology in 1990s, although it exchanged its PC-XTs to 486s, and WordStar to MSWord (NSC News, 30 September 1994).

A special project submitted by this researcher in 2006 as a course requirement to MSU-IIT MBM’s Management Information Systems and Expert Systems in Business provided an analysis of GSPI’s Information Systems and Services Department from the viewpoint of a user in a production setting. The paper, entitled “Reengineering the Global Steel Philippines (SPV-AMC), Inc. Information Systems” detailed the known facts disseminated through GSPI’s corporate communications network, actual usage of the new in-house developed information systems, additional related literature research, and comprehensive analyses of the various systems. A copy of this paper was sent to GSPI’s Information Systems Department head, who remarked that the claims made therein were in essence true.

Meanwhile, a defunct Mainframe, which handled the stock procurement and maintenance programs until 1994, sits idly and unused.

W4. Instability at the top, insecurity at the bottom. For the past four (4) years, from 2004 to the present, there has been three (3) presidents prior to the present one, the Managing Director. From discussions with several employees, most perceived this as instability at the top. Although, patience have become a virtue of ex-NSC employees, who have shared common memory of NSC’s most trying era and have been loyal to the idea of the “old” NSC since then, nevertheless this could not last long enough to see another “changing of the guard.” This instability has affected the mills’ productivity, and further eroded the seemingly perceived teamwork between management and those it managed. Insecurity among the ranks is also high, foremost because of the delayed or curtailed salaries and pays, and the unremitted government dues pre-deducted from personnel’s compensation for their SSS and Philhealth premiums, as well as the withheld taxes, aside from unrequited promises since 2005 to fix them. To this day, this particular insecurity is a frequent feature on most local radio commentators’ airtime. Secondly, the anxiousness shown by management towards the union is making the Labor-Management relationship a thorny issue. The union only asked for the barest minimum pay increases, plus a small list of fringe benefits, enjoyed during NSC like free hospitalization, medicines, uniforms, shifting crew transport, bereavement assistance and group life insurance, to which the former cut all these in half, claimed a key informant. Another union officer further compared the economic provisions of the union and management proposals, referring to copies distributed by the union secretariat. A typical example: the union proposed for an aggregate of three times increase in night premium pay from 11.5% to 50% of regular pay, while management countered it with 18% increase from 11.5% to 13.5% of regular pay. The informant justified that the 50% night premium was the typical rate on top of NSC’s regular pay since 1989, and that most members desired to revert to the accustomed rate.

On 19 November 2007, a labor crisis ensued at GSPI and its DOLE-brokered resolution was hinged on management’s presentation to employees of the GSPI’s financial status, which the company refused to do. The rank-and-file attributed the crisis to the government’s decision to privatize NSC and sell it to a company without a good track record (Valdez, 2007n).

W5. Weak marketing of products to domestic steel markets. NSC’s dominance of the domestic market before and after privatization was legendary that certain groups in the country branded the company an opportunistic monopoly (Henares, 2006). In contrast, the GSPI’s marketing department, mostly staff with Indian expatriates who may or may not have any local selling experience in the country resorted to focusing their skills on exports rather than on the domestic market. It is a fact, moreover, that in the past four years of GSPI, only a few of its products are for exports.

Domestic sales and marketing is being handled by a contractor, Steel Alliance. Prospective buyers could not directly deal with GSPI but rather inconvenienced by having to deal with a contractor.


Notes:

Santos, Bayani Jr. (ed.) (1993) “Supply Side Economics: A More Challenging Ahead for our Raw Materials and Supply Group.” NSC News, XVIII: 2, Makati: Corporate Communications, NSC, 28 February 1993. p. 7. back to text

Balali, Macky P. (ed.) (1994), “Making the Information Technology Big Leap.” NSC News, XIX: 9, Makati: Corporate Communications, NSC, 30 September 1994. pp. 3-5. back to text

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

Valdez, Katrina Mennen A. (2007n), “Global Steel workers restrained from protest actionn,” Manila: The Manila Times, 20 November 2007. back to text

Henares, Hilarion M. Jr. (2006), “National Steal Corporation,” Give and Take. Book 9. Manila: Philippine Folio, 2006. back to text

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4 Comments »

  1. Could you kindly please assist me with recommendations to the following weaknesses. I see that you have a good report writting

    No. Weaknesses
    1 The salary system is entirely manual
    2 Con Masters, the owner /Manager of Multiman (Pty) Ltd is a lawyer by training with virtually no computer Knowledge
    3 He is concerned that if the company computerises the salaries system and places the application on the companies network the risk of breaches of confidentiality and much greater
    4 A signed unnumbered memo usually follows
    5 Thereafter the personnel section notifies him by memo if any of the standing information changes, through occationally they forget to do so
    6 Any employee who is not present picks up his cheque from Erki Nool on his return

    Comment by One — 2010.May.11 @ 09:19 | Reply

    • I’m sorry . . . but I am too loaded with work and taking care of my son that I don’t even have enough time to finish the posts for this blog. Thus, I can’t take any additional assignment for the moment.

      Comment by reyadel — 2010.May.12 @ 17:43 | Reply

  2. Thanks for all the INFOS….

    Comment by 060586-7 — 2009.October.13 @ 01:07 | Reply

  3. whats up:) I have been lingering this site several times. Needed to say thanks for all the info!

    Comment by Nuffoutfivy — 2009.August.26 @ 09:04 | Reply


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