The Grey Chronicles

2008.September.13

Recommendations for Future NSC: Threats


These factors include the political and legal environment affecting the nation as a whole, thus affecting the steel industry. Although not discussed here at length, its repercussions are noted. Other threats include the unbundling of the power rates and the worsening power supply in Mindanao; the constantly decreasing import tariffs vis-à-vis the increased volume of steel importation; the rising “brain drain” syndrome; and the challenges of keeping the natural environment safe from pollution.

T1. Legal and Political Environment: The political environment in the Philippines has been volatile in the 1990s, with the fall of Marcos and then Estrada, highlighting each break in the economic situation of the country. Gloria Macapagal-Arroyo’s term, due to end in 2010, has shown promise in stabilizing the economic policies of the country. Most people are optimistic that the country could do better in the coming years. The MTPDP for 2004-2010 outlined the most important Philippine concerns such as Economic Growth and Job Creation; Energy; Social Justice and Basic Needs; Education and Youth Opportunity; and Anti-Corruption and Good Governance.

Furthermore, the remnants of Jacinto (NSC News, 12 September 1990) and Cacho cases, inherited from the NSC and NDC, might not bear much effect to the industrial position of the company and will be a lingering reminder of the past. If GSPI has the legal right to deal with these cases, they should also be pursued for legal finality, or a set of guidelines be drafted such that the reputation of the new corporate identity be separate from the old.

T2. Unbundled Power and Worsening Energy Supply: The Philippines passed a landmark law (R.A. 9136) which embarked on the restructuring the power sector in 08 June 2001. The Electric Power Industry Act (EPIRA) envisions an industry with an independent regulator; privately owned and competitive generating plants; single regulated and privately owned transmission system; power distribution companies with incentives for performance; and vibrant competition for retailing power to end-users. It provides for the privatization of state-owned companies in the industry, most notably NPC, establishment of wholesale electricity spot market (WESM), creation of new regulatory body, government’s absorption of P200 billion of NPC’s liabilities, and review of NPC-IPP contracts (Abrenica, 2004).

With unbundling of power rates in October 2002, the new power rates posed a threat to the bottom line. The present rate system allows for the imposition of sub-transmission rates for all systems below 138kV. NSC’s electrical system used both 138kV and 69kV power supplies. Most sheet-production facilities, HSM, CSM and ETL manufacturing, are connected to the 138kV supply. Although the latter is specifically for the BSP operations, it also supplies the whole of NSC plant in case of power fluctuations or interruption. Thus, GSPI pays monthly for a power supply not directly used for flats production. From October 20002, transmission charge for 138kV was about P171.62/kw, while total Transmission Charges for 69kV was P242.83, or an additional P71.21/kw for sub-transmission. These charges are continually revised with increasing trend. It is imperative, therefore, that proposed project to relieve the 69kV supply and the plant to be solely supplied by 138kV be pursued (PFP, 2002).

T3. Increasing Steel Imports, Meager Steel Exports: Total imports is stable at 19% increase per annum with Iron and Steel imports regaining from a decline starting in the first quarter of 2000 and a strong climb at the end of the fourth quarter in 2002. Recent data from NEDA online shows that imports will climb from 42.6% increase during the second quarter of the current year to a level lower than the highest attained in 2002. Total exports decreased beginning 2001 and will gradually remain at low levels seen in the last quarter of 2004. While, Iron and Steel Exports accounts to a meager 0.06% of the total Manufactured Exports, NEDA predicts that it will continue to hover between P18 and 20M for the succeeding years.

T4. Rising “Brain Drain”: With the construction boom in the Middle East, especially in the United Arab Emirates, Kuwait, plus neighboring ASEAN countries like Vietnam, Cambodia and Malaysia, technically inclined Filipinos, e.g., engineers, technicians, or experts, are joining in the bandwagon in search of the proverbial pot of gold (Tullao, Jr., 2000). This is even true at GSPI, when each time offers of job on foreign lands are posted somewhere, employees—from managers down to the low-ranked personnel—flocked in hordes hoping to be slotted for at least an interview. Employees who were hired in 2004, promised with rosy future after the closure of NSC for almost four years, hoped for easier months ahead, yet remained in the same position with the same pay level for four years—pegged at 1999 exchange rates, plus holding respective familial obligations and responsibilities have no recourse but to look for greener pastures. Worse of all, these same ex-NSC employees observe that their counterpart expats, toting their GSPI-issued laptops, hired in 2004 at a salary level based on 2004 exchange rates, are pampered. Expats are afforded with shuttle buses to ferry their children enrolled to premier private school all expenses paid for by GSPI. They relax in their fully furnished no-rent blue houses with free electricity, free cable, landline and internet connections, plus free-flowing no-charge potable water, and sport amenities that could rival a five-star hotel: Olympic-size swimming pool, a covered tennis court, a standard size basketball court, guarded every hour 24/7!

Highly trained Systems Engineers and Technicians, although loyal at first to GSPI, are now considering employment in Middle East because of employment status uncertainty. Between 2005 and 2006, a number of experienced mechanical and electrical tenders plus well-trained quality assurance inspectors resigned to fill vacancies with higher competitive compensation packages outside of GSPI. Fortunately, fresh college graduates from nearby universities and colleges, including MSU-IIT, St. Peter’s College and Xavier University, were immediately drafted to fill the void, but by 2007, these same replacements followed suit their predecessors for high-paying jobs.

T5. The Challenge of the Natural Environment: Philippine government is a signatory of the Kyoto Protocol, and several landmark laws have been enacted in support of this gesture, such as the Clean Air Act, Water Conservation Act, among others.

In April 1994, NSC shared with two other companies—Coca- Cola Bottlers Philippines, Inc., and Honda Cars Philippines, Inc.—the first Macli-ing Dulag Environmental Achievement Awards Special Citation for Corporation for demonstrating deep commitment and outstanding achievements in protecting and conserving the environment (Illut, 1994).

By 1995, NSC completed the Acid Regeneration Plant, its eleventh environmental control facility since 1984 in addition to dust collectors, fume scrubber, treatment plants, neutralization facilities, and smoke stacks. Furthermore, NSC adopted a Business Chapter for the Environment in 1993 based on the Philippine Business Charter for Sustainable Development. An Environmental Management Group administered NSC’s efforts in waste reduction, recycling, treatment and disposal (NSC News, August, 1995).

In contrast, GSPI has but a single person who used to be part of NSC’s Environmental Management Group dealing with all this concern.


Notes:

NSC News (1990), What Employees Should Know About The Jacinto Claim, NSC News Supplement, Iligan City: NSC, 12 September 1990, p. i-ii. back to text

Abrenica, Ma. Joy V. (2004), “Contracting for Power: The Philippine Case.” Manila: Asian Development Bank, 01 December 2004. pp. 18-19. back to text

Plant Facilities Preservation (PFP, 2002), Power and Energy Analysis, Iligan: Plant Facilities Preservation, NSC, 07 October 2002. back to text

Tullao, Tereso Jr. (2000). An Evaluation on the Readiness of Filipino Professionals to Meet International Competion. CBE Working Paper Series 2000-01 Manila: De LaSalle University, 08 August 2003. p. 6. back to text

Illut, Jek (1994), NSC Cited for Environmental Concern. NSC News, XIX: 5, Makati: Corporate Communications, NSC, 31 May, 1994. p. 13. back to text

Balali, Macky (ed.) (1995), Protect and Preserve. NSC News, Vol. XX: 8. Makati: Corporate Communications, NSC, August 1995. pp. 8 – 10. back to text

Advertisements

Leave a Comment »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Blog at WordPress.com.

%d bloggers like this: