The Sad Fall of a Philippine Steel Giant

Summary

The National Steel Corporation (NSC) was once a symbol of Philippine industrial success, employing thousands in Iligan City. Originally a government-owned enterprise, NSC's journey from a promising steelmaker to its decline by 1999 was marked by privatization, economic challenges, and mismanagement. Despite initial success and profitability, competition from cheaper imports, financial missteps, and the Asian Financial Crisis led to its collapse. Efforts to revive the company failed, leaving its plant abandoned, a haunting reminder of what could have been for the Philippine steel industry.

Takeaways

• 🏭 NSC (National Steel Corporation) was once one of the Philippines' largest and well-managed government-owned companies.
• 🔨 The Philippines had a strong start in building its steel industry, with the potential to become a global giant, but several factors led to NSC's decline by 1999.
• 🛠️ NSC began as NASSCO (National Shipyard and Steel Corporation), producing steel for ships and attempting to build an integrated steel mill.
• 💸 Privatization in the 1950s led to Jacinto Steel taking over NASSCO, but funding issues and economic crises hindered progress.
• 👷 NSC experienced growth in the 1970s and became the Philippines' leading steel producer, employing over 4,000 workers in Iligan City.
• 💼 By the 1990s, NSC faced increased competition from cheap steel imports, especially from Taiwan and South Korea, leading to financial strain.
• 🤝 A second privatization in 1995 resulted in Malaysian company Wing Tiek Holdings taking over, but the new management lacked the necessary expertise, leading to severe losses.
• 📉 The Asian Financial Crisis of 1997 exacerbated NSC's troubles, ultimately causing its closure in 1999, leading to massive job losses and economic decline in Iligan City.
• 💥 Attempts to revive the company in the 2000s failed, even with new management from Global Steel Philippines Inc., partly due to a lack of funds and community support.
• 🏚️ Today, the remnants of NSC's plant in Iligan City serve as a stark reminder of the company's downfall and the missed opportunities for the Philippine steel industry.

Q & A

What was the significance of National Steel Corporation (NSC) in the Philippines?

NSC was once the pride of Philippine industry, being one of the biggest companies in the country and a rare example of a well-run government-owned company. It was a leading producer of steel and contributed significantly to Iligan City's economy.

How did the Philippine government initially plan to use the country's metallic minerals?

The government saw the minerals as the building blocks for a richly industrialized future, aiming to establish an integrated steel mill to produce steel domestically, build infrastructure, and open doors to specialty alloys and industrial chemicals.

What are the two major methods of steel production mentioned in the script?

The two methods are: 1) A vertically integrated process involving sintering, making pig iron, creating steel, and turning semi-finished steel into various products. 2) Using mini-mills to melt down scrap metal, clean out impurities, and recast it into new steel products.

What was the impact of the global oil price shocks on the Philippines during the 1970s?

The global oil price shocks led to economic turmoil, causing the peso to devalue significantly, which in turn drove up the prices of imported goods and made it difficult for indebted industrialists to service their foreign currency-denominated debts.

Why did the Philippine government decide to privatize National Shipyard and Steel Corporation (NASSCO)?

The government decided to privatize NASSCO due to a currency crisis that affected its plans, the need to purchase steel-making equipment from abroad, and the requirement from the United States Export Import Bank for privatization as a condition for a loan.

What were the consequences of the privatization process for IISMI?

The privatization process caused delays and financial issues for IISMI, with the Jacintos stating that the initial loan was insufficient to build an integrated steel mill. The government had to guarantee loans and provide additional funding to complete the mill.

How did NSC become a dominant player in the Philippine steel industry?

NSC became dominant by merging with other bankrupt local steel factories, expanding its capacity, and holding a monopoly over the country's steel industry for two decades. Its specialty in flat steel products and exports to China, Indonesia, and the United States further solidified its position.

What role did NSC play in Iligan City during its peak?

NSC was a generous patron of Iligan City, providing up to 75% of the city's total revenues, offering healthcare and housing benefits to its employees, and contributing to the local economy through high salaries and low employee turnover.

What were the key factors that led to NSC's decline in the 1990s?

The decline was due to cheap imports from Taiwan and South Korea, the need for investment in upgrades that the government could not afford, and the eventual sale to foreign steel traders who lacked the expertise to manage the company effectively.

How did the Asian Financial Crisis of 1997 affect NSC?

The crisis led to a massive devaluation of the peso, making NSC's US dollar-denominated loans and raw materials extremely expensive. It also resulted in the loss of credit and supplier relationships, leading to the company ending operations in 1999.

What was the aftermath of NSC's closure for Iligan City and its employees?

The closure led to 1,800 employees losing their jobs, a significant drop in city revenues, and estimated losses to supporting businesses of 1.4 billion pesos a year. The plant and housing complex now sit unused, serving as a reminder of what could have been.