Rebuilding one industry at a time

During the opening of the San Miguel Corporation’s Mega Industrial Poultry factory in Davao del Sur, President Bongbong Marcos placed emphasis on the need for the Philippines to “industrialize” and adopt the latest technologies available in order to make the country competitive and fasttrack economic growth. The President failed to see the need for steel as well.

President BBM was correct and for his next ribbon cutting, I would suggest he visits the Steel Asia plant in Compostela town in Liloan, Cebu, which happens to be the domain of DOT Secretary Christina Frasco and her husband Congressman Duke Frasco. There the President will find a very modern steel mill equipped with the latest machinery from Italy, operated by experts from Italy, Germany, the Netherlands and Filipino technical experts, many of whom have returned from the Middle East.

Unbeknownst to many, from 2018 to 2022, Steel Asia provided all the 50 mm rebars (commonly called round bars) that were used for the Cebu Cordova Link Expressway built by the MVP group. The total amount delivered was 38,609 metric tons of rebar produced at the Steel Asia plant in Batangas.

Last weekend, I was invited along with a select group of columnists to visit one of the cleanest if not “the cleanest steel mill” in the country located in Compostela, Cebu. Given that my mental file of images and impression for steel mills in the country are all circa 1960 to 1970, the invitation was intriguing enough for me to say yes. As a result, I learned so much about the true state of the steel industry in the Philippines and about the company Steel Asia.

After watching and listening to presentations, comparing notes with more senior and veteran journalists and speaking to engineers and technical people while touring the 25-hectare Steel Asia plant, it became very clear that what most Filipinos know about the steel industry is based on information that is “old stock,” a sad generalization that the steel industry is dead and dirty or that all steel products are imported.

Even worse is the persistent notion that all steel plants in the Philippines were government owned, taken over by government or were failed joint ventures between government and corrupt cronies. In other words, the industry died because of government incompetence. But as it turns out, not all the steel plants were government concerns and not all died or folded up.

Steel Asia under the leadership of Mr. Benjamin Yao, a second-generation company executive, has seen it all – and then some. Starting in 1965, the company has been run by the family that is totally committed to the operation of their steel mills. Ben Yao often mentions how he started as a working student going to night school but eventually opted to give it all to the family business and sacrificing a formal education.

But what he gave up in the classroom, Ben Yao earned in spades of technical knowledge working alongside engineers, managers and a stream of foreign consultants. The continuing education clearly got him hooked, because the Steel Asia journey was no easy ride. Many times, hard choices had to be made, personal comfort and luxuries denied to self, so much so that even now, when the business has grown, Ben Yao often walks to work, or drives a used car which causes his managers discomfort because “our cars are nicer than the boss’.”

The day and a half we spent interviewing Ben Yao turned out to be short-term courses on the need to invest in the latest technology and machinery, having the courage to put everything on the line: your house, material assets, etc. in order to get financing for modern equipment and plants. Being fast learners and teachable, even from foreign consultants who lived with them on site or at home, having humility enough to allow foreign investors to “camp” in your backyard and influence or affect daily operations.

Just when the company and business seemed headed in the right direction, the 1997 financial crisis hit and, having sizeable loans that were dollar-denominated, completely stunned the group, along with many other businesses and corporations worldwide. That’s when all the years of developing good and professional relationships and being teachable benefitted Ben Yao and Steel Asia.

Instead of cutting the cord and cashing in their chips, the 17 banks that did business with Steel Asia opted to work out an arrangement that effectively postponed the company’s independence but allowed them to manage the plants the way they have through the years. Clearly the banks saw that the future was in steel. Slowly but surely, one bank after another cleared the slate and Steel Asia survived and has now gone into expansion mode, contrary to the impression that there are no longer any operating and profitable steel mills in the country.

In fact, Steel Asia was such a standout in its journey that one or two other privately owned steel mills came under Ben Yao’s wings on a “tolling basis.” Believing that there is no way but up, Steel Asia has and will build plants all over the country in order to create strategic production and distribution of steel products nationwide.

At the moment, they have steel mills in Meycauayan, Bulacan; Calaca, Batangas; Carcar, Cebu; Compostela, Cebu. Upcoming expansion projects or plants will be in Lemery, Batangas; Concepcion, Tarlac; Candelaria, Quezon. The rationale for building so many plants and mills goes back to distribution and strategic locations that are nearest to the market. Being near to market cuts the cost of shipping, trucking and, in some cases, lowers costs due to the availability of renewable energy sources such as government hydroelectric power plants.

When the invitation is respectfully extended by Steel Asia and Cong. and Sec. Frasco, I respectfully recommend that the President sees for himself: The steel industry is alive and building!