Steel industry still awaiting revival

Every administration brags about bountiful remittances it is able to derive from overseas Filipino workers to augment domestic incomes. It’s something to be ashamed of, though, for it actually reveals their failures. Eleven million talented Filipinos are forced to work abroad because there is no steel industry to spark businesses, boost employment, and modernize agriculture. At the end of the day, the higher the OFW remittances are, the longer the delay will be of a Philippine steel industry.

More than a decade ago, the Arroyo administration attempted to revive the Nation Steel Corp. in Iligan City. It never happened. Why?

Perhaps the answer to the question is embedded between the lines of a Gotcha column I wrote as far back as 17 Nov. 2001, entitled “Revive National Steel, Revive North Mindanao,” reprinted below.

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Iligan is a city practically built on steel. It began hosting in the ‘60s a modest steel mill that the government, from a World Bank loan, transformed into huge integrated steel works to provide the girders for Southeast Asia’s growth. National Steel Corp. was born from what was once the Iligan Steel Mill in the early ‘70s. At its peak National Steel posted annual business of P16 billion, and employed 4,000 workers — a third of Iligan’s total payroll. Iligan boomed as steel gave rise to support enterprises, from trucking and trading to hotels and hospitals, banks and corner stores. Government set up a hydroelectric plant to fuel the businesses.

The patch on a National Steel uniform became a virtual seal of credit-worthiness. At any car dealership or eatery employees could readily order, then pay on soft terms.

All that changed two years ago today, when the steel works suddenly closed. The owners — Malaysian Hottick Investment Ltd. (82.5 percent), government through National Development Co. (12.5 percent) and Marubeni (5 percent) — had sought fresh capital to keep afloat. But National Steel’s P18-billion debt was too heavy a burden to bear. Market reverses, crony meddling, and operational difficulties brought the great machines to a halt. Over 1,300 once-proud workers went home with P750 million in unpaid wages and benefits. Surrounding businesses floundered, too. Iligan flickered to economic darkness.???The workers remained undaunted. Whittled down to a core of 800, they rallied round their union president since 1985, Simplicio Villarta Jr., a metallurgical engineering scholar who had risen up the ranks from trainee to chief of the inspection and testing department. Villarta had a plan. He teamed up with Alexander Delmo, a finance whiz who spent half his 20 years in metals in National Steel and owner of Allengoal Corp. Together in April 2000 they presented the Hottick majority with a plan. With the 800 workers, they would re-operate the plant within 45 days and thus save it P12 million a month in maintenance costs. They would even lease the facilities for two years until National Steel finds a new strategic partner-buyer. For that they would pay National Steel P20.5 million a month, money it could in turn pay to its creditors: Land Bank, PNB, Global Bank, Equitable-PCI, and Credit Agricole. Too, they would share 40 percent of the net income, money that National Steel can again use to settle its other obligations. National Steel would not spend a cent to reopen and rehabilitate the plant; Allengoal would even deposit a P100-million cash-and-performance bond to ensure safety and preservation of facilities and equipment. Allengoal was bullish: it had a technical tie-up with Hatch Associates, National Steel’s consultant since its inception, plus an initial P400-million credit line from International Exchange Bank. Too, Delmo had ready buyers of some of National Steel’s output: his own two private firms and competitors. The rest, he was confident of selling to the industry in which he circulates.???

Hottick liked Allengoal’s idea and was ready to endorse it when a presidential crony stalked in. The crony wanted a crack at the plant, and asked Malacanang to stop everything till he could come up with a better plan than Allengoal’s, or at least copy it. Months ticked away; the crony came up with nothing. Hottick and the creditors endorsed the original Allengoal proposal to Malacañang, where an impeachment in November 2000 overtook it.???

In Jan. 2001 government again offered National Steel for interim operation. Only one investor-operator submitted a proposal: Allengoal. The liquidator appointed by the Securities and Exchange Commission was ready to recommend Allengoal when new Trade & Industry Secretary Mar Roxas asked for time to study options till May 23, 2001. On that day, Roxas and the SEC received three offers, one of them from Allengoal. Its proposal, the same as the one made in April 2000, was deemed most acceptable. The two rivals could not match the performance bond, lease rental, and income sharing, much less Allengoal’s commitment to rehire all former workers and timetable to reopen.

Allengoal should have won. But Roxas again wavered. He called for still another bidding on Sept. 21. Before the big day, the two old losers asked for more time. The Malaysian majority owner withdrew from the bid evaluation committee in disgust, and opted to start its long-delayed lease with Allengoal. Roxas begged for time — and another bidding on Oct. 26. The three again submitted bids; again Allengoal’s oft-repeated offer was most superior.???

Meantime, the jobless workers grew restive. More so when President Gloria Macapagal Arroyo, a native of Iligan, snapped at them and accused them of delaying National Steel’s reopening. They wondered why she was blaming them for their two long years of waiting, when all the while their union head was committing their cooperation with the best bidder. For a while they thought of suing Roxas for the delays and National Steel owners for back-wages. They also contemplated picketing Mrs. Arroyo’s visit to her hometown. Allengoal’s Delmo, Villarta, and the mayor of Iligan prevailed on them for patience.

Yet Allengoal was itself losing patience. More so when, Roxas’s evaluation committee met with the bidders on Nov. 8. To Allengoal’s surprise, the committee said none of them met the technical and financial requirements. How could that be, when the committee practically adopted Allengoal’s old offers as terms of referrence that the two competitors failed to meet time and again.???

Still another meeting with bidders has been set by the evaluation committee for Nov. 26. But this early, Allengoal already knows what will happen. As with the many past biddings, it will emerge with the best offer, but the government will again stall for time until one of the two other bidders discovers Allengoal’s trade secret to be able to match its offer. By that time, Mrs. Arroyo would have lost Iligan. Her own townsfolk would have turned against her for not finding out all this time what or who really has been messing things up with Iligan’s biggest employer.

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