An Evaluation of Flat Carbon Steel Production of National Steel Corporation (NSC) From Its Privatization in 1995 To Its Liquidation in 1999 and Its Implications To The Country's Steel Industry

i
AN EVALUATION OF FLAT CARBON STEEL PRODUCTION

OF NATIONAL STEEL CORPORATION (NSC)
FROM ITS PRIVATIZATION IN 1995 TO ITS LIQUIDATION IN 1999
AND ITS IMPLICATIONS TO THE COUNTRYS STEEL INDUSTRY
A THESIS
Presented to
the Graduate Faculty of
Master in Business Management
MSU Iligan Institute of Technology
Iligan City
In Partial Fulfillment
of the Requirements for the Degree
MASTER IN BUSINESS MANAGEMENT
(Major in Production Management)
ARTURO B. del AYRE, R.E.E.

October 2008
iii
ABSTRACT
Flat carbon steel production in the privatized National Steel Corporation

(NSC) during the Wing TiekHottick era succumbed to external forces, such as
the onslaught of cheap steel imports and the cyclical movement of global steel
prices, vis--vis fortuitous events in the 1990s. Three prominent events were
considered: the Philippine trade liberalization, the Asian Financial Crises in 19971998 and the global slowdown of steel demand. Albeit a succession of promising
internal factors: high mill-utilization and production rates, soaring material and
prime yields, plus diminutive customer complaints for its finished products, NSC
was threatened with liquidation in 1999, then officially closed on 07 May 2000.
The study attempted to merge quantitative data with qualitative facts
through time-line series graphs, an investigative reconstruction of the past, and
the before-and-after effects of the three events to NSC flat steel production. NSC
flat carbon steel production is significantly correlated to ASEAN steel demand,
and highly, significantly correlated to Global Steel, Flat Steel and Asian steel
price indices. Furthermore, NSCs flat production is significantly correlated to the
following NSCs internal factors: production rate, material yield, and quality, in
terms of customer acceptance rate.
Incidentally, the study found that Philippine crude production is highly,
significantly correlated to Philippine and ASEAN steel demand (consumption per
capita). In addition, Philippine Steel raw material imports is highly, significantly
iv
correlated to ASEAN semi-finished and finished steel imports and ASEAN
consumption of finished steel. Furthermore, Philippine raw steel imports is highly,
significantly correlated to Philippine steel demand (consumption of finished steel)
as well as to Philippine steel consumption per capita.
NSC facilities was revived in 2004 by Global Steel Holdings, Ltd. (GSHL)
as Global Steelworks Infrastructures, Inc. (GSII) then later renamed as Global
Steel Philippines (SPV-AMC), Inc (GSPI) in 2005. GSPI promised to inject fresh
capital and bring back former NSCs dominance in the Philippine steel market,
and aggressively venture partnerships in China, ASEAN, and the world.
A SWOT matrix draws attention to the following STEP recommendations
for GSPI: the benchmarking of the organization (structure); the maximization of
base capacity production through efficient use of resources through ISO
9001:2000 (tasks); the strengthening of GSPIs domestic market penetration
(environment); the upgrade of GSPI employees compensation package (people);
and eventually, the revival of the ISM project, among others.
v
ACKNOWLEDGEMENTS
Many people have contributed to the final version of this thesis, and to all
of them, the authors heartfelt gratitude is hereby expressed. There are, however,
several who warrant special mention. Dr. Annie J. Orejana as thesis adviser
offered her timely motivation, valuable support and succinct guidance. Dr. Alita
T. Roxas, Dean of the College of Business Administration, guided the author
during the thesis proposal stage, and then offered innumerable judicious
suggestions for improvement of the final form. Prof. Michael M. Gagarra, who
acted as the de facto thesis content adviser, suggested additional snippets of
NSC history and offered supplementary analyses. This triumvirate, as members
of the guidance committee, became a formidable team with their concerned
efforts, insightful comments, profound review of the manuscripts, and timely
completion of this work.
Sincere thanks also to Prof. Milagros R. Narido, MBM coordinator, for
her motherly attention when the author was in search of an adviser, as well as
her perceptive annotations, and Ms. Elizabeth G. Delmo, for her perpetual
encouragement especially her personal reminders on the importance of patience,
hardwork, and coolheadedness during the thesis writing.
The authors three sisters deserve mention: Ma. Andriena Ida B. del
Ayre-Ofina, for her statistical expertise for this thesis while also writing her own
masteral thesis; Ana B. del Ayre and Ma. Anelyn B. del Ayre-Ome, thesis
financiers, without them the printed form would have been impossible.
vi
All ex-NSC management, supervisory, and rank-and-file personnel, who
lived through and out of NSCs most trying era, the authors gratitude is beyond
words. These former and present NSC managerial, support, operations, quality
assurance and maintenance supervisors, staff and assistant engineers offered
their recollection of NSCs glorious past, participated in the making of the SWOT,
and assisted in the collection of the data used, specially the internal factors.
Mr. Sushant C. Das, then President of GSPI (2004-2006) and Mr.
Munish Dewan, department head of Business Strategy, shared their knowledge
in the steel industrys Business Strategy while the author was hired as GSPIs
Analyst. Their subtle queries on what really happened to NSC then became this
writers encouragement on re-pursuing masteral studies. Yet, instead of a short
answer, this evolved into writing this lengthy and reflective thesis.
Almira, soulmate-wife, and our sons: R.E.J., R.E.X. and R.E.D. provided
their tender love, infinite patience, understanding and moral support.
Finally, this work is dedicated to The Almighty and Powerful God, for
giving the author the strength, wisdom and serenity all throughout this research.
Last but not the least, this thesis is also dedicated to Papa and Mama, for their
encouragement of completing this thesis after a hiatus of ten years.
Arturo B. del Ayre, R.E.E.
vii
TABLE OF CONTENTS
Page
TITLE PAGE ..................................................................................................... i
APPROVAL OF THESIS ................................................................................. ii
ABSTRACT....................................................................................................... iii
ACKNOWLEDGMENTS ................................................................................... v
TABLE OF CONTENTS.................................................................................... vii
LIST OF FIGURES ...................................................................................................... ix
LIST OF TABLES ............................................................................................. xi
LIST OF APPENDICES .................................................................................... xiv
CHAPTER
1
INTRODUCTION
Background of the Study ..................................................................... 2

Statement of the Problem .................................................................... 8
Hypotheses........................................................................................ 10
Significance of the Study ................................................................... 10
Limitations of the Study ..................................................................... 14
Definition of Terms............................................................................. 15
2
REVIEW OF RELATED LITERATURE
21
The Philippine Industry and Manufacturing ....................................... 22

Asian Currency Crisis ........................................................................ 24
Steel Industry..................................................................................... 26
3
THEORETICAL FRAMEWORK
29
RESEARCH METHODOLOGY
33
Subject and Scope of the Study ........................................................ 33

Research Design ............................................................................... 35
Research Instrument ......................................................................... 36
Data Gathering .................................................................................. 36
Treatment of Data.............................................................................. 38
5
PRESENTATION, INTERPRETATION AND ANALYSES
44
NSC Flat Carbon Steel Production, 1995 - 1999............................... 44

World/ASEAN Steel Supply (Capacity).............................................. 48
The Government-Owned NSC, 1974 - 1994 ..................................... 57
World/ASEAN Steel Supply (Production) .......................................... 61
World/ASEAN Steel Demand (Consumption).................................... 67
viii
Philippine Raw Steel Imports............................................................. 78
Price Elasticity of NSCs Raw Steel Imports...................................... 89
Steel and Raw Materials International Pricing Trends....................... 92
Summary: NSC Production versus External Factors......................... 96
The Privatized NSC, 1994 - 1999 .................................................... 101
1995-1999 NSC Production Rate .................................................... 107
1995-1999 NSC Material Yield ........................................................ 112
1995-1999 NSC Prime Yield............................................................ 114
1995-1999 NSC Product Quality ..................................................... 116
Summary: NSC Production versus Internal Factors ........................ 122
Events and Emerging Trends in 2000 and Beyond ......................... 123
NSC on Liquidation, 2000 2004.................................................... 124
The Recharged NSC: GSII to GSPI, 2004 .................................... 129
6
SUMMARY, CONCLUSION AND RECOMMENDATIONS
134
Summary of Findings....................................................................... 134

Conclusion ....................................................................................... 140
Recommendations for Future NSC.................................................. 143
Recommendations for Further Studies ............................................ 174
BIBLIOGRAPHY
177
APPENDICES
196
CURRICULUM VITAE
276
CERTIFICATE OF AUTHENTIC AUTHORSHIP
278
ix
LIST OF FIGURES
Figures
Page
Steel Value Chain...................................................................................... 2
Snapshot of History from NSC to GSPI..................................................... 3
Flat Carbon Steel Production Process Flow.............................................. 4
Theoretical Model of Independent Variables affecting NSC Flat

Carbon Steel Production ......................................................................... 32
NSC Monthly HRC and CRC Production, 1995 -1999 ............................ 46
NSC Quarterly Flats (CRC) Production, 1995 2000 ............................. 47
Globalization of the Steel Market............................................................. 50
Emergence of Steel Companies with over 40 mtpy Capacity.................. 52
Comparative HRC Flats Production, 1991-2004 ..................................... 62
10
ASEAN Hot Rolled Flats Production, 1991-2004 .................................... 64
11
World, ASEAN vs. NSC Crude Production, 1991-2004........................... 66
12
Evolution of steel specific consumption per unit of GDP, 1950-2005...... 68
13
World Flat Carbon Steel Supply vs. Demand .......................................... 69
14
World vs. ASEAN Apparent Finished Steel Consumption, 1991-2004.... 70
15
ASEAN Apparent Finished Steel Consumption, 1991-2004.................... 72
16
World, ASEAN vs. Philippines Apparent Consumption of Finished

Steel, 1991-2004 ..................................................................................... 74
17
Apparent Steel Consumption per Capita, in kg ....................................... 76
18
Philippines Steel Intensity, 1985-2004 .................................................... 77
19
Exports as a Percentage of Global Finished Steel Production................ 78
20
ASEAN Imports of Semi- and Finished Steel, 1991-2004 ....................... 81
21
ASEAN Exports of Semi- and Finished Steel, 1991-2004....................... 82
22
Exports as a Percentage of ASEAN Steel Production............................. 83
23
Philippines Steel Trade vs. NSC Production, 1991-2004 ........................ 84
24
Philippines Steel Imports per Type, 1991-2004....................................... 86
25
NSC Raw Material Imports, 1991-2004................................................... 87
x
26
Slabs Fitted Regression Line Plot ........................................................... 89
27
HRC Fitted Regression Line Plot............................................................. 91
28
Flat Carbon Steel Monthly Index Prices, 1994-2000 ............................... 93
29
Scatter Plot with Regression Line of NSCs CRC Production vs.

Average CRC Prices ............................................................................... 95
30
NSC Plant Availability and Utilization Computation............................... 108
31
Pickling Lines Production Rate MT/EOH (1995-1999) ......................... 110
32
NSC CRC Material Yield vs. Production, 1995-1999 ............................ 112
33
NSC CRC Prime Yield vs. Production, 1995-1999................................ 114
34
Yearly Trend of NSC Customer Complaints, 1988-1999....................... 116
35
NSC's % Customer Acceptance, 1995-1999......................................... 120
36
Monthly Trend of NSC Customer Complaints, 1995-1999 .................... 121
37
NSC Process Flow ................................................................................ 199
38
Economic and Steel Industry Time Line ................................................ 203
39
Transactions for NSCs Stake (1995-1998)........................................... 204
40
Statistical Summary for NSC CRC Production, 1995-1999................... 205
41
Statistical Summary for NSC HRC Production, 1995-1999................... 206
42
Philippine Steel Scenario in 1995.......................................................... 240
43
Philippine Steel Scenario in 2000.......................................................... 241
44
NSC Production vs Mill Utilization, 1995-1999 ...................................... 256
45
NSC Functional Table of Organization (1993)....................................... 262
46
47
NSCs CSM Function Table of Organization (2000).............................. 264
48
NSC Liquidator Functional Table of Organization (2004)...................... 265
49
GSPI Functional Table of Organization (2007)...................................... 266
50
FreeMind Concept Map for this Research............................................. 269
xi
LIST OF TABLES
Tables
Page
NSC Flat Carbon Steel Production, 1994 -2000...................................... 45
Flat Steel Capacities, Mtpy in 2000 ......................................................... 54
Mill Rated Capacities in the Philippines, 1994-2000 ............................... 55
NSCs Annual Rated Capacity (000MT) ................................................. 59
World/ASEAN Production of Hot Rolled Flats Steel ................................ 63
World / ASEAN Total Production of Crude Steel, 1994 2000 ............... 65
World/ASEAN Apparent Consumption of Finished Steel, 19942000......................................................................................................... 71
World/ASEAN Apparent Consumption per Capita, 1994-2000 ............... 75
World/ASEAN Exports of Semi-Finished & Finished Steel, 19942000......................................................................................................... 79
10
World/ASEAN Imports of Semi-Finished & Finished Steel, 19942000......................................................................................................... 80
11
Philippine Steel Imports, metric tons, 1991-2004 .................................... 85
12
Summary of Correlation of NSC Production and World, ASEAN

and Philippine Supply (Production) ......................................................... 97
13

and Philippine Demand (Apparent Consumption per Capita [ACC]) ....... 98
14

and Philippine Demand (Apparent Consumption of Finished Steel
[ACFS]).................................................................................................... 99
15
Summary of Correlation of NSC Production and Raw Materials

(Semi-Finished and Finished [SF&F]) Imports ...................................... 100
16
Summary of Correlation of NSC Production and Steel Index Prices ..... 101
17
Correlation of NSC Production and monthly NSC's Production

Rate ....................................................................................................... 111
18
Correlation of NSC Production and monthly NSC Material Yield .......... 113
19
Correlation of NSC Production and monthly NSC's Prime Yield ........... 115
20
Correlation of NSC Production and monthly NSC's Quality Rate

(Percent Customer Acceptance Rate, %CAR) ...................................... 121
xii
21
Comparative Analyses: NSC Before, After, Now................................... 133
22
Effects of External Factors to NSC's Flat Carbon Steel Production ...... 135
23
Effects of External Factors to NSC's Flat Carbon Steel Production ...... 137
24
Effects of Internal Factors to NSCs Flat Carbon Steel Production ....... 139
25
World / ASEAN Total Production of Crude Steel, 1991-2004 (Data:

IISI, various years)................................................................................. 207
26
World / ASEAN Hot-Rolled Flats Production, 1991-2004 (Data:

IISI, various years)................................................................................. 208
27
World / ASEAN Tinplates Production, 1991-2004 (Data: IISI,

various years) ........................................................................................ 209
28
World / ASEAN Apparent Consumption of Finished Steel, 19912004 (Data: IISI, various years)............................................................. 210
29
World / ASEAN Apparent Consumption per Capita, 1991-2004

(Data: IISI, various years)...................................................................... 211
30
World / ASEAN Imports of Semi-Finished and Finished Steel,

1991-2004 (Data: IISI, various years).................................................... 212
31
World / ASEAN Exports of Semi-Finished and Finished Steel,

1991-2004 (Data: IISI, various years).................................................... 213
32
Philippine Steel Intensity Data, 1984-2004............................................ 214
33
Best Subsets Regression for NSC Production and World Factors ........ 216
34
Analysis of Variance: External Factors: World ...................................... 217
35
Multiple Regression Analysis: External Factors (World)........................ 217
36
Best Subsets Regression for NSC Production and ASEAN Factors ..... 218
37
Analysis of Variance: External Factors (ASEAN) .................................. 219
38
Multiple Regression Analysis: External Factors (ASEAN) ..................... 219
39
Best Subsets Regression for NSC Production and Philippine

Factors................................................................................................... 220
40
Analysis of Variance: External Factors (Philippines) ............................. 221
41
Multiple Regression Analysis: External Factors (Philippines)................ 221
42
Best Subsets Regression for NSC Production and Internal Factors ..... 222
43
Analysis of Variance (Internal Factors).................................................. 223
44
Multiple Regression Analysis: Internal Factors...................................... 224
45
Correlations of External Factors to NSC Production ............................. 225
xiii
46
Correlation of Internal Factors to NSC Production ................................ 227
47
Correlation of NSC Flats Production versus World, ASEAN and

Philippines Steel Production, in Metric Tons ......................................... 228
48
Correlation of NSC Flats Production versus World and ASEAN

Steel DemandApparent Consumption of Finished Steel, in
Metric Tons, and Apparent Consumption per Capita, kg....................... 229
49
Correlation of NSC Flats Production versus World, ASEAN &

Philippines Steel Trade, in Metric Tons ................................................. 230
50
Correlation of NSC Flat Steel Production versus World & Regional

Yearly Steel Prices, in US$ ................................................................... 231
51
Correlation of NSC Flat Steel Production versus Monthly World &

Regional Steel Prices, in US$ ............................................................... 232
52
Correlation of NSC Monthly Production Tonnage vs. Prime Yield

and Material Yield, in percent ................................................................ 234
53
Correlation of NSC Monthly Production Tonnages and Production

Parameters ............................................................................................ 236
54
Correlation of NSC Quarterly Production Parameters........................... 237
55
Correlation of NSC Production vs. Quarterly World Steel Index

Prices..................................................................................................... 238
56
NSC Steel Imports (1994 1999) ......................................................... 239
57
Flat Steel Mergers & Acquisitions, 2000................................................ 242
58
Geographical Locations of Steel-Producing Countries.......................... 245
59
List of Asian Steel Companies............................................................... 246
60
Flat Steel Corporate Bankruptcies (1998-2002) .................................... 254
61
Companies That Ended in Bankruptcy .................................................. 254
62
Steel Industry Tariff Reform Schedule, 1991-2000 ............................... 255
63
Summary of Correlations: NSC Production, Production Rate and

Mill Utilization......................................................................................... 257
64
Customer Complaints, 1995 - 1999....................................................... 261
65
A Comparative Table of NSC: Before, Then and Now .......................... 267
66
SWOT Matrix ......................................................................................... 270
xiv
LIST OF APPENDICES
Appendix
Page
Key Informant Interview Questionaire ................................................... 196
Key Informants ...................................................................................... 198
NSC Process Flow ................................................................................ 199
Economic and Steel Industry Time Line ................................................ 200
Transanctions for Nscs Stake (1995-1998) .......................................... 204
Anderson-Darlington Normality Tests.................................................... 205
Tables of World / ASEAN
Philippines Steel Intensity Data, 1984-2004.......................................... 214
Multiple Regression Analysis: External Factors .................................... 215
Multiple Regression Analysis: External Factors (ASEAN) ..................... 218
Multiple Regression Analysis: External Factors (Philippines)................ 220
Multiple Regression Analysis: Internal Factors...................................... 222
Tables of Correlation ............................................................................. 225
NSC Steel Imports (1994 1999) ......................................................... 239
Philippine Steel Scenario....................................................................... 240
Flat Steel Mergers & Acquisitions, 2000................................................ 242
Geographical Locations of Steel-Producing Countries.......................... 245
List of Asian Steel Companies............................................................... 246
Flat Steel Corporate Bankruptcies (1998-2002) .................................... 254
Steel Industry Tariff Schedule, 1991-2000 ............................................ 255
NSCs Mill Utilization, 1995-1999 .......................................................... 256
NSC Corporate Philosohy ..................................................................... 258
NSCs Corporate Quality Policy (1998) ................................................. 259
Cold Strip Mill Vision and Quality Policy................................................ 260
Customer Complaints, 1995-1999......................................................... 261
Steel Data, 1991-2004............................... 207
xv
AA
NSC Functional Table Of Organization (2000)...................................... 263
BB
NSCs CSM Functional Table Of Organization (2000) .......................... 264
CC
NSC Liquidator Functional Table of Organization (2004)...................... 265
DD
GSPI Functional Table of Organization (2007)...................................... 266
EE
NSC: Before, Then and Now ................................................................. 267
FF
Freemind Concept-Map for this Research............................................. 269
GG
SWOT Matrix ......................................................................................... 270
HH
Special Acknowledgment for Former NSC Personnel........................... 272
II
List of Abbreviations .............................................................................. 275
1
CHAPTER 1
INTRODUCTION
This research focuses primarily on National Steel Corporation (NSC) as a

manufacturing entity of flat carbon steel products from 1994, on the onset of its
privatization, to 2000 after its liquidationthe closure of a company by collecting
assets and settling its debts. It is NSC insiders common knowledge that flat
carbon steel, particularly cold-rolled products, was the bread-and-butter of NSCs
domestic market dominance from its inception in 1974 to its liquidation. Where
relevant and necessary, however, an analysis of international events and its
effects to the Philippine situation, particularly its steel industry, is discussed.
Various nagging questions haunted the NSCs liquidation in 2000. The
general public has had some snippets of circumstances, notions, and
preconceptions why the premier steel corporation of the Philippines closed but
the root causes have not been fully studied. Furthermore, while majority argued
that NSC closed in 1999 primarily because it was unable to pay its debts, this
study offers an alternative viewpoint aside from the inconvenient truth of the
corporate financial scenario during the period of the study.
Three
scenarios
were
prominent,
namely:
the
Philippine
Trade
Liberalization in the 1990s, the Asian Financial Crises in 1997-1998, and the
global slowdown of the steel industry in the second half of the 1990s.
Background of the Study

The steel industry encompasses many subsectors, thus to facilitate
understanding, a simple value chain is provided below, Figure 1:
Figure 1: Steel Value Chain

(Adapted from Claessens and Henderson, 2007)
National Steel Corporation was organized on 22 February 1974 from the
assets of Iligan Integrated Steel Mills (IISMI) when the later was subsequently
foreclosed by the Development Bank of the Philippines (DBP). NSC acquired the
cold rolling facilities of Elizalde Steel (ELISCON) in 1978 and its tinning lines
three years later. In 1981, the National Development Company (NDC) assumed
full ownership of NSC. Two phases of Five-Year Expansion Projects in 19831988 and in 1991-1992 brought flat steel production capacity from 151,000 tons
in 1974 to 800,000 tons in 1988 then 1,200,000 tons in 1992. Prior to liquidation,
NSCs manufacturing plant occupied 450 hectares in Iligan City and 11.8
hectares in Pasig City. Installation of a Corex slab-caster in lieu of a Basic
Oxygen blast furnace, the purchase of a Continuous Annealing Line or HighConvection Furnaces, as well as Computerization Level 3 (the replacement of
the Mainframes, purchase of Computerized Maintenance Management System
for Facilities Management and SCADA for Utilities), among several others were
planned and considered for the next Five-Year Expansion Projects.
Aside from being the countrys leading producer of billets, the raw
materials for rebars and wire rods, NSC was the dominant flat-rolled producer in
the Philippines and was the countrys only tinplate producer. NSC flat products
consist of hot-rolled coils, hot-rolled plates, cold-rolled coils, and tinplates.
Figure 2: Snapshot of History from NSC to GSPI

(Various Sources; see Appendix D for detailed timeline).
In 1992, NSC enjoyed considerable leads in domestic flat-rolled market
shares, particularly hot rolled coils (29%), cold rolled coils (72%) and tinplates
(53%). By 1999, however, market shares slid down to 0%, 22% and 18%,
respectively. From a 53% market share of flat steel in 1995, NSC only garnered
10% of the total flats market by 1999. The downtrend started in 1997 primarily
attributed to the dumping of cheap imported steel products into the country (NSC,
1997). Suits filed by NSC before the Tariff Commission against, CIS/Russian hotrolled coils on 23 September 1998 (Tariff Commission, 2000) were dismissed on
30 August 2000 concluding fair competition from normal imports. The case of
Taiwanese CRCs on 28 June 1999 (Tariff Commission, 2001) sacked on 24 April
2001 for lack of merit; and South Korean tinplates on December 1996 (Tariff
Commission, 1999) similarly rejected on 18 October 1999 citing excess domestic
and shift in demand from Electrolytic Tin Plate sheets to coils.
Three facilities produce the flat products of NSC, namely: hot strip mills,
cold strip mills and the electrolytic tinning lines. Refer to Appendix C for a
complete list of facilities for flat steel production.
Figure 3: Flat Carbon Steel Production Process Flow

(Adapted from the American Iron and Steel Institute)
The Hot Strip Mills, which process slabs to hot-rolled coils and hot-rolled
plates, consisted of Hot Strip Mill No. 1, Hot Strip Mill No. 2 and a Plate Mill.
Brazil, Australia, Korea, Mexico, Europe, Russia and China supplied NSC with
slabs on a spot market basis, but the Asian crisis in 1997 frustrated NSCs
attempt of a slab supply agreement. Commissioned on 17 July 1993, President
Fidel V. Ramos in his speech during the inauguration ceremonies said, the 1.2
million tons per year Hot Strip Mill No. 2 is the final phase of NSCs expansion
effort and the vital link to the full integration of the steel industry in the
Philippines (NSC News, July 1993).

By 30 March 1995, Hot Strip Mill No. 2 attained its all-time highest daily
production of 5,182 metric tons. Hot Strip Mills annual production slid from
792,767 metric tons in 1996, an increase from the all-time high year production of
644,552 metric tons in 1994, to a meager 91,601 metric tons in 1999. The
decrease can be attributed to the fact that only the Hot Strip Mill No. 2 was
operational by 1999, while the 500,000 metric-tons-per-year Hot Strip Mill No. 1
was mothballed due to economic reasons, although plans were made to dedicate
it to hot-rolled plates production and to cater to special steel markets.
The Cold Strip Mills produced coils, sheets and tin-milled black plates
from NSCs Hot Strip Mill-produced or imported hot rolled coils. The hot-rolled
coils are reduced in either the 0.250 million-tons-per-year four-stand or 0.600
million-tons-per-year five-stand tandem mills. Finished products at Cold Strip Mill
reached its daily peak on 23 November 1994 with 3,448 metric tons. Annual
production volume fell more than 75% from 513,002 in 1995 to 121,514 metric
tons by 1999, compared to an all-time high of 415,420 metric tons in 1993.
Again, the dumping of cheap imports allegedly caused the production slowdown.
The Iligan-based 150,000 metric tons per year Electrolytic Tinning Line
No. 3 produced tinplates from its local Cold Strip Mill production or imported tinmilled black plates from Japan, Korea, Australia and Brazil. Electrolytic Tinning
Line No. 3 production output in 1995 of 81,464 metric tons, the highest since
80,506 metric tons was attained in 1992, declined to 26,926 metric tons in 1999.
Excess domestic demand was blamed for the downward trend. The Electrolytic
Tinning Line No. 2 in Pasig was closed in May 1998 due to economic factors
(NSC News Special Bulletin, 20 April 1998). After the 1983-88 NSCs Five-Year
Expansion Program, Electrolytic Tinning Line No. 1 was decommissioned in 1992
because of technological obsolescence.
The steel industry (Austria, 1998) particularly the basic iron and
steelmaking integrated with slabmaking, and flats production, among others,
were considered pioneer status in the Foreign Investment Act of 1991 (Republic
Act 7042). With this law in place, the Philippine government allowed greater
foreign investors participation in local steel production facilities. On August 8,
1991, the President Corazon C. Aquino signed into law Republic Act 7103, Iron
and Steel Industry Act. RA 7103 called the state to provide the boost in making
the industry the springboard and basis for launching Philippine industrialization
through the full and efficient use of the country's human and natural resources
considering its critical impact on employment, indigenous resources utilization,
foreign exchange and balance of payments position.
Privatization plans for NSC began as early as 1990. It was successfully
approved by the Philippine government with Malaysias Wing Tiek acquiring
controlling interests in November 1994. Privatization was pushed by the National
Government to limit its financial exposure on the myriad of government-owned
and controlled corporations, such as NSC. The next year, NSC retrenched about
500 personnel for the first time since 1974. The reduction was premised on
building a leaner organization. Wing Tiek sold its entire 69.2% stake to Hottick in
December 1996 while NDC optioned its own 12.5% stake to the latter on
February 1997. On 15 October 1997, the Board of the Philippine Economic Zone
Authority (PEZA) declared NSC as a Special Economic Zone, pending
Presidential Proclamation, with downstream steel products manufacturing and
fabrication industries and related sectors as preferred industries (de Lima, 1999).
Prior to privatization, NSC launched its own-version of the Total Quality
Management program. NSCs TQM encompassed the Total Production
Management System based on a 5S Program, the Operator-Mechanic-Inspector
concept, a series of Corporate Culture seminar-workshops, and Quality
Management Systems. The Operator-Mechanic-Inspector concept, dubbed as
1:7 in 97 program, was a quest for a leaner structure characterized by a
decentralized, autonomous, and accountable organization by reducing superiorto-subordinates ratio by 1997. The Seven Basic Habits and Interaction
Management were held for supervisory and managerial positions; while SelfEnrichment Workshops for the rank-and-file. Kaibigan seminar-workshop
culminated these various seminars into an all-employees Corporate Culture
development. Quality Management Systems included Statistical Process Control
and ISO 9000 certification.
By 1995, the Cold Strip Mills and the two Electrolytic Tinning Lines,
including the Billet Steelmaking Plant, were ISO 9002:1994-certified. The Hot
Strip Mills were in the process of certification prior to NSC closure.
In 1999, amidst proposed backward integration plans, equipment and
technological modernization, and employee value-enhancement programs, NSC
officially underwent a liquidation plan resulting in the retrenchment of 1,400
employees, while a number opted for earlier retirement.

When NSC closed shop, the scrap iron business lost P1.4-billion and the
Refractories Corp. of the Philippines lost 30% of its market. Mabuhay Vinyl Corp.,
supplier of NSCs chemicals, was severely hit, and the National Power Corp. lost
P720M in sales yearly (Philippine Star, 17 May 2002).
On October 2000, the Securities and Exchange Commission ordered the
liquidation of NSC citing that it was unable to make repayments on its debts,
which were about $350 million (Lyday, 2002).
In his privileged speech during the First Special Session of the Thirteenth
Congress of the Senate, Joker P. Arroyo (2005) stated, National Steel, for the
record, was sold to an undercapitalized Malaysian firm which, in turn, borrowed
heavily from local sources. The Malaysians left and the government is left holding
the bag. Global Steel Philippines (SPV-AMC), Inc. acquired ownership of NSCs
assets in 2004.
In comparison with other SEASI members, crude steel production from
1994 to 2000 exhibited a downward trend for the Philippines, in terms of crude
steel and finished production. Steel trade, however, showed exports were down;
while imports reached top marks in 1997 and 1999 (SEAISI, 2004).
Statement of the Problem

This research is an evaluation of the flat carbon steel production of
National Steel Corporation from its privatization in 1995 to its liquidation in 1999
and its implications to the countrys steel industry. The purpose of this study is to
determine how the internal and external factors led to the liquidation of NSC.
Specifically, this study sought to answer the following questions:
1. What was NSCs monthly and annual flat steel production, in metric tons,
from the privatized NSC in 1995 to its SEC-declared liquidation in 1999?

2. From NSCs privatization in 1994 to its SEC-declared liquidation in 1999,
what was the effect of the following external factors on NSCs flat carbon
steel production:
2.1.
2.2.
2.3.
2.4.
worldwide and ASEAN steel supply (capacity, production)

worldwide and ASEAN steel demand (consumption)
Philippines raw steel imports
steel and raw materials international pricing trends?
3. What is the price elasticity of the supply of NSC flat carbon raw materials,
particularly slabs and hot-rolled coils, from global suppliers?

4. From NSCs privatization in 1994 to its SEC-declared liquidation in 1999,
what was the effect of the following internal factors on NSCs flat carbon steel
production:
4.1.
4.2.
4.3.
4.4.
monthly production rate

monthly material yield
monthly prime yield
quality, in terms of monthly customer acceptance rate?
5. What are the implications of the significant events, which occurred right after
NSCs liquidation in 1999 to its reopening in 2004, and beyond?

6. Based on these findings, what recommendations may be made to sustain flat
carbon steel manufacturing at the former NSC plant?
10
Hypotheses
Using a 95% confidence level, the study tested the following null
hypotheses:
Ho1. NSCs flat carbon steel production is decreasing at an increasing
rate.
Ho2. NSCs production from its privatization in 1994 to its SEC-declared
liquidation in 1999 is not significantly correlated to the following
external factors:
2.1.
2.2.
2.3.
2.4.
worldwide and ASEAN steel supply (production),

worldwide and ASEAN steel demand (consumption),
Philippines raw steel imports and
steel and raw materials prices.
Ho3. Supply of NSCs raw materials, particularly slabs and hot-rolled coils,
is not responsive to a change in price of raw materials, respectively.
Ho4. NSCs production is not significantly correlated to the following
internal factors:
4.1. monthly production rate,
4.2. monthly material yield,
4.3. monthly prime yield, and
4.3. quality (based on monthly customer acceptance rate).
Significance of the Study

Considering that NSC, or its resurrection from the dustbins of steel
industry, as the Global Steel Philippines (SPV-AMC), Inc., is still the biggest steel
industrial complex not only in Iligan City but as well as in the Philippines, if not
11
among the ASEAN member-countries, the findings of this study is significant to:
NSCs former employees and customers. When NSC retrenched
almost 1,400 employees in 1999, several suggestions have been offered by
these individuals counteracting NSCs one-sentence explanation of tight financial
situation and some reassurance of a probability of recovery after a year. NSCs
former customers were also dumbfounded when news of NSCs liquidation hit
the headlines. The findings of this study could alternatively explain the various
propositions and insinuations and a common stance and understanding might be
adopted. Examples of these: a consortium was taking over Hotticks mother
company, Renong, including Hotticks stake at NSC (Kwek, 2000). Another one
was that the Malaysian management pocketed all the revenues somewhere out
of the Philippines, thus it could not afford to pursue the ISM project, or even
operate NSC on a daily basis (Arroyo, 2005). Worse, from a flyer distributed
sometime in 1999, when NSC was undergoing exit clearance after retrenchment,
was that NSC management knowingly ran NSC to bankruptcy so that it could be
liquidated and the stockholders could recoup whatever they invested?
Iligan City local government and local populace. Iligan City also
suffered economically when NSC closed in 1999. To paraphrase an age-old
adage: when NSC sneezes, Iligan City catches the cold. This study is significant
to the local government of Iligan City, the direct beneficiary of NSCs presence,
because for several years from 1974 until its closure, NSC offered decent and
relatively high-paying employment, both direct and indirect, aside from income
taxes to the local coffers, and tangible contributions to local communities through
12
NSCs social responsibility projects, among others. Thus, the findings of this
research could provide an insight on the importance of NSCs presence to the
growth and development of the locality, particularly Iligan City.
The Philippine government, in particular, and the Philippines, in
general. This study is significant to the Philippine government in assessing the
perceived effects of privatization of a vital component of the industry. Lessons
learned from NSCs plight might offer new insights to the privatization of other
GOCCs, which are forthcoming this decade. Furthermore, the legislators and
political leaders might now tread more carefully in dealing with privatization and
similar acts of deregulation on primer industries, such as manufacturing. For the
country as a whole, this study is important to the national economic planning
based on the premise that industrial production is a factor of GDP, and steel
production is a leading indicator in the countrys growth and development.
The current dispensation, Global Steel Philippines (SPV-AMC), Inc.,
or other potential investors. The implications of this research to the current
dispensation, particularly Global Steelworks Philippines, Inc. (GSPI), which
acquired controlling interests on all the assets of the resurrected NSC, through
the Special Purpose Vehicle (SPV) law under the Asset Management
Corporation (AMC) provisions in 2004, would be beneficial inputs to whatever
corporate strategy the latter opts to adopt. Consequently, pitfalls faced by NSC
then can be avoided by GSPI now. With the advent of global mergers and
acquisition, GSPI stands to gain some understanding on the state of the
Philippine steel industry, in general, and the sphere of influence of NSC, now
13
GSPI, in particular, to the domestic and regional steel market, as well as the
global steel market. Furthermore, potential investors to augment GSPIs quest to
resuscitate NSCs facilities to commercial operations would be able to see the
NSCs viability and profitability.
The ASEAN member-countries. The budding steel industry of
respective ASEAN member-countries, particularly Malaysia, Indonesia, Thailand,
Cambodia, Vietnam and Laos, would also gain from this research through an
understanding of the difficulties faced by NSC during the Asian financial crises
and thus could avert similar government actions that would endanger their own
fragile steel industry. Of the ASEAN member-countries excluding the Philippines,
only Malaysia, Indonesia, and Thailand have their respective hot rolling mills.
Thus, with the closure of NSC in 1999, the other members relied more on hotrolled coils, and ultimately cold-rolled coils, supplied by Far East countries
(particularly Japan, Korea and Taiwan) and even from Commonwealth of
Independent States (Russia, Kazakhstan, and Ukraine). Furthermore, with the
boom of construction specifically in Cambodia and Vietnam, this study could also
provide an impetus among the ASEAN member-countries to safeguard the
regional steel industry as an economic cooperative rather than as a loose
aggregation of individual steel industries, such as the Southeast Asia Iron and
Steel Institute (SEAISI).
Other researchers. Indisputably, the boom-and-bust experience by NSC
is a very interesting and enlightening topic. Unfortunately, aside from the case
study conducted by Basilio and Cabasan (2004) entitled, Local Governance and
14
Economic Challenges of Economic Distress: The Case of Iligan City with special
focus on the impact of the closure of the National Steel Corporation to Iligan City,
no other formal research was and is being done, and publicly disclosed since
1999. NSCs historical records of production data, among other things from as
far as back in 1974 to 1999, face the threat of being lost to oblivion due to the
degradation of paper-based or computer-based media, or the haphazard attempt
to clear the NSC grounds of its recorded past. Although a NSC Museum do exist,
it only has space for memorabilia, mementos and other museum pieces but not
historical production data and the like. Thus, this research might induce special
attention to the expeditiousness of at least saving NSCs recorded past for use in
similar studies by other researchers.
Limitations of the Study

This study is limited to the flat carbon steel production of NSC from 1995,
when Wing Tiek took management control, to 1999 when the SEC ordered its
liquidation. The billet steel production was deliberately excluded from this study.
In the steel industry, billets fall under long, not flat, steel products.
No financial analyses were made on the periods between 1995 and 2000.
This study was limited to the analyses of the effects of the various factors, such
as the worldwide and ASEAN steel demand and supply, the prices of steel and
raw materials, and steel and raw materials imports, from the point of view of
NSCs production and manufacturing.
15
Most of the secondary data were taken from NSCs databank and no
attempt was made on other sources, except those cited, due to time constraints
and financial limitations. Only yearly data from international steel associations
such as SEAISI, IISI, or AISI were used because other monthly figures were
available only at a high price coupled with a required access subscription.
Definition of Terms
A brief glossary of terms used in this research is given below and, when
appropriate, its respective commonly used abbreviation in steel manufacturing
technology is provided in enclosed parentheses.
Apparent steel consumption is the aggregate steel products consumed
that is equal to crude steel production and total steel imports less total steel
exports. To convert finished product weight into crude steel equivalent, the
weight of finished products is multiplied by the following expression: 1.3/ (1 +
0.175c) where c is the domestic proportion of crude steel continuously cast in
any particular year (IISI, 2002). Apparent consumption per capita (ACC) is equal
to the apparent steel consumption divided by the total population.
Apparent consumption of finished steel (ACFS) is computed with the
above expression for apparent steel consumption inverted and applied to total
crude steel production (IISI, 2002).
ASEAN5, as used in this study, is the collective term for the five original
founding member-countries of the Association of Southeast Asian Nations,
16
namely: Indonesia, Malaysia, Philippines, Thailand and Singapore.

ASEAN10, as used in this study, is the collective term for all the membercountries of the Association of Southeast Asian Nations, namely: ASEAN5 plus
those nations, which joined laterBrunei Darussalam (1984), Vietnam (1995),
Laos (1997), Myanmar (Burma) (1997), and Cambodia (1999).
ASEAN+3, as used in this study, is the collective term for ASEAN10 plus
the three East Asia nations: China, Japan, and South Korea.
ASEAN steel demand, as used in this study, is the aggregate flat carbon
steel products consumed or purchased by the ten member-countries of the
Association of Southeast Asian Nations, or ASEAN10. The aggregate values of
the apparent consumption of finished steel (ACFS) denote the ASEAN steel
demand (consumption). A derived value, termed here as the apparent
consumption per capita (ACC), is also used as steel demand.
ASEAN steel supply, as used in this study, is the aggregate flat carbon
steel products manufactured by the member-countries of the Association of
Southeast Asian Nations, ASEAN10. The total crude steel production in
ASEAN10 denotes the ASEAN steel supply (production).
Cold-Rolled Coils (CRC) are flat carbon steel products made from Hotrolled coils, pickled in an acid bath, reduced in a tandem mill, cleaned through an
alkali or electrolytic process; annealed at controlled temperatures; and skinpassed at temper mill. CRCs are classified within the Harmonized System
Numbers (HSN) 7209.00, 7211.23 to 7211.90 and in the Philippine Standard
Commodity Classification (PSCC) under 6737-6738 series. Typical applications
17
are roofing materials, non-food packaging, pipes and structurals for construction.
NSCs CRCs range from 0.17 to 1.6mm thick and 508 to 1524mm wide (NSC
Customer Primer).
Crude steel production is the total flat steel manufactured during the
period to include semi-finished steel particularly slabs, hot-rolled coils, wires and
rods, as inputs to the production of finished steel products (Lankford, 1985). In
this study, NSC crude flat steel production is exclusive to the production of hotrolled and cold-rolled coils and strips. Billets, considered by the industry as semifinished steels, are categorized as long products. Tinplates are lumped under as
finished products, particularly coated steels.
Domestic steel price, as used in this study, is the nominal selling price of
flat carbon steel products equivalent in local currency.
Flat carbon steel include sheets, strips, tinplates, black plates, flat bars,
slabs, plates, skelp and hoop, usually produced on rolls with smooth surfaces
and the ratio of width (from 4.76mm in narrow strip to 5182mm in wide) to
thickness (0.13mm thick in light strip to 381mm in heavy plates) is generally high
compared with other rolled products. These products have a carbon content of
0.25% maximum (Lankford, 1985). NSC flat carbon steel, as used in this study, is
limited to slabs and tinplates, as raw inputs; and restricted to sheets, strips, tinmill black plates, and plates, as NSCs processed materials.
Hot-rolled coils (HRC) are flat carbon steel products reduced from slabs
into strips or coils by heating and rolling at high temperatures in a reversing
roughing mill. These products are categorized under the Harmonized System
18
Numbers 7208.00, 7211.13 to 7211.19 and in the PSCC under 6733 and 6736
series. Typical applications include pipe and tubes manufacturers, drums and
fabricators, as well as inputs to cold-reduction processes. NSCs HRCs are
typically 1.6 to 6mm thick and 508 to 1600mm wide (NSC Customer Primer).
Imported steel price, as used in this study, is the selling price of flat
carbon steel products as sold in international markets. The CRUspi index prices
were primarily used in this study, while actual prevailing prices were based on
published data in Metal Bulletin, Steel Business Briefing and others.
Material yield (MY), as used in this study, is the quotient in percent of the
output tonnages of steel products manufactured over the input tonnages of raw
steel materials.
Prime yield (PY), as used in this study, is the quotient in percent of the
total tonnages of flat steel products manufactured less the quantity classified as
seconds or rejects, over the total manufactured tonnages in a period.
Production rate (PR), in this study, is the capability of a steel facility or
equipment to produce a certain metric tonnage per specified quantity of time, say
metric-tons-per-year (mtpy) or metric-tons-per-annum (mtpa). NSC production
rate was based on the effective operating hours of NSCs Pickling Line No. 2,
being the input mill for all HRCs coming from NSCs Hot Strip Mill No. 2.
Rated capacity, in this study, is the facilitys effective capability of
production, usually stated in mtpy or mtpa, base on the designed product mix.
Slab is a rectangular steel sector (50.8 to 304.8mm thick, 304.8 to
2032mm wide and 1524 to 12192mm long) which is a raw material for hot-strip
19
mill. (Lankford, 1985) Slabs are categorized under the Harmonized System
Number 7207.12.10.
Steel intensity (SI) is the ratio of steel consumption (i.e., steel demand) to
Gross National Product (GNP), the monetary value of the total production of final
goods and services (Laplace Conseil, 2007).
Steel imports, as used in this study, are the aggregate quantity of flat
carbon steel products bought from foreign steel producers for domestic use. The
total quantity of the semi-finished and finished steels (henceforth, referred here
as SF&F) bought into a country denotes the steel imports.
Steel Production, as used in this study, is the production of maximum
output tonnages of steel products, such as cold-rolled coils, given a level of input
materials used, such as slabs or hot-rolled coils.
Tin-milled black plate [TMBP], including tin plate [TP], is a flat carbon
steel product produced by depositing a sliver of tin on the surface of cold-rolled
sheets. TMBPs are classified under HSN 7209.18.00, 7210.10.11, 7210.12.00
and 7212.10.00 and in the PSCC under 6742 to 6745 series. Typical applications
include tin cans, tin caps, and food packaging (NSC Customer Primer).
Total
Production
Management
[TPM]
is
Japanese
model
of
maintenance policy promising high mill availability and reduced maintenance

costs (NSC TPM Primer).
Worldwide steel demand, as used in this study, is the aggregate global
flat carbon steel products consumed by various countries based on published
data from IISI. The worlds apparent consumption of finished steel (ACFS)
20
denotes the worldwide steel demand (consumption). Similar to ASEAN, the

derived apparent consumption per capita (ACC) is also used as steel demand.
Worldwide steel supply, as used in this study, is the aggregate global flat
carbon steel products manufactured by various countries based on published
data from IISI. The worlds crude steel production denotes the worldwide steel
supply.
21
CHAPTER 2
REVIEW OF RELATED LITERATURE
This chapter presents an overview of the current research and related

studies on the three scenarios NSC faced between 1994 and 2000. These are,
namely, the state of Philippine industry and manufacturing including policies
particularly privatization, special purpose vehicle law and tariff liberalization; the
Asian Financial Crises in 1997-98 and its aftermath; and the global slowdown of
the steel industry leading to liquidation or bankruptcy of several manufacturing
plants.
Most of the published researches presented only the facts of these three
events and their repercussions to the national economy, but neither to steel
production, in particular, nor any other manufacturing sector, in general.
Examples, Amponsah and Boadu (2002) tackled the crisis in the U.S. textile and
apparel industry then asked whether it was caused by Trade Agreements and
Asian Currency meltdowns, while Caprio (1998) and Bond and Miller (1999) both
addressed the Asian banking and financial sectors. Meanwhile, the case study of
Basilio and Cabasan (2004) focused on the impact of the closure of NSC to the
local governance and challenges of economic distress in Iligan City, particularly
one that altered population pattern and welfare of the city.
Drapeau (2004) itemized four primary causes of business failure and
subsequent bankruptcy: economic, financial, corporate fraud, and disaster.
22
Ruling out the last three as insignificant to this particular research as insinuated
in the limitations, of particular interest in Drapeaus study is its consideration of
economic factors to include industry weakness and poor location. NSC has been
considered a pioneer steel plant in the ASEAN region, thus poor location can be
safely tossed out of the equation, leaving industry weakness as an important
beacon to consider.
The Philippine Industry and Manufacturing

The Philippine Industrial Policy in the 1990s can be summarized in two
key words: economic reform and liberalization.
In the 1980s, the Philippines initiated trade policy reforms and opened the
economy to imports to promote competition in the local market. Furthermore,
deregulation in the 1990s demolished barriers to entry in regulated key
industries, and government-owned and controlled corporations (GOCCs), such
as iron and steel, fertilizers, telecommunications and banking, were privatized
(Clarete, 2005).
Luken (1999) noted that from the mid-1970's to 1996 the Philippine
manufacturing sector showed low rates of growth, roughly comparable to those
of overall economic growth and to growth rates in the industrial sector as a
whole.
In 1992, the Philippines signed up for the ASEAN Free Trade Agreement,
which aimed for 0 to 4% regional tariff reduction, over a 15-year period, through
23
the Common Effective Preferential Tariff scheme. Orbeta (2003) wrote that the
Philippines underwent its third Tariff Reform Program four years later. The first
and second were in 1981 and 1991, respectively. The tariff liberalization for some
items, e.g., iron and steel, petrochemicals, garments and textiles, and motor
vehicles, however, were slowed down from 1998-2001 due to the Asian financial
crisis (UNDP, 2003).
From 1995 to 1999, the iron and steel industrys Gross Value Added in
constant 1985 prices showed a declining trend, in contrast to a rising trend for
the entire steel-based group of industries. Two sectors, particularly the basic
metal products and electrical machinery, comprised at least 50% of Gross ValueAdded attributable to steel-based industries (NSCB, 2004).
Sauer, Gawande, and Li (2003) performed general tests of the big push
industrialization hypothesis of Murphy, Shleifer, and Vishny (1989) for selected
industries, including iron and steel, in a set of eight emerging countries, including
the Philippines, and preliminary results supported the theory that a role for
activist government policy in the industrialization process is necessary.
Cook and Uchidas study (2003) suggested that the deficiency in
appropriate governmental reforms might be the cause for a negative relationship
between privatization and economic growth. Later, Filipovics theoretical analysis
of privatization (2005) suggested that to create economic growth incentives, such
as improvement of economic efficiency, increase in investments, and adoption of
new technologies, privatization should be coupled with government commitment
to legal and regulatory reforms.
24
Under the First Pillar: Achieving Macroeconomic Stability, Bulan (2004)

urged the sale of all government holdings in the . . . business sector, identifying
National Steel Corporation, justifying that it posed conflicts of interest with the
governments objective.
Asian Currency Crisis

Tomita (2000) observed that the 1990s experienced a series of severe
international financial crises in places such as Mexico, dubbed as the Mexican
tequila, in December 1994; then Thailand, popularly known as the Asian flu in
July 1997; and finally hit Russia, the so-called Russian virus, in August 1998.
These crises, all occurred in emerging markets, involved a sharp fall in the
exchange rate, a rise in interest rates, a sharp contraction in economic activity, a
domestic financial crisis and an adjustment to the current account.
Bustelo (2000) argued that, despite some similarities, financial crises in
the 1990s have featured substantial differences between them . . . the Mexican
crisis of 1994-95 was associated to private overconsumption; and the East Asian
crises of 1997-99 were basically the result of private overinvestment.
Majid and Yusoffs study (2004) examined the determinants of currency
crises in Malaysia, Thailand, Indonesia and the Philippines in the period between
1987 and 1997, and found that reserve inadequacy, deteriorating trade balance,
increases of banks claims on private sector and misalignment of real exchange
rate increase the probability of a speculative attack. Bustelo surveyed (1998) the
25
crisis then highlighted (2004) its similarities and differences to the Argentinas
crisis of 2001-02.
Wong (2004) contended that the Asian Financial Crises was not spread
through common risk factors, nor the flight of foreign capital be blamed as the
major cause of the crisis. The study traced the root of the crisis to several
economic policies and conditions of the countries involved like Thailand,
Malaysia, and Indonesia prior to its outbreak.
Japan (Shiraishi, 2005) was instrumental in dealing with the Asian
economic crises in 1997-98 by suggesting several measures to tackle the
problem in the ASEAN. In 1997, Japan called for the establishment of the Asian
Monetary Fund. It suggested the new Miyazawa initiative in 1998 to stimulate
economies hit by the crisis. It promoted in 2000 the Chiengmai Initiative
(Eichengreen, 2002) as a mechanism to create a zone of currency stability; the
conclusion of the Japan Singapore Economic Partnership Agreement in 2001.
Last but not the least measures was the proposal of Japans Prime Minister
Koizumi made in Singapore in 2001 for the Japan-ASEAN economic partnership
as the first step to build an East Asian community.
Radelet and Sachs (1998) argued that Southeast Asia should devalue
their currencies in order to recover from the economic turmoil plaguing the region
in the late 1990s. Ahearn (2002) later debunked this claim but instead found that
only the Philippines and Malaysia would benefit from devaluation, while
Singapore and Korea were more sensitive to short term and long-term policy
decisions.
26
In his speech before the University of the Philippines economists,

Salceda (2004) discussed a roadmap to fiscal rehabilitation after detailing the
economic issues confronting the Philippines from 1996 to 2003. Noland (2000),
however, wondered why the Philippines, with its reputation for weakness, fared
better in the crisis than other countries in the region.
Steel Industry
Zinters study (2002) of Minnesotas Iron and Steel Industry from 1974 to
1990 supported similar claims made by many others that imports are significant
contributor to declining employment in the manufacturing sector, however,
competition from import prices was not a direct, statistically significant cause of
employment decline in Minnesotas iron and steel industry.
In contrast, Orbeta (2002), using Philippine aggregate and sub-level
industry manufacturing data sets, concluded that export inclination shifts labor
demand upward the Hecksher-Ohlin model, while doubting the conception of
wholesale substitution of imports for domestic production.
In 1999, the Center for Trade Policy Studies hosted an event, which
discussed the steel "crisis" of 1998. At that time, the cause for steel's woes was a
combination of poor corporate decisions and macroeconomics. Hundreds of firms
in dozens of industries experienced falling profitability, layoffs, and even
bankruptcies (Ikenson, 2001). The US steel industry considered 1998 a crisis
point when steel imports rose to great heights while return on sales started its
27
downturn. Treado (2004) claimed that between 1998 and 2003, 29 US

steelmakers faced bankruptcy leading to a global loss of 67 million metric tons in
capacity.
Considering these three scenarios as a backdrop, this research

attempted to show their respective and combined ripple effects to NSCs steel
production. There is no existing published research singularly done with this
particular viewpoint. Thus, this research attempted to fill this certain gap.
Although, this study primarily bolstered the claims of Sauer, Gawande, and Li
(2003) pushing for an activist government policy on industrialization; Cook and
Uchida (2003) on deficient governmental reforms as the probable cause of
negative relationship between privatization and economic growth; yet, this study
will inherently show that Filipovics (2005) privatization with legal and regulatory
reforms proposition was right. The research attempted to show the effect of slow
economic growth (Luken, 1999) further dimmed the prospects of NSCs steel
production after privatization.
This study took off where Radelet and Sachs (1998), Ahearn (2002) and
other proponents of devaluation left and eventually show that Philippine
economic conditions after devaluation did not help the recovery of steel
manufacturing per se but rather diminished the steel industrys growth.
Furthermore, using Philippine steel production data sets, this research
hinted the relevance of Zinters (2002) conclusion that importation contributes to
the declining employment in the steel industry and Orbetas (2002) doubting the
28
concept of wholesale import substitution to domestic production.

Lastly, while this paper complemented Basilio and Casabans case study
(2004) on the effect of NSCs closure to Iligan City, but it could act as the catalyst
to other investigations using NSCs myriad of data waiting to be studied,
analyzed and deliberated before these statistics and records are all lost to
oblivion.
29
CHAPTER 3
THEORETICAL FRAMEWORK
This chapter presents a theoretical framework based principally on

Maurice and Thomas production theory, which is linked to the theory of supply
and demand. Although classified into external and internal factors, the
independent variables used in this study were adapted from the generalized
supply and demand functions.
Production theory is based upon efficiency, i.e., production of maximum
output possible with a given level of input usage or producing a given level of
output at the lowest possible cost (Maurice and Thomas, 1995). Thus,
rephrasing this theory for this study, steel production is the production of
maximum tonnages of steel products (output) given a level of raw materials used
(input) or producing a given level of steel tonnages at the lowest possible cost.
The theory of supply and demand can be applied to flat carbon steel,
which is traded worldwide without recognition of international borders.
The generalized supply function (QS) is determined a number of factors.
These are the price of good (P), for this study e.g., flat carbon steel; the prices of
inputs used in production or raw materials (Pi), the prices of related goods (Pr),
the level of available technology (T), the expectations of producers concerning
the future price of the product (Pe), and the number of firms (F) (Maurice and
Thomas, 1995).
30
In equation form, it can be stated as:

Qs = g (P, Pi, PR, T, Pe, F).
(eq. 1)
Similarly, there are principal variables that influence the quantity

demanded (Qd) of a good, for this study, i.e., flat carbon steel. These are the
price of steel products (P), the consumers income (M) per capita, the prices of
related goods (PR), the preferences of consumers (T), the expected price of steel
in future periods (Pe), and the number of consumers in the steel market (N)
(Maurice and Thomas, 1995).
In equation form, the generalized demand function can be stated as:
Qd = f (P; M, PR, Pe, T, N).
(eq. 2)
The supply and demand functions, respectively, are usually taken into
consideration with the relation of price and quantity per period of time when all
other factors that affect supply, and similarly demand, are held constant. Thus,
for this particular study, the price of steel (P), and the prices of inputs used in
production or raw materials (Pi) were considered on the demand side.
Correspondingly, this study quantitatively considered the quantity
supplied (QS) and quantity demanded (Qd) of flat carbon steel at various prices
(P) as well as the prices of inputs used in production or raw materials (Pi). For
this study, the quantity supplied (QS) is represented by flat steel production in
metric tons for a certain period, say a month, a quarter, or a year; while quantity
demanded (Qd) is represented by apparent steel consumption in metric tons for a
31
certain period, say a month, a quarter, or a year. It should be noted, however,

that the quantity suppliedflat steel productionis limited by the capacity of the
facilities used in its production.
Qualitative factors were descriptively discussed based on several
environmental factors affecting production that are not quantifiable.
Stevenson
(economic
(1990)
conditions,
classified
political
environmental
scenario,
legal
factors
into
environment,
external
technology,
competition, and markets) and internal (human resources, facilities and

equipment, financial resources, customers, products and services, technology,
suppliers, and others).
Similarly, Friedman and Gyr (1998) proposed the STEP factors, namely
structure, tasks, environment, and people. Structure consists of the arrangement
and administration of resources such as policies, communication mechanism and
reporting relationships. Tasks incorporate work processes, systems and
standards. The environment consists of the political, economic, technological and
social factors, also known as PEST. People include the employees, suppliers
and customers with their respective needs, expectations, talent, as well as
demographics.
These two models primarily and categorically complemented each other.
Thus, the model constructed for this study was loosely based on the merged
versions of corporate strategic factors introduced by Stevenson (1990), Friedman
and Gyr (1998), as illustrated in the next page:
32
Figure 4: Theoretical Model of Independent Variables affecting NSC Flat

Carbon Steel Production
33
CHAPTER 4
RESEARCH METHODOLOGY
This chapter details the manner in which the research was carried out.
The study attempted to relate quantitative data with qualitative facts. Quantitative
data from various sources such as NSC historical production records, SEC
officially published report, NEDA and National Statistical Coordination Board
(NSCB) statistical records, and IISI, AISI, SEASI and PISI annual reports
augmented by interviews with key informants were the basis for this research.
Snippets of historical facts based on news reports filed by different news
bureaus; working papers of various international bodies under the umbrella of the
United Nations, e.g., ILO, UNCTAD, UNDP, and WTO; and analyses of world
events by well-established experts from various published journals in economics,
world trade, and steel industry formed part of the qualitative aspect of this study.
Subject and Scope of the Study

Limiting the research on the flat carbon steel production of National Steel
Corporation, the research focused on the factors, which affected steel production
to include the steel market scenario existing particularly between the privatization
of NSC in 1995 and after its SEC-approved liquation in 1999. Likewise, world
market events and global economic situation present from 1994 to 2000 were
considered as backdrop.
34
Key informants were former employees of NSC, customers of NSC flat

carbon steel products, and selected personages of Iligan City.
Former employees of NSC, particularly the executive vice president for
production, assistant vice presidents, area managers, supervisory, and rank and
file personnel at HSM and CSM, because most of them have lived through the
entire experience, validated NSCs internal factors existing between 1994 and
2000 (refer to Appendix B and Appendix HH for a complete list).
Former customers of NSC formed part of the key informants to
corroborate the impact of external factors such as economic conditions, political
scenario, legal environment, technology, competition, and markets faced by
NSC. Identified probable interviewees consisted of the managerial executives of
Philippine Steel Corporation (PhilSteel), Steel Corporation of the Philippines
(SteelCorp), Bacnotan Steel, Puyat Steel as well as owners of several steel
service centers and small steel fabricators, refer to Appendix B for a complete
list. Transcripts of customers interviewed by Andersen and SGV Consulting for
the Challenges Facing NSC conference in 1995 were also used.
Select Iligan City personalities provided the background information not
perceived by other respondents. This included incumbent and former city
government officials, various heads of the citys non-governmental organizations
dealing with NSC such as the leaders of the Chamber of Commerce, managers
of local suppliers of NSCs materials and supplies used in steel production,
among others (refer to Appendix B for a complete list).
35
Research Design
Qualitative research formed a major part of this study while quantitative
data numerically proved that the events occurred and were statistically
significant.
This study used developmental method whereby patterns and sequences
of growths and decline of steel production as a function of time, particularly on a
monthly, quarterly or annual basis, was investigated. This was done through an
analysis of a time-line series of data.
Investigative method was used to examine three prominent scenarios
the Philippine trade liberalization, the Asian Financial Crises, and the global
slowdown of steel demandduring the period 1995 to 1999 then determined and
explained the differences and similarities before 1995 and after 1999.
The study attempted to reconstruct the past objectively and accurately in
relation to the hypothesis that NSCs steel production and manufacturing plans
are not positively correlated with the worldwide and Asian steel demand and
supply after its privatization in 1994 or that NSCs liquidation in 1999. The year
1994 was included to trace events that were rooted in that year but the effect was
felt only in the next. Moreover, the year 2000 was included to show the
consequence of the conspiring scenarios until 1999.
No sampling was needed because the research heavily relied on
secondary data from NSC databank.
36
Research Instrument
Qualitative data gleaned from key informant interviews helped bring out
the meaning and pattern of the gathered quantitative data.
The key informant interviews were done either face-to-face for those
domiciled in the Philippines or by correspondence though the use of electronic
mail (e-mail) for key persons residing abroad using an interview schedule (refer
to Appendix A). These interviews (refer to Appendix B: Key Informants), provided
insights where the numerical data failed to show.
Due to the confidential nature of the responses, some of the respondents
requested that they were to be identified only by their job positions.
Data Gathering
Secondary data, i.e., planned and actual quantitative data of NSCs flat
carbon steel production between 1994 and 2000, were retrieved from NSCs
historical databank mainly through the courtesy of Antoinette G. Manzo, Financial
Analyst, Finance, NSC. Several other persons, listed in the Appendix HH, also
helped in the data retrieval. Similar data were obtained from the SEC, NEDA,
and National Statistical Coordination Board (NSCB) to verify its accuracy and
veracity. These data were validated with key informants, former NSC employees,
suppliers and customers. Raw production data are included in the Appendix M
while processed data are cited in the preceding chapter.
Global flat steels demand (consumption) and supply (production) between
37
1995 and 1999 were gathered from various sources on the World Wide Web,
such as IISI, SEASI, AISI, CRU, and other published reports by similar databank
institutions. This ensured triangulation and traceability of existing data. Steel
importations and exportations were sourced from published reports of the DTI,
PISI, and NSO.
Data mining was employed to gather various news reports on the world
economy, Asian Financial Crises in 1997-98, and the world steel market scenario
between 1994 and 2000. The NSC News, the official monthly corporate
magazine of NSC from 1976 to 1997, with its supplements was greatly relied
upon for local data and events. In addition, Philippine daily newspapers and
magazines were researched for national data and events, especially concerning
NSC and the steel industry. The results of data mining are presented in Appendix
D. Literature concerning the explanation of political, economic and industry using
models and theories were examined. Pertinent working papers, discussion
series, conference proceedings, and compilations of the various arms of the
United Nations, namely, ILO, UNCTAD, UNDP, and WTO, were also reviewed.
Monthly steel prices were obtained as separately monitored and
published by International Iron and Steel Institute (IISI), Southeast Asian Iron and
Steel Institute (SEAISI), and the Philippine Iron and Steel Institute (PISI).
Similarly, NSCs domestic and foreign selling prices were acquired from NSCs
historical databank then compared to published prices as monitored by
internationally known steel monitors such as Commodities Research Unit, Metal
Bulletin, Steel Business Briefings and World Steel Digest.
38
Prevailing steel prices for slabs, HRCs, CRCs and plates are frequently
published on a low-and-high weekly basis per geographical area such as Asia
(mainly Japan and China), CIS countries (primarily Russia and Ukraine), United
States, Latin America and Western Europe by Metal Bulletin, Steel Business
Briefing, among others. The weekly steel prices were collated to generate a data
pair of low and high prices for each month. These generated monthly means
were compared to the Composite Resource Unit steel price index, CRUspi, which
provided a tableau of flat carbon steel prices per month (refer to Appendix M,
particularly Table 50 and Table 51).
Process and specifications data were taken from a variety of NSC internal
publications and inter-office documents, technical and feasibility reports, mill
construction drawings, and operating manuals.
A typical product flow of NSCs flat carbon steel production processes is
diagrammatically shown for clarity and better understanding of the system of
NSCs steel manufacturing. Equipment specifications detailed certain aspects
and various limitations of NSCs manufacturing equipment capability, if any,
which affected steel production capacity. These were incorporated in the
analyses; else, these were shown in the Appendix C: NSC Process Flow.
Treatment of Data
Raw steel quantitative data on production or supply, demand, prices, etc.
gathered from various sources were verified, validated and triangulated. For
39
various NSC data, triangulation was done by comparing official reports by

different production participants, such as, production planners, operations
supervisors, and maintenance engineers. Steel prices were crosschecked using
the official publications of iron and steel institutes cited above versus published
prices by steel monitors, such as Composite Resource Unit. These were collated,
tabulated and presented into coherent tables and figures.
The statistical software, Minitab 14, was primarily used for correlations
and multiple regressions, and graphical generation. It also served as a guide to
the basic interpretation of statistical tables and computation. Microsoft Excels
robust graphical editing component, which Minitab lacked, was used to highlight
features of some graphs. Formula for the various statistical tools, mentioned
hereafter, was not shown as these were incorporated in the Minitab 14 software.
Anderson-Darling normality test

This test was used to determine if gathered quantitative data followed a
normal distribution, refer to Appendix F: Anderson-Darlington Normality Test. If
the p-value is lower than the pre-determined significance level, e.g., 0.05 or 5%,
the data do not follow a normal distribution.
Multiple Regression
Multiple regression analysis was used to determine the causal
relationship between the four (4) identified external factors, which serve as the
independent variables, versus NSCs production, the dependent variable for the
40
period between 1994 and 2000, refer to Appendices I, J and K: Multiple

Regression Analysis: External Factors. The model for the external factors,
namely worldwide and ASEAN steel demand (Qd), worldwide and ASEAN steel
supply (Qs), steel price index (P), Philippines raw steel imports (M) versus NSC
production, is:
NSC Production = a + b1Qd + b2Qs + b3M + b4P.
(eq. 3)
Multiple regressions were also employed to the four (4) identified internal
factors, production rate (PR), material yield (MY), prime yield (PY) and quality
represented by the percent Customer Acceptance Rate (%CAR), refer to
Appendix L: Multiple Regression Analysis: Internal Factors. The model for the
internal factors versus NSC Production (NSC) is:
NSC Production = a + b5PR + b6MY + b7PY + b8%CAR. (eq. 4)
Pearson product moment correlation (Pearson )

This test was performed on World and ASEAN steel demand
(consumption), steel supply (production), steel and raw materials prices, and raw
steel importations against NSCs flat carbon steel production. From the
correlation coefficient of the above external factors versus NSC flat carbon steel
production, a discussion of results and analysis was done. Similarly, correlation
tests were done for the internal factors, such as production rate, material and
prime yield, and quality, in relation to NSCs flat carbon steel production.
41
The raw monthly data from NSC databank, such as production tonnages,
production rate (PR), capacity utilization, material yield (MY), prime yield (PY)
and per cent customer acceptance rate (%CAR) were totaled to arrive at
annualized values. Monthly data were used for the correlation of internal factors
in relation to NSCs production because this method gave a more accurate
correlation factor than annualized values. Refer to Appendix M: Tables of
Correlation, Table 45 to Table 55. The latter, however, were used to correlate
NSCs annualized production with yearly data published by SEAISI, IISI, or AISI.
Monthly data from these online sources, although available, were usually
expensive and required a similarly costly access subscription.
Time-series Plots
Furthermore, time-series plots graphically displayed fluctuations in the
gathered data over a period of time, say monthly, quarterly or yearly basis. Time
Series Plot was employed to detect trends in a series of data over time, detect
seasonality of the series data, and compare trends across groups of data.
Descriptive trend analyses were provided and generalizations were made based
on facts highlighted for clarity. The time-series plots were annotated with similar
studies or appropriate comments from key informants bolstering the analyses.
Scatter Plot with Fitted Regression Line

Price elasticity of demand for raw material inputs, either as slabs or hotrolled coils, to cold-rolled coils were computed based on the procurement prices
42
as reported by the NSCs Raw Materials Procurement department. Correlation

and regression were used to plot the relationship between price and quantity.
Correlation was first employed to calculate the Pearson product moment
correlation coefficient between each pair of these two variables: quantity (Q) and
price (P). A scatter graph with a fitted regression line was used to generate the
general demand equation, with quantity (Q) in metric tonnage as the response
using unit price (P) in dollars as the predictor, or in formula form:
Quantity = 0 + 1 (Price)
(eq. 5)
where: 0 = constant; 1 = slope = Q/P.
With this general demand equation, the demand curve is drawn using a
random series of prices. From the demand curve, the price elasticity of demand
was then computed, with metric tonnage (Q) and unit price (P), using the
following formula:
Elasticity = (Q/P) (P/Q) = 1 (P/Q).
(eq. 6)
Accuracy of gathered qualitative data was analyzed by crosschecking

sources and facts then these were presented descriptively in a chronological
order. Based on filed press and published media reports, a review of events was
also made. Using Joerg Muellers FreeMind, a GNU General Public Licensed
software, the gathered concepts and related topics were mind-mapped. A mindmap is a tree with many colors, pictures, and text representing the concepts and
related topics (refer to Appendix FF: Freemind Concept-Map for this Research).
43
A tabulated timeline was created to show significant events from 1994 to

2000 to highlight the scenario faced by NSC during the period of the study, i.e.,
1995 to 1999, refer to Appendix D. A qualitative analysis of the rise and fall of
NSC from a historical and manufacturing perspective, specifically on flat carbon
steel production, was done and this is covered in Chapter 5.
Acknowledging that the steel industry is one of the most dynamic sectors
in any economy; thus, events and emerging trends in the steel industry beyond
the exclusive period of this study, from 1995 to 1999, were included as a
separate section in Chapter 5. The inclusion was vital to the appreciation and
understanding of the recommendations in Chapter 6. Without discussing these
events from 2000 to the present, the perspective of the implications of what
happened to the privatized NSC to the present dispensation, particularly GSPI,
would be shortsighted or seemingly without the necessary foundation.
Comparative analyses of production parameters before 1995 and after 2000 also
presented in Table 21 found in page 133, as well as in Appendix O.
A conclusion is provided based on these aforementioned analyses as to
the future role of NSC, and its subsequent resurrection, in the Philippine
industrial scene, as well as in the regional or international steel market. An
attempt on Strength-Weakness-Opportunities-Threat (SWOT) matrix for the
resurrected NSC was devised to show the interdependence of these four (4)
matrix parameters based on the exposition in Chapter 5: Presentation,
Interpretation and Analyses. The SWOT matrix, shown in the Appendix GG,
encompassed also the qualitative aspect of the study.
44
CHAPTER 5
PRESENTATION, INTERPRETATION AND ANALYSES
This chapter presents each external and internal factor in the Problem
Statement in separate subsections. Individual figures and graphs are presented
first, followed with a short interpretation, and then annotated with similar studies
or appropriate comments from key informants reinforcing the analyses. An
exposition of the transition from pre-privatized NSC, then Wing Tiek and Hotticks
era, to the current NSC owner, GSPI, is also introduced where appropriate.
Although the focus of this paper dealt with flat steel production of NSC
specifically from 1995 to 1999, analysis of NSCs plight deemed it necessary to
incorporate other facets of the global, ASEAN, and Philippine scenariosspecific
to the steel industryintertwined with fleeting references to political, economic,
and market factors. Thus, data prior to 1995 and beyond 1999 were included in
some figures and graphs to aid the respective analyses done for the particular
period of this study, i.e., 1995 to 1999, which is appropriately highlighted.
NSC Flat Carbon Steel Production, 1995 - 1999

From 1975, NSC was the only manufacturer of hot-rolled flat carbon
steels in the Philippines but its hot-rolled production waned by June 1999.
Beginning December 1999, however, there was no flat carbon steel production at
NSC until the resumption of operations by GSPI in December 2004.
45
Table 1: NSC Flat Carbon Steel Production, 1994 -2000

(Data Source: NSC)
Table 1 shows a yearly summary of NSC production for the three flat
carbon steel, namely hot-rolled coils (HRC), cold-rolled coils (CRC), and tinmilled black plates (TMBP). Moreover, with reference to Figure 1 in page 2, only
hot-rolled and cold-rolled steel are considered at NSC as crude steel. Hot-rolled
coils used imported slabs as raw materials and subsequently hot-rolled coils are
the input for cold-rolled coils. Tin-milled black-plates, or TMBPs, although
physically flat in form, fall in the sub-category of coated steel under the finished
steel classification. Table 1 clearly shows that year-on-year percent change (yron-yr % change) for NSC production was decreasing at an increasing rate.
The Minitabs Anderson-Darlington normality test was used (refer to
Appendix E: Anderson-Darlington Normality Tests). The p-value is 0.024 for coldrolled coils production and 0.013 for hot-rolled coils production. The p-values
exhibited less than the predetermined 0.05 significance level, thus both the
gathered data do not follow a normal distribution.
46
NSC Monthly HRC and CRC Production, 1995 - 1999

70
60
Hot-Rolled Coils
Cold-Rolled Coils
50
40
30
20
10
0
J F MAM J J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D J F MAM J J A S O N D
'95
'96
'97
'98
'99
Figure 5: NSC Monthly HRC and CRC Production, 1995 -1999

(Data: NSC)
NSC monthly production shown in Figure 5 illustrates the dependency of
cold-rolled coils volume to that of hot-rolled coils (HRC) production at NSCs Hot
Strip Mill No. 2. Whenever Hot Strip Mill No. 2 hot-rolled coils production from
slabs is insufficient, NSC resorted to purchasing additional hot-rolled coils from
its regular suppliers from China, Russia, Mexico, Australia, South Korea and
Brazil. This scenario for NSC is a simple example of Kodas (1995) theorem on
self-support ratio between capacity expansion and steel demand.
Panganiban, Analyst of PISI, claimed that based on her previous studies,
historical NSC production is not cyclical in tendency on a monthly- or quarterlybasis, thus she suggested that this study would suffice with a year-end
summaries for production volumes (Interview, 2007).
47
Quarterly NSC Flat Steel Production,1995-1999

'000 metric tons
% qtr-on-qtr
300
1.00
0.96
0.81
250
0.80
0.60
200
0.40
0.36
0.22
150
Fire at
5STCM
0.20
(0.11)
100
(0.24)
(0.11)
50
NSC Production
(0.30)
(0.20)
(0.40)
(0.39)
(0.47)
(0.60)
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
1995
1996
1997
1998
1999
Figure 6: NSC Quarterly Flats (CRC) Production, 1995 2000

(Data: NSC)
On a quarterly-basis, flats production, particularly cold rolled coils, see
Figure 6, at NSC also peaked in the third quarter of 1997. NSCs production was
severely affected by the accidental fire sustained at its Five-Stand Continuous
Mill in March 1998 that cold-rolled production considerably declined thereafter
and never regained its pre-Asian Financial Crises level until its liquidation in 1999
allegedly, according to several industry observers.
There is apparent trend of per cent quarter-on-quarter (% qtr-on-qtr) as
shown in Figure 6, but disregarding the fire between 1997Q4 and 1998Q1, the
quarterly increase during Q3 each year would virtually exist except for the peak
in 1995Q2.
48
Several managers, in separate interviews, explained this Q3 peak as

NSCs attempt to stock finished goods prior to the holidays in Q4. From
inception, they clarified; NSC adopted the manufacturing policy of production-toinventory, especially for identified fast-moving cold-rolled coil gauges.
World/ASEAN Steel Supply (Capacity)

Globalization of the Steel Industry. The 21-member Asia-Pacific
Economic Cooperation, or APEC, was established in 1989 as the premier forum
in the Asia-Pacific region for facilitating trade and investment and promoting
economic cooperation and growth. From the start, APEC worked for tariff
reduction and removal of other trade barriers across the Asia-Pacific region,
creating more efficient domestic economies and dramatically increasing exports.
All the ASEAN5 countries are members of APEC (APEC, 2005).
Furthermore, in 1992, the Philippines signed up for the ASEAN Free
Trade Agreement (FTA) (Cuyvers and Pupphavesa, 1996). Later, either alone or
as an ASEAN member, Philippines would sign additional FTAs with other
countries, such as China, Japan or economic communities, e.g. European Union
(de Melo, 2004).
Then in 1995, the World Trade Organization was formally organized to
deal with global rules of trade between 123 nations. The Philippines is signatory
to this global compact (WTO, 2005).
According to Friedman (2005), the second era of globalization ended in
49
2000, coincidentally the official year reckoned when NSC closed, where
multinational companies changed the landscape and shrunk the world from
medium to small despite the Great Depression, World Wars I & II and the Cold
War. In 2000, the world has gone from small to tiny and for the first time, shaped
by individuals instead of corporations. While the previous two eras were driven
by Europe and America, this third era is being driven by non-Western, non-white
countries such as China and India. In this new era, the ten flattenersThe Berlin
Wall, Netscape, Work Flow Software, Open Sourcing, Outsourcing, Offshoring,
Supply Chains, Insourcing, In-forming and The Steroidsbegan to converge,
and thus, the world became flat (Friedman, 2005).
With globalization in a flat world, new opportunities, challenges and
partners are presented. The highly cyclical and very competitive (Anwar, 2004)
global steel industry, being one of the prime movers of the worlds economy, is
neither immune nor reactive but rather oftentimes proactive in dealing with these
three elements.
Laplace Conseil (2000), a consulting firm for the London Metal Exchange,
acknowledged that prior to 2000, Ispat, Tenaris, Arcelor and Riva were the only
steel companies significantly present in more than one country.
Figure 7 below illustrates the transformation of a regional steelmaker from
the 1970s into a continental one in 1990s through a series of events. The oil
shocks in the 1970s transformed a regional steelmaker serving a national market
into a national steelmaker supplying a continental market. The fall of the Berlin
Wall in the 1980s transformed a national steelmaker into a continental one
50
serving the international market. By the 1990s, triggered by deregulation, a

continental steelmaker became an international steelmaker catering to the global
market (Laplace Conseil, 2000).
Figure 7: Globalization of the Steel Market

(Source: Laplace Conseil, 2003)
New challengesderegulation of the steel industrymeant bankruptcies,

while new opportunitiesmergers and acquisitionsexemplified consolidation,
thus creating new partners (Considine, 2005; refer to Appendix P: Flat Steel
Mergers & Acquisitions, 2000).
Prominent steel bankruptcies include USAs Acme Steel and Thailands
Nakornthai Strip Mill in 1998; and USAs Wheeling-Pittsburgh and LTV Steel in
2000 (refer to Appendix S: Flat Steel Corporate Bankruptcies, 2000).
51
Moitti and Sachwald (2006) noted that globalization redrawn the map of
the industrial world; and while foreign direct investment has been a powerful
engine of globalization in the 1990s but by 2000 it shifted gears to the expansion
of productive activities in low-wage countries. Aside from cheap labor, however,
expansion shifted to some countries because of proximity to raw material
sources, reduced tariff and taxes, among others.
Glasmeier and Leichenko (1999) simply defined globalization as
liberalized markets, free-flowing capital and lower-cost goods.
Globalization is the growth of international trade (Deardorff and Stern,
2001), plus the expansion of foreign direct investment, multinational corporations;
integration of world capital markets and resulting financial capital flows,
extraterritorial reach of government policies, attention of global issues, and the
constraints on government policies imposed by international institutions.
World Steel Supply (Capacity). Katrak, et. al. (2002) described a

fragmented steel industry in 2000, which began in the 1990s, and predicted that
consolidation will continue in all major steel producing and consuming areas; but
argued that consolidation is not the same thing as globalization as evidenced by
the fact that most steel companies that have ventured overseas largely managed
their investments as separate entities.
Consolidation or globalization, the steel industry was not spared, thus
mergers and acquisitions were prevalent (again, refer to Appendix P: Flat Steel
Mergers & Acquisitions, 2000).
52
Figure 8: Emergence of Steel Companies with over 40 mtpy Capacity

(Source: POSCO, 2004)
Historically (IISI, 2007) American, German, Korean and Japanese steel

firms have dominated the steel market. Later, however, referring to Figure 8 saw
the emergence of European steel giants like LNM, Arcelor and Corus Group.
Hatch Associates (2001) observed that in the last 25 years the steel
industry worldwide has invested $330 billion . . . for an overall return of 4%.
Hatch Associates itemized that operating cost savings, R&D savings,
globalization, cultural fit, product and market focus, asset utilization gains and
access to technology are the motivating factors to consolidate steel investments.
However, without due diligence what actually happens is value disappointment
because operating cost savings are slow to realize, R&D savings have little
53
impact, globalization adds complexity, the prevalence of cultural mismatch,

product/market focus and asset utilization gains are difficult to achieve, and
access to technology becomes limited.
Payne (2001) noted, however, a brisk and impressive pace of
restructuring and consolidation for West European steel industry during the last
several years prior to 2000 was juxtaposed with a lackluster progress in North
America.
Weston (2002) wrote that U.S. deemed it unacceptable either for its steel
companies to merge domestically or cross border to reduce costs fearing that a
reduction in the number of U.S. steel companies would intensify oligopoly and
reduce competition.
Woetzel (2002) observed that in 2000, there was an undersupply of
worlds flat steel capacities particularly for hot rolled (1%), cold rolled (5%) and
galvanized steel (2%), while there was an overcapacity for other steels1% for
plates and 12% for bar/rebar. Woetzel, moreover, expected that investment plans
to offset the capacity shortage, and in some segments, will most likely exceed
the increase in demand growth from 2000 to 2005.
ASEAN Steel Supply (Capacity). Generally, steel mills capacities have

steadily increased through the years. At the end of the year 2000, Table 2 below
shows a summarized tabulation of flat steel capacities of global steel mills and a
detailed one for ASEAN member-nations.
54
Table 2: Flat Steel Capacities, Mtpy in 2000

Source: CRU Analysis: Steel Sheet Quarterly, April 2005
Koda, et. al. (1995) observed in 1995 that self-support ratio between
capacity expansion and steel demand increased over time, but a situation of lack
of supply capacity in ASEAN will continue until the year 2005.
By 2000, ASEAN steel mills only accounted for 6.2% of Asias 170.56million tons per year (Mtpy) Hot Rolled mill capacity, and only 2.5% of the worlds
431.09Mtpy. For Cold Rolled mill capacity, moreover, ASEAN steel mills
accounted for 8.6% of Asias 87.54Mtpy and 3.2% of the worlds 233.68Mtpy. For
Galvanized mill capacity, however, ASEAN steel mills accounted for 11.8% of
Asias 38.02Mtpy and 4.0% of worlds 111.25Mtpy, refer to Appendix R: List of
Asian Steel Companies. These capacities would change in 2006 (IISI, 2007).
Philippines Steel Supply (Capacity). Back in 1953, Henares (2006)

chronicled that the country envisioned a fully integrated steel complex, 100
percent government-owned, a monopoly functioning as prime mover of the
55
country's industrialization, servicing and inducing an entire series of down-stream

steel-based industries, ranging from construction, to automotive and appliances,
to food canning industries. Henares further pointed out that the Philippines was
20 years ahead of South Korea and Taiwan which entered the steel industry only
in the early 1970s, followed much later in the 1980s by Indonesia, Malaysia and
Thailand (Henares, 2006).
Table 3: Mill Rated Capacities in the Philippines, 1994-2000

Source: CRU Analysis, April 2005
56
Through the years, NSC strongly believed that downstream expansion

would risk jeopardizing relationship with its most important customers, the
galvanizers. Table 3, based on CRU AnalysisApril 2005, lists the Philippine
steel companies with their respective mill rated capacities. CRU Analysis (CRU,
2005) clarified that from 1994 to 2005, no new mill capacities were added in the
Philippines. Thus, when NSC resumed operations in 2004 as Global Steel
Philippines (SPV-AMC), Inc. (GSPI), the latter inherited the biggest hot-rolling
and cold-rolling mill capacities in the Philippines. Only Mindanao Steel and
Philippine Steel Coating (Philsteel) have cold-rolling facilities for their respective
galvanizing lines (CRU, 2005).
Even today, only the former NSC plant boasts of a hot-rolling capacity
since 19 May 1993, aside from hosting the biggest cold-rolling capacity (Lyday,
1995). Still without an Integrated Steel Mill, the Philippines is therefore
constrained to import slabs from foreign suppliers for feed the countrys only hot
rolling mill (NSC Annual Report, 1989). NSC facilities do not have any
downstream capacity, particularly in galvanizing, except for its tinning linesthe
only one in the countrywhich supplied many tin can manufacturers.
Lamberte, et. al. (1999) examined the impacts of the Asian Financial
Crises 1997-98 on 541 Philippines manufacturing firms and found a clear
indication that their capacity utilization rates started to decline even before the
onset of the crisis in July 1997. Capacity utilization continued to drop possibly
caused by both cyclical and structural factorsas the crisis stretched to 1998.
57
The Government-Owned NSC, 1974 - 1994

This background is an expanded version of the Introduction. It is
reiterated here as a foundation to the recommendations in Chapter 6.
National Steel Corporation was an amalgamation of several domestic
long and flat steel companies. It became a government-owned and controlled
corporation under the aegis of National Development Corporation in 1984, from
the foreclosed assets of Iligan Iron and Steel Mills, Inc. (IISMI) in 1981. The latter
succeeded the National Shipyard and Steel Corporation (NASSCO) authorized
by RA 1396 to set up pig-iron smelting plants in 1951 (Henares, 2006). In 1983,
NSC purchased the ELISCON tinning lines in Pasig, Metro Manila then acquired
the billet making facilities of the Philippine Blooming Mills, Inc. in 1984, and lastly
Visayan Integrated Steel (VISCO) cold rolling equipment in 1985. (NSC News, 29
February, 1992)
By taking over the business operations of these distressed corporations;
NSC absorbed 98% of the total IISMI workforce, and 90% of ELISCONs
employees. Between 1981 and 1990, (San Pedro, 1994) an additional 230
employees were recruited from the top ten (10%) per cent of engineering
graduates nationwidedubbed as the cream of the crop, younger blood with
impressive academic credential but hardly any work experience. This new blood
was from Industrial Engineering (IE) then later transformed to Engineering
Management Training (EMT) program where NSC internally trained them in all
aspects of plant operations. IE pioneers and 11 batches of EMT graduates
58
occupied key supervisory and technical positions in operations, maintenance,

support, and project management groups.
There were also personality changes at the helm of the company from E.
Rodriquez
and
Larrazabal
(political
appointees)
to
Jose
Ben
Laraya
(professional/technical) which brought about the change in management

systems, including financial and budgetary controls (NSC, Annual Reports).
In 1980s, NSC became prone to various sub-cultures in its many work
groups caused by diversities in academic backgrounds, work experiences,
geographic origins and age levels of its hired and assimilated employees. This
prompted the adoption of management by objectives (MBO) as the basis for
corporate planning and budgeting system. NSC managers then codified the
corporate MBO which later evolved into the NSC Corporate Philosophy (refer to
Appendix V). In 1986, after the EDSA Revolution, NSC launched an
Organizational Self-Renewal Program, anchored on NSCs human resource
philosophy: A change in men, rather than of men . . . at all levels, in all divisions,
covering all facets of the corporate operations, in a manner that unites rather
than divides the NSC organization in the pursuit of its corporate mission. After
that program in 1986, the Corporate Philosophy officially became part of the NSC
Mission Statement, which cemented the congruence of goals among NSCs
various publics while harmonized the interests between employees, the
corporation and the country (Narciso, 1992).
With its corporate mission in place, a corporate value system was
established and published in 1988 as the Seven Corporate Values (refer to
59
Appendix V: NSC Corporate Philosophy). Armed with a sense of being and

collective corporate values, NSC completed in the same year the construction
and implementation of Phase I expansion program, shown in Table 4 below, and
has focused on becoming a major supplier of flat steel products in the country.
Table 4: NSCs Annual Rated Capacity (000MT)

(Data: NSC)
In 1989, NSC adopted a corporate slogan: Were building a country,

premised on the eventual integration of the local industry and the industrialization
of the country (NSC News, October 1992). The technical and technological
preparations, to realize this dream then, were already being attended.
Corollary to that, NSC adopted four (4) guiding principles in its expansion
and modernization program, and these are capability optimization of existing
facilities, acquisition then upgrading of idle domestic facilities, acquisition then
retrofitting of foreign second-hand facilities, and reliance on internal cash
60
generation and corporate profit reinvestment (NSC, 1994).

On the Human Resources aspect, with the belief that people are its most
important asset, NSCs competitive hiring rates were much coveted that its
turnover rate of 1.5% in 1990s was probably the lowest in Philippines industry
(NSC News, August 1992).
NSC increased its Hot Strip Mill capacity by more than 200% after the
completion of Phase II-A with the installation of the 1.20 mtpa seven-stands Hot
Strip Mill No. 2. Consequentially, about 0.400-mtpa was added to Cold Strip Mills
capacity when NSC commissioned 1.00-mtpa Pickling Line No. 2. Thus, the total
NSCs primary capacityincludes Hot Strip Mills and Billet Shopis rated at
2,000,000 metric tons per year or 2.00-mtpy.
Prior to the commercial operations of the new Hot Strip Mill, NSC secured
in 1990 long-term supply agreements with four major slab exporters. It has
agreements with Companhia de Siderurgica de Tubara (CST) for 300,000 to
500,000 MT per year; Pohang Iron and Steel Co. Ltd. (POSCO) for 100,000 MT
per year; and China Steel Corporation (CSC) for 100,000 MT per year; plus
Broken Hill Proprietary Ltd. (BHP) for 100,000 MT of slabs/HRC minimum supply
per year (NSC News, April 1990).
An incremental Phase II-B, drafted in 1994 (NSC, 1994), planned to
complete the balancing of plant capacitiesexpansion of Hot and Cold Rolling
capacities to 2.80Mtpy and 1.6Mtpy, respectivelythen integrate rolling
operations from Hot Mill to Tinning Lines. The main feature of Phase II-B for
Pasig was the conversion of the Halogen ETL1 to produce tin-free products. On
61
the NSCs 20th Anniversary on 22 February 1994, Rolando S. Narciso, President
and COO, remarked, Phase II-B will allow this company to gain additional
capacities at a very minimal investment cost per ton (NSC News, March 1994).
Phase III involved the full integration of NSC into iron and steelmaking,
dubbed as the Integrated Steel Mill (ISM) project. When NSC closed, technical
feasibility and cost studies for Phase III had already been carried out by US
Steels subsidiary, USX Engineers. NSC was even contemplating on the
installation of a direct-smelting ironmaking plant and a thin-slab flat rolling or
Corex compact-strip mill somewhere in PHIVIDEC Industrial Estate, Misamis
Oriental (NSC News, September, 1993).
With the lesson learned during the 25 April 1995 Mindanao-wide 138kV
grid power collapse (Valencia, 1995), the ISM project (Longakit, 1993) was
planned to be autogenousself-generated power and energyaside from
contributing an additional 300 megawatts of excess electric power to the
Mindanao grid. Furthermore, a self-liquidating prospect, ISM (Baares, 1990) will
improve NSC profitability as it will address NSCs existing and long-term
vulnerability to supply and price fluctuations of its raw materials required for its
continued operations.
World/ASEAN Steel Supply (Production)

World Steel Supply (Production). Globally, steel is produced on each
four corners of the world. Countries with steelmaking capability are usually
62
grouped, sometimes arbitrarily, by geographical locations: Western Europe,

Eastern Europe, North America, South America, Asia, Africa and Oceania
(Australia and New Zealand). Table 58, shown in Appendix Q, grouped the steelproducing countries, such as Europe classified into the European Union (EU15)
and the rest are lumped as Western Europe. The former member-states of USSR
are grouped into Commonwealth of Independent States (CIS) while the rest are
retained as Eastern Europe. North America includes the Caribbean islands plus
Central America. Asia is further grouped into East Asia, South Asia, and
Southeast Asia; the latter are mostly ASEAN-members. Middle East nations are
separately grouped from the rest of Africa (IISI, 2007; CRU, 2004).
World vs ASEAN Hot-Rolled Flats Production, 1991 - 2004
('000 metric tons)
500
Asian
Financial
450
World
Crisis
400
350
300
250
East Asia
200
150
100
50
South Asia
ASEAN
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Figure 9: Comparative HRC Flats Production, 1991-2004

(Data: IISI, SEAISI)
63
Figure 9 shows the trend of hot-rolled coils production for the ASEAN in
relation to the world HRC flats production. A slowdown is apparent for the year
1998, during the Asian Financial Crises, but ASEANs HRC flats production
continuously grown to higher levels after the crisis (refer to Appendix G for the
complete table of raw data used to generate Figure 9). Table 5, below, highlights
the hot-rolled flat steel production for the years 1994 to 2000.
Table 5: World/ASEAN Production of Hot Rolled Flats Steel

Source: IISI
64
Taccone (2006) considered the 20-year span between 1979 and 1998 as
the dark period, an aberration, with the steel industry's crude steel production
exhibiting only a meager 3% growth compared to 6% between 1946 and 1978,
and then 6% again after 1998 to present.
Although there was a peak in HRC production in 2000, refer to Figure 9,
the world HRC flats production, moreover, experienced (Ikenson, 2002) a
sluggish performance in 2001, when USA imposed tariff on imported steels.
ASEAN Hot-Rolled Flats Production, 1991 - 2004

('000 Metric Tons)
4.0
3.5
Note: Other ASEAN members

no Hot-Rolled Flats capacity
Asian
Financial
Crisis
Thailand
3.0
2.5
2.0
Indonesia
1.5
1.0
Philippines
0.5
Malaysia
0.0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Figure 10: ASEAN Hot Rolled Flats Production, 1991-2004

ASEAN Steel Supply (Production). Hot-rolled flat steel production
determines the total domestic finished flats production, i.e., cold-rolled flat steel
65
and tinplates. It is economically viable for a steel company with hot-rolled

capacity to use domestically produced hot-rolled coils for its downstream
finishing lines (Koda, et. al., 1995).
Table 6: World / ASEAN Total Production of Crude Steel, 1994 2000
Source: IISI, various years
Shown above is a tabulation of world and ASEAN total crude steel

production for the period 1994-2000. Appendix G, Table 25 shows the raw data
for the world and ASEAN total crude steel production used to create Figure 10.
There are four hot-rolled steel-producing member-countries of ASEAN,
namely: Thailand, Indonesia, Malaysia and the Philippines. Figure 10 illustrates
66
that of the four flat-steel-producing ASEAN members, only the Philippines and
Thailand decreased its hot-rolled steel production after 1996, while the rest have
continuously increased its respective production for the ten-year period: 19932003, but all decelerated during the Asian Financial Crises, respectively.
World, ASEAN vs NSC Crude Production, 1991-2004

('000 metric tons)
20
18
16
NSC Crude, Asian

56.25 y-o-y Financial
Crisis
26.20
14
12
10
8
6
50
ASEAN Crude
y-o-y
40
30
20
10
-
(4.53)
World Crude
y-o-y
(10)
(0.29)
(20)
(30)
(40)
ASEAN Crude
(51.43)
4
2
%y-o-y
60
NSC Crude
(50)
(60)
(72.78)
(70)
(80)
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Figure 11: World, ASEAN vs. NSC Crude Production, 1991-2004

(Data: IISI)
Comparing the per cent year-on-year (%y-o-y) change in NSC production,
Figure 11 shows that while the World crude production oscillated in the 10% yo-y band, and the ASEAN crude production moved between 20% and +40%
year-on-year, NSC spiraled down to its lowest point of 72.78 % year-on-on-year
by 1999 from a peak of 56.25% year-on-year six year earlier.
67
Eerily, the downhill trend for NSC began well before the Asian Financial
Crises in 1997-98, but rather in 1994, the banner year when it was privatized
during the Ramos administration.
Data shows that there is a strong positive correlation between NSC crude
production to the Philippine crude production (refer to Appendix G, Table 25).
This acknowledges the fact that NSC is the only hot-rolled manufacturer in the
Philippines. Furthermore, NSC production data exhibited a negative weak
correction versus both the World and ASEAN crude production. Compared to
both world and ASEAN, NSC crude production is very small in tonnages.
World/ASEAN Steel Demand (Consumption)

Steel Intensity. Through the years, flat carbon steel demanded
worldwide was invariably always slightly greater than the available steel
produced by various countries. Global steel demand (Christmas, 2003) is
expected a continual increase while risk appears more on a downside, unless
raw material shortages and shipping problems prevent supplies rising.
Steel consumption can be measured by steel intensitythe ratio of steel
consumption to Gross National Product (GNP), the monetary value of the total
production of final goods and services (Laplace Conseil, 2007).
The Iron and Steel Institute conceptualized in the seventies the steel
intensity, which varies according to the stages of countrys economic
development, is differentiated below:
68
Stage 1: Pre-industrialization. Steel intensity is low and its applications are for
exploitation of mineral resources, agriculture and food industry.
Stage 2: Industrializing. The country starts to industrialize, thus heavy
investments are focused on infrastructure: transportation, power generation and
distribution, and telecommunications. Steel intensity gradually rises.
Stage 3: Industrialization. The country is already an industrializing one with rapid
growth in steel consumption for the machinery and equipment, consumer
durable, and shipbuilding industries. Steel intensity accelerates.
Stage 4: Transition. The country has already industrialized and has a wellestablished industrial infrastructure. Steel intensity stabilizes.
Stage 5:Post-industrialization. The country already saturated its industrial
products. Service-based and sophisticated industries comprise more share of the
GNP. Steel intensity declines. (Laplace Conseil, 2007)
Figure 12: Evolution of steel specific consumption per unit of GDP, 1950-2005.
(Sources: L. Conseil, 2007; Taccone, 2006, Goodyear, 2007)
Figure 12 is a merged version of three authors as cited below, whereby
69
each complemented the others. Steel intensity for the Philippines from 1984 to
2004, with analysis for the particular period 1994-2000, is discussed in page 77.
In the year 2000, Figure 12, the Philippines was in Stage 1, South Korea
in Stage 2, Taiwan was nearing Stage 3 steel intensity. Stage 4s steel intensity
is prominent in Singapore. The U.S.A. and Western Europe would be on the later
part of Stage 4 going unto the last stage, evidenced by a shift from
manufacturing towards the service industry (Taccone, 2006; Goodyear, 2007).
326.722
316.872
290.441
289.507
272.819
271.447
280.353
259.036
258.415
252.260
251.810
236.355
237.338
223.744
224.163
220.344
200.0
219.845
250.0
281.281
300.0
303.697
Asian
Financial
Crisis
325.988
346.546
Demand
304.342
Supply
Source: CRU, IISI, SEAISI,
317.916
350.0
346.846
World Flat Carbon Steel Supply v Demand
Million
metric tons
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Figure 13: World Flat Carbon Steel Supply vs. Demand

(Data: CRU, IISI, SEAISI)
World Steel Demand (Consumption). Even during the Asian Financial

Crises in 1997 to 1998, steel demanded worldwide was slightly greater than what
70
was supplied by various steel producers worldwide. Between the years 1995 to
2000, Figure 13 shows a slow but increasing trend for world steel demand, still
slightly greater than the world steel supply, yet on the onset of the Asian
Financial Crises, an abrupt decrease in demand as well as supply is noticeable
(CRU, 2004).
World vs. ASEAN Apparent Finished Steel Consumption 1991-2004
('000 metric tons)
1000.0
Asian
Financial
900.0
Crisis
800.0
World
700.0
600.0
500.0
East Asia
400.0
300.0
200.0
100.0
South Asia
ASEAN
0.0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Figure 14: World vs. ASEAN Apparent Finished Steel Consumption, 1991-2004
Figure 14 compares the trend of the World and ASEAN Apparent

Finished Steel Consumption in 1991 to 2004. The World Apparent Finished Steel
Consumption declined during the Asian Financial Crises brought by the decline in
ASEAN and East Asias consumption.
71
ASEAN Steel Demand (Consumption). Koda, et. al. (1995) found that
there is a tendency for steel demand in Asia to increase in proportion to GDP
growth, yet would level off then decrease when GDP reached a certain level. On
a country basis, such as the ASEAN countries, domestic demand can be
estimated by both GDP and population trends.
Table 7: World/ASEAN Apparent Consumption of Finished Steel, 1994-2000
72
Shown above is the tabulation of apparent finished steel consumption of

ASEAN countries plus other countries in Asia (refer to Appendix G for the
complete table of raw data used to generate Figures 14-16).
ASEAN Apparent Finished Steel Consumption 1991-2004

('000 metric tons)
14.0
Asian
Financial
Thailand
Crisis
12.0
10.0
Malaysia
8.0
6.0
Indonesia
Singapore
4.0
2.0
Philippines
VietNam
Myanmar
0.0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Figure 15: ASEAN Apparent Finished Steel Consumption, 1991-2004

(Data: IISI)
Moreover, the apparent consumption of finished steel, although shown an

increasing trend for the previous years to 2004 as illustrated in Figure 15, was
slowed during the Asian Financial Crises. Apparent consumption in ASEAN,
however, belatedly regained momentum only by the year 2002, in contrast with
73
the earlier resumption of upward trend for the whole of Asia and the world (see
also Figure 14 on page 70).
Vietnams apparent finished steel consumption, seemingly unaffected by
the slowdown during the Asian Financial Crises, continued its upward trend from
1995. NatSteel Asia (SEAISI Newsletter, March 2007) believes that this growth in
Vietnam will continue to grow strongly because its steel consumption per capita
is still relatively low.
Philippine Steel Demand (Consumption). Paglomutan (1981) found

that the Philippine steel (flats and longs) consumption was highly dependent on
three factors: domestic steel production, import price of steel, and construction
expenditures. The third factor was expected because it was the take-off stage
of a countrys economic development.
Furthermore, Paglomutan observed that the Philippine steel consumption
increased 3.4 times over the period 1960-1977, then using a econometric
model forecasted an increase by 7% per year; to reach 2-million metric tons by
1990; and a 4-million-metric-ton mark by the end of the century. (Paglomutan,
1981)
In 1995, NSC expected domestic steel demand to grow unabated. Total
demand was projected to reach to about 3.00 million metric tons, or a 13%
growth rate compared to 1994 demand levels. A low forecasted 10% growth was
also considered citing that historical cyclical expansion is only 3 years, although
a four-year expansion (1987-1990) was recorded once in the past 27 years from
74
1968 (NSC Annual Report, 1995).

Apparent Consumption of Finished Steel, 1991-2004
'000 metric tons
45
Philippines 27.28
Asian
ASEAN
Financial
40
Crisis
% yr-on-yr
30
20
10
35
30
World
(10)
(2.02)
25
(20)
20
(30)
(40.75)
15
ASEAN
10
Philippines
5
(64.82)
(40)
(50)
(60)
(70)
(80)
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Figure 16: World, ASEAN vs. Philippines Apparent Consumption of Finished

Steel, 1991-2004
(Data: IISI)
Apparent Consumption of Finished Steel (ACFS), Figure 16, of the
Philippines before and after the Asian Financial Crises 1997-98 fluctuated 30%
year-on-year; for ASEAN it was 20% year-on-year, and for the world this was
10% year-on-year. During the Asian Financial Crises 1997-98, however, the
Philippines apparent consumption went down to 40.75% year-on-year that also
brought down the ASEAN apparent consumption to 64.82% year-on-year
(combined with the decrease in consumption in Thailand, Malaysia and
Indonesia). This resulted to the worlds apparent consumption to 2.02% year-
75
on-year in 1998 (IISI, 2007). (Refer to Appendix G, Table 28 for raw data).
Table 8: World/ASEAN Apparent Consumption per Capita, 1994-2000
Shown above is the tabulation of apparent steel consumption per capita

in kilograms (ACC) of ASEAN countries plus other countries in Asia compared to
the apparent steel consumption per capita in kilograms (ACC) of the world (see
76
Appendix G Table 29, for the complete table of raw data used for Figure 17).
Apparent Steel Consumption per Capita, 1991-2004
kg
300
ASEAN
250
Asian
Financial
Crisis
200
150
World
196.19
180.77
131.10
166.30
126.80
100
50
256.67
Philippines
58.60
40.70
36.80
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Figure 17: Apparent Steel Consumption per Capita, in kg

(Data: IISI)
In terms of Apparent Consumption per Capita (ACC), in kilograms, the

Philippines apparent consumption hovered at 45kg per capita, almost one-fifth
that of the averaged ASEAN at almost 200kg per capita; or one-third that of the
World at 132kg per capita. Figure 17 confirmed that during the Asian Financial
Crises 1997-98, the Apparent Consumption per Capita the world over, including
ASEAN, decreased (refer to Appendix G, Table 29 for raw data).
Applying the IISI concept of steel intensity (refer to Figure 12 previously)
to the Philippine steel industry, using the Apparent Steel Consumption per capita
77
from IISI and available raw data of per capita income (representative of the GNP)
from NEDA and National Statistical Coordination Board
(NSCB), the graph
below is provided.
Philippines Steel Intensity, 1984 - 2004

App. Crude Consumption, kg per capita
60
1996
55
1995
50
45
1999
1994
40
1997
35
2000 2001
30
1998
2002
2003
2004
25
20
15
1984
10
500
600
700
800
900
1,000
1,100
1,200
Per Capita Income [PPP], US$ source: NEDA, NSCB
Figure 18: Philippines Steel Intensity, 1985-2004

(Data: IISI, NEDA, NSCB)
Figure 18 shows that although there was a steady climb for steel intensity
since 1984, it wavered in 1994a reaction with the then impending privatization
of NSC. The trend recovered until 1996 then curved to year 2000. Enlarging the
cluster of steel densities between 1998 and 2001, see inset of Figure 18, the
steel density for the successive years circled between 1998 and 2001 (refer to
78
Appendix H for the Philippine steel intensity data used to create Figure 18).
Philippine Raw Steel Imports

In 1994, the world was experiencing an aggregation of nations to form
Free Trade Areas as well as Regional Trade Associations. By 1995, the World
Trade Organization was formally organized to deal with global rules of trade
between 123 nations, including the Philippines. The WTO rules encompassed
almost all commodities, including steel; and even services (WTO, 2005).
Exports as a Percentage of Global Finished Steel Production,
1990 - 2000
Million metric
Production
tons
800
Exports
45%
700
600
37.50%
37.00% 36.80%
400
40.30%
40%
35%
30.80%
300
39.70%
35.30%
34.50%
500
38.70%
Asian
Financial
Crisis
27.40%
30%
200 25.20%
25%
100
0
20%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Source: IISI
Figure 19: Exports as a Percentage of Global Finished Steel Production

In Figure 19, except for the slowdown of exports as percentage of world
79
steel production between 1995 and 1997, it has regained momentum, which
commenced in 1990.
Table 9: World/ASEAN Exports of Semi-Finished & Finished Steel, 1994-2000
Shown above is the tabulation of semi-finished and finished steel exports

of ASEAN countries plus other countries in Asia compared to the world (refer to
Appendix G Table 31, for the table of raw data used to generate Figure 19).
Referring again to Figure 19, global exports grew from a mere 25.2% of
global steel production in 1990 and doubled in 2000. After the Asian Financial
80
Crises, although global production slightly dipped in 1999, however, the

percentage of global steel exports continued its rise.
APEC Study Centre (2003) reported, "recovery from the crisis was
generally slow in 1998 due to the slower than expected growth in exports but
picked up remarkably in 1999, largely due to a number of internal as well as
external factors." This phenomenon is also reflected in the global steel industry.
Table 10: World/ASEAN Imports of Semi-Finished & Finished Steel, 1994-2000
81
Shown above is the tabulation of semi-finished and finished steel imports

of ASEAN countries plus other countries in Asia compared to the world (refer to
Appendix G Table 30, for the table of raw data used to generate Figure 20-22).
Motti and Sachwald (2006) emphasized that among 36 classifications
under the industrial sector worldwide, the growth of iron and steel industry
increased most steeply between 1990s and 2000s. Dachin (2006) noticed that
structural changes of international trade flows indicate modifications in
competitiveness of developing countries, including the Philippines, in terms of
production, technological upgrading and exports under the pressure of
globalization.
ASEAN Imports of Semi-Finished & Finished Steel, 1991-2004
('000 metric tons)
12.0
Thailand
10.0
Asian
Financial
Crisis
8.0
Malaysia
6.0
Singapore
4.0
2.0
Philippines
VietNam
Indonesia
Myanmar
0.0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Figure 20: ASEAN Imports of Semi- and Finished Steel, 1991-2004

82
ASEAN Steel Trade. Most ASEAN members imported semi-finished and

finished steel from various parts of the world then processed these semi-finished
steel to augment the domestic finished steel market.
Figure 20 illustrates that most ASEAN member-nations endured a slump
in imported semi-finished and finished steel during the Asian Financial Crises,
except for Viet Nam and Myanmar. Moreover, there was a resumption of steel
importation thereafter that slump. Interestingly, Indonesia only belatedly
continued steel importation in 2000, while Singapore had yet to recover.
ASEAN Exports of Semi-Finished & Finished Steel, 1991-2004

Asian
Financial
Crisis
1.00
2.00
3.00
4.00
('000 metric tons)
Malaysia
Thailand
Indonesia
Singapore
0.00
Philippines
Viet Nam
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Figure 21: ASEAN Exports of Semi- and Finished Steel, 1991-2004

ASEAN member-nations also exported semi-finished and finished steel to
83
the rest of the world. During the 1997-1998 Asian Financial Crises, however,
there was a tendency to dump these steel to other countries, thus exportation
increased. Interestingly, Figure 21, only Singapores exports fell during the Crises
and have yet to recover. Both the Philippines and Vietnam have a small steel
export inclination, which would pick-up only beginning 2002.
Exports as a Percentage of ASEAN Steel Production

Millions
metric tons
Production
200
Export
%
0.5
Asian
Financial
Crisis
180
0.45
160
140
0.4
120
100
35.9%
80
0.35
34.9%
33.8%
32.4%
32.4%
33.6%
0.3
60
40
27.1%
20
25.3%
24.7%
1995
1996
0.25
25.5%
0.2
1994
1997
1998
1999
2000
2001
2002
2003
Source: SEAISI, IISI, PISI
Figure 22: Exports as a Percentage of ASEAN Steel Production

(Data: SEAISI, IISI, PISI)
In contrast to the world scenario, in the ASEAN region, shown in Figure
22, exports picked-up during the 1997-1998 Asian Financial Crises, however, it
never regained that high level even until 2002 although production continued to
increase. The increase in exports was due to the apparent need of steel mills to
84
unload products anticipating for a global economic slowdown, as noted above,

which unfortunately never yet came true.
Philippine Steel Trade. In 1986, CB Circular 1005 liberalized iron and

steel imports, subject to the required tariffs. Executive Order 470, known as the
Tariff Reform Program, rationalized the structure from 24 August 1991 to 01 July
1995 (see Appendix T: Steel Industry Tariff Schedule, 1991-2000).
Philippine Steel Trade vs NSC Production, ('000 mt), 1991-2004

('000 metric tons)
4.0
('000 metric tons)

1.0
Phil. Imports
0.9
(right scale)
0.8
3.0
0.7
0.6
NSC Crude
Phil. Crude
2.0
0.4
0.2
2.5
(right scale)
0.5
0.3
3.5
1.5
Phil Exports
1.0
0.5
0.1
0.0
0.0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Figure 23: Philippines Steel Trade vs. NSC Production, 1991-2004

(Data: IISI, NSC, NSO, DTI-BETP)
Figure 23 shows that prior to the closure of NSC, the Philippine steel
imports shadow that of NSCs. NSC was the biggest Philippine importer of iron
85
and steel raw materialssteel slabs, hot-rolled coils, including tinplates. Refer to
Appendix O: Philippine Steel Scenario in 1995. Imported steel abruptly increased
without NSC, then hovered at 3,000 metric-tons-per-year level.
Paltry steel exports, which began when NSC exported the first ever steel
products to United States and Europe in 1976 (NSC News, November 1976),
remained small until the surge in 2002, brought by the lowering of export tariffs.
Table 11: Philippine Steel Imports, metric tons, 1991-2004
(Sources: NSO and DTIs Bureau of Export Trade Promotion)
Table 11 above shows the volume of Philippine steel imports. This table
was used to generate Figure 24 below.
Between 1991 and 1999, NSC was the sole importer of slabs in the
country. Philippine slab imports generally mimic the movement of NSCs
86
production, as shown in Figure 24 below. Until 1998, hot-rolled coil imports

consistently about 200,000 metric tons per year dramatically rose to as much as
600,000 mtpy in 1999 and fluctuated within the 500,000 mtpy thereafter.
Figure 24: Philippines Steel Imports per Type, 1991-2004

(Sources: IISI, SEAISI, NSO, DTI-BETP, NSC)
For twenty years, NSC enjoyed considerable but dominant role in the
domestic market. Before NSCs privatization, it was entitled to a lot of incentives
under Presidential Decree 1789 and the Iron & Steel Industry Act, such as:
partial Value-Added Tax exemption20% up to March 1994 and 10% from April
1994 to March 1997 for domestic sales and 100% for its export sales.
Furthermore, the Act granted 100% tax credits for the purchase of domestic
capital equipment and parts; 100% import tax and duty-free importation of capital
87
equipment and parts for its upgrading and expansion program; and accelerated
depreciation for the first ten years from the start of commercial operations of its
expanded mills (R.A. 7103).
NSC Raw Steel Imports. NSC imported slabs and HRCs, aside from
TMBPs, on spot market basis from different suppliers.
('000 metric tons)

900
NSC Raw Materials Imports, 1988-2004

Asian
Financial
Crisis
Slab
800
700
600
500
400
NSC Production
300
HRC
200
100
TMBP
0
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Figure 25: NSC Raw Material Imports, 1991-2004

Data Source: NSC
Figure 25 graphically show that slabs imported by the privatized NSC

declined prior to the Asian Financial Crises 1997-98.
88
NSC slabs came from China (Baosteel, Pangang, Anshan, Angang,

Jinan, Panzhihua, Wugang, and Wuhan) South Korea (Posco), Brazil (CST),
Australia (BHP), Mexico (IMEXSA) and Russia (NMK, MMK, Ilych).
NMK, Ilych Steel, Anshan, POSCO, IMEXSA, CST, and later Australias
BHP, also supplied NSC with Hot-rolled coils. Japans Nippon Steel, Australias
BHP and South Koreas POSCO) supplied tin-milled black-plates (TMBPs).
The HRCs imported by NSC remarkably decreased in 1995 when it
brought Hot Strip Mill No. 2 into commercial operations, thus imported slabs
increased until 1996. Although, NSCs attempt for slab supply agreements with
its various suppliers was frustrated in 1997, Hottick management was hopeful
that these would be completed as soon as the world steel industry recovers from
the effects of the crisis. Furthermore, importation of TMBPs declined starting
1992, when NSC closed its last tinning mill in Pasig to concentrate on its newly
installed ETL3 in Iligan City (NSC News Special Bulletin, 20 April 1998).
As mentioned before, Lamberte, et.al. (1999) found that capacity
utilization of firms decreased from July 1997, on the onset of the Asian Financial
Crises.
NSC flat carbon steel crude production shows a strong correlation to the
following factors: Philippine import volume of cold-rolled coils, hot-rolled coils,
hot-rolled plates, and tinplates. It exhibited, however, a weak correlation to the
Philippine and ASEAN Semi-Finished and Finished (SF&F) steel imports (refer to
Appendix M).
89
Price Elasticity of NSCs Raw Steel Imports

Hotticks NSC ordered replenishment of raw materials: slabs and Hotrolled coils on a quarterly basis, whereby raw materials needed for a first quarter
of a year, maybe ordered a quarter or two the previous year, dependent on the
country source of material. The raw data used in the computation of price
elasticity for slabs and hot-rolled coils is included in the Appendix N.
NSC Slab Imports. From 1994 to 1999, about 15 steel manufacturers

supplied NSC with slabs from countries such as China, South Korea, Brazil,
Australia, Mexico and Russia through several traders or direct company sales
representatives.
Slabs Fitted Line Plot
QTY = 21190 - 10.16 PRICE
S
R-Sq
R-Sq(adj)
35000
6326.22
0.4%
0.0%
30000
QTY
25000
20000
15000
10000
150
175
200
225
PRICE
Figure 26: Slabs Fitted Regression Line Plot

(Data: NSC, Graph: Minitab 14)
250
275
90
Using the confirmed purchase orders for quarterly deliveries to NSC, refer
to Appendix N, a fitted regression line through software, Minitab, Figure 26,
shows the relationship for slab:
Quantity = 21190 10.16 x Price
(eq. 7)
Using this demand curve (eq. 7), the elasticity coefficient was computed
using (eq. 6) in page 42, which yielded an average of 0.12, very price inelastic.
NSC Hot Rolled Coils (HRC) Imports. Similarly, from 1994 to 1999,
NMK, Ilych Steel, Anshan, POSCO, IMEXSA, CST, and lately Australias BHP,
supplied NSC with Hot-rolled coils.
HRCs were usually ordered instead of slabs especially when the
difference between the latter and the former prices were minute. Common sense
prevailed, according to most NSC managers, because NSCs conversion cost
from slabs to HRCs amounted to about $46/MT compared to the Best-in-Class
Hot Strip Mill, a difference of about $16/MT (Hatch Associates, 1996).
Using Minitab with data tabulated in Appendix N, Figure 27 below shows
the relationship for HRCs:
Quantity = 31082 41.5 x Price
(eq. 8)
The scatter plot, Figure 27, shows that the data-pairs are sporadically
91
distributed whereby a smaller Pearson coefficient was generated for these datastream compared to that of slabs.
HRC Fitted Line Plot
QTY = 31082 - 41.5 PRICE
S
R- Sq
R- Sq(adj)
40000
9533.55
0.8%
0.0%
QTY
30000
20000
10000
0
220
230
240
250
260
PRICE
270
280
290
Figure 27: HRC Fitted Regression Line Plot

(Data: NSC, Graph: Minitab 14)
A simple explanation to this distribution would be that NSC was

predisposed to order higher quantities of HRCs, rather than slabs, during it last
year in 1999 prior to its eventual liquidation. NSC managerial executives pointed
out that if slab conversion cost will result to negative cost of production (COP) or
margin, HRC ordering is preferred, if its conversion to CRC COP is positive.
Using this regressed demand curve (eq. 8), the elasticity coefficient was
computed using (eq. 6) in page 42 which yielded an average of 0.50, very price
92
inelastic, meaning a small decrease in HRC prices might only lead to a smaller
increase in the HRC quantity ordered or demanded by NSC.
Generally, the demand for steel in the long-run is very price inelastic
between 0.2 and 0.3 (Barnett and Crandall, 2002). The results of price
elasticity for NSCs slabs at 0.12, and NSCs HRCs at 0.50, although
accounted for in a short-run, i.e., 1995 to 1999, are consistent with the range of
long-run price elasticity of demand for steel.
Steel and Raw Materials International Pricing Trends

Steel Pricing. The US Geological Services published (Fenton, 2000) an
extensive narrative on metal prices and succinctly explained how steel products
are priced, stating:
Steel products are priced by a system of base prices and extras. In general,
each producer specifies a base price for each product form that it manufactures.
For example, a producer of carbon steel cold-rolled sheets would specify a base
price for that product. In addition, the producer specifies completely the range of
thickness, width, and other properties that are covered by the base price. If a
customers requirements are for material thicker, thinner, wider, or narrower than
the base range, an extra charge is added. Extras are also added for such
requirements as cut-length (as opposed to sheets in coil form), special drawing
quality, small orders (e.g., less than 20,000 pounds of a single item), and other
requirements, depending upon the product form.
The cost of transportation from the producer to the customer is a significant
consideration. As a result, a producer often will adjust his price to match a
customers delivered price from a more proximate producer. When such an
adjustment is made, the customers cost is the same, regardless of the location
of the shipping mill; the result for the steel producer is a lower realized price
when shipping to a customer located closer to another producing mill.
Steel prices are usually quoted by weight. For many products, however, there is
a provision for calculating the weight of a shipment so that a customer is required
to pay only for the theoretical weight of the product rather than the actual weight,
which normally is more than the theoretical weight because of allowable
manufacturing variations. Discounts from the quoted price are often available.
93
Alexander and Kalevar (2004) explained that the traditional approach to

determine changes in the price environment is to use a price index that
comprises several different types of steel.
Flat steel prices in the Philippines, being a minor steel player in the global
steel market, only follows that of prevailing prices pegged by integrated
steelmakers such as Japans Nippon Steel and South Koreas POSCO, both
considered as Asias steel exports price-setters, while China
dominates the
prices for imports (Interview with Teresita Panganiban, 2007).
Flat Carbon Steel Monthly Index Prices, 1994 - 2000

130
120
Index Prices (1994=100)
Asian
Financial
Crisis
Asia
Europe
World
110
100
90
N. America
80
Figure 28: Flat Carbon Steel Monthly Index Prices, 1994-2000

(Data: CRUspi Carbon Flats Index Prices)
Dec.00
Aug.00
Apr.00
Dec.99
Aug.99
Apr.99
Dec.98
Aug.98
Apr.98
Dec.97
Aug.97
Apr.97
Dec.96
Aug.96
Apr.96
Dec.95
Aug.95
Apr.95
Dec.94
Aug.94
Apr.94
70
94
Based on CRUspi index, Figure 28 above shows that although steel

prices reached it peak in the second quarter of 1995, a downtrend began in May
1997 and continued until January 1999.
Between the second quarter of 1995 to the second quarter of 1997, the
average steel index prices in Asia were greater than that of the world steel
prices, see Figure 28. The Asian Financial Crises brought down the steel index
prices in Asia, and indubitably the world steel index prices. World steel index
prices peaked again in the third quarter of 2000, but it was 25% lower than the
previous one in 1995. During this quarter, however, the steel index prices in Asia
were about ten points lower compared to the world.
For the period of this study from 1995 to 1999, see Figure 28, steel index
prices exhibited a downward trend worldwide and in Asia, with the lowest point
registered during the first quarter of 1999.
Considine (2005) observed that despite robust demand growth during the
1990s, the North American steel industry faced mounting financial losses from
1999 through 2002 brought on by the Asian economic crisis of 1998 to 2000. As
a result, North American steel prices steadily declined from 1997 through 2001.
NSCs CRC Production vs. Average CRC Prices. NSCs products were
sold to various domestic and foreign customers. Domestic prices were based on
prevailing retail export Asian prices in US dollars. Most NSCs cold-rolled coils
(CRC) were usually sold to customers based on these retail prices, converted to
equivalent currencies for foreign customers.
95
Sales of HRC were very minimal and sporadic, a former HSM QA

supervisor claimed, because most hot-rolled coils (HRC) produced at Hot Strip
Mill No. 2 were delivered to Cold Strip Mills for further processing. NSC was
more into selling CRCs and Tinplates to domestic markets rather than selling the
bulk of its HRC, according to another NSC executive.
Scatter Plot with Regression Line

CRC Production = - 22855 + 148.9 CRC Average Price
60000
CRC Production
50000
40000
30000
20000
10000
S
R-Sq
R-Sq(adj)
0
250
300
350
400
CRC Average Price
450
11289.7
44.1%
43.2%
500
Figure 29: Scatter Plot with Regression Line of NSCs CRC Production vs.
Average CRC Prices
(Data: NSC, Graph: Minitab14)
The Pearson correlation of cold-rolled coils (CRC) Production and CRC
Average Price is 0.664. The Scatter Plot in Figure 29 illustrates that CRC
production is positively correlated to average CRC prices based on the lowest
96
and highest published retail prices.

NSC price strategy, according to a former NSC senior manager, is import
parity pricing schemeproducts are priced not higher than the landed cost
equivalent imported steel products. Landed cost of imported steel is equivalent to
FOB cost and freight multiplied by some factorsforeign exchange rates, bank
charges and insurance, custom duties, value-added taxes, and handling charges.
NSC domestic market price would then be equivalent to the landed cost of
imported steel material less discounts/incentives.
In totality, NSC monthly flat carbon steel production shows a significant
correlation to the following monthly steel prices: Global, Flats, Asia, and North
American Steel Price indices. Quarterly NSC (CRC) production is positively
correlated to all Steel Price Indices, but show high significance of correlation to
Asia Flats and Global Steel price indices.
Summary: NSC Production versus External Factors

World/ASEAN Steel Supply (Capacity). Katrak (2002) observed that
world steel capacity was ruled by consolidation and deregulation. Payne (2001)
noted a fast pace of restructuring and consolidation for West European steel
industry during the last several years prior to 2000, while Weston (2002) reported
a lackluster progress in North America.
By 2000, Woetzel (2002) noted an undersupply of worlds flat steel
capacities, while there was an overcapacity for other steels. For ASEAN, Koda,
97
et. al. (1995) observed that self-support ratio between capacity expansion and
steel demand increase over time, but a situation of lack of supply capacity in
ASEAN will continue until the year 2005.
For the Philippine scenario, only NSC has a hot-rolling production
capacity from 1985 to 1999. Its hot-rolled capacity was increased from 0.5mtpy to
1.7mtpy in 1995, the Phase II-A of its Five-Year Expansion Program.
World/ASEAN Steel Supply (Production). The World steel supply

(production), including ASEAN increased over time.
Taccone (2006) reported that the world steel supply recovered a 6%
growth after 1998, the last year of the Asian Financial Crises, from the 19791998 an aberration when the industry exhibited only a meager 3% growth.
Only Thailand and the Philippines decreased their respective hot-rolled
production starting in 1996. On a year-on-year comparison, however, NSC crude
production started its decline in 1994.
Table 12: Summary of Correlation of NSC Production and World, ASEAN and
Philippine Supply (Production)
98
The data summarized in Table 12 shows that there is no significant

correlation between NSC crude (hot-rolled and cold-rolled coils) production and
the Philippine crude, ASEAN and World crude production. Thus, the null
hypotheses are not rejected, respectively
World/ASEAN Steel Demand (Consumption): In terms of apparent

consumption per capita (ACC), in kilograms, the Philippines apparent
consumption hovered at 45kg per capita, almost one-fifth that of the averaged
ASEAN at almost 200kg per capita; or one-third that of the World at 132kg per
capita. During the Asian Financial Crises 1997-98, the apparent consumption per
capita (ACC) the world over, including ASEAN, decreased.
Philippine Demand (Apparent Consumption per Capita [ACC])
NSC crude production, particularly cold-rolled coils, refer to Table 13,

shows a highly significant correlation to the ASEAN apparent consumption per
99
capita (ACC). In comparison to the World and Philippine demand, particularly

ACC, these factors are not significantly correlated to NSC production.
Philippine Demand (Apparent Consumption of Finished Steel [ACFS])
Similarly, as shown in Table 14, NSC crude production is also

significantly correlated to the ASEAN apparent consumption of finished steel
(ACFS). Moreover, the World and ASEAN Demand, represented here as ACFS,
are also not significantly correlated to NSC production.
Incidentally, the Philippine steel intensity was steadily climbing since
1984, but wavered in 1994 as a reaction with the then impending privatization of
NSC. The trend recovered until 1996 and for the successive years circled
between 1998 and 2001.
Philippines Raw Steel Imports: The HRCs imported by NSC

remarkably decreased in 1995 when NSC brought Hot Strip Mill No. 2 into
commercial operations, thus imported slabs increased until 1996.
100
Table 15: Summary of Correlation of NSC Production and Raw Materials (SemiFinished and Finished [SF&F]) Imports
Furthermore, NSC production data is not significantly correlated to the

Philippine, ASEAN and World semi-finished and finished (SF&F) steel imports,
respectively.
Price Elasticity of NSCs Raw Steel Imports. The results of price

elasticity for NSCs slabs at 0.12, and NSCs HRCs at 0.50, although
accounted for in a short-run, i.e., 1995 to 1999, are consistent with the range of
long-run price elasticity of demand for steel, between 0.2 and 0.3 (Barnett and
Crandall, 2002).
The price inelasticity of both NSCs imported slabs and hot-rolled coils
suggests that even if the respective import prices of these raw materials were
low, the quantity demanded by NSC of these input steels remained low.
Steel and Raw Materials International Pricing Trends. NSC flat carbon
steel production shows, refer to Table 16, a highly significant correlation to the
following monthly steel prices: Global, Flats, Asia, and North American Steel
101
Price indices, respectively.
Table 16: Summary of Correlation of NSC Production and Steel Index Prices
Similarly, NSC production is highly, significantly correlated to most of the

average import prices for both hot-rolled and cold-rolled coils. Quarterly NSC,
especially cold-rolled coils production, is also significantly correlated to all Steel
Price Indices, but show higher correlation to Asia Flats and Global Steel price
indices.
The Privatized NSC, 1994 - 1999

Support for the steel industry might be gleaned from the Philippine
governments policy toward the establishment of the steel mill changed from one
administration to another. Henares (2006), who chronicled the Philippine steel
industry from its aborted birth in 1950s to its tumultuous events in early 1990s,
stated that the government acted as the investment pioneer of the steel mill
under President Magsaysay. The steel industry became a joint venture
102
arrangement under President Garcia. President Diosdado Macapagal totally

handed over the project into private hands. Under Marcos martial rule, it
confiscated and seized the steel industry. After the EDSA People Power in 1986,
President Aquino ordered privatization all over again.
From 1990 to 1996, privatization of state-owned enterprises became a
phenomenon in both industrial and developing countries (The Economist, 22
March 1997). As early as 1990, talks about NSCs privatization surfaced to NSC
employees consciousness (Longakit, 1990) with the government intending to
retain as much as 30% of NSCs shares, another 30% sold to the public and
remainder auctioned off to big investors. Later, in 1991, a revised proposal that
twenty-five (25%) percent of National Development Company (NDC) shares were
to be offered to the public, primarily Filipino investors, and employees of NSC
and NDC. NSCs mother company, NDC, even hired SGV and Morgan-Grenfell
as financial advisors to study the mechanics of the privatization plan. (NSC
News, April 1991)
When Fidel V. Ramos assumed as president in May 1992, with his
Philippines 2000 vision, he embarked on a pro-business and free marketoriented government and pushed for the privatization of strategic public assets,
particularly NSC (NSC News, June 1994). Ramos encouraged greater private
sector participation in the economy, for substantial share of that sector in the
countrys growth and prosperity. Furthermore, he acknowledged (NSC News,
June 1994) that steel being essential to modernization, a relatively advanced and
cost-effective iron and steel industry was vital to the attainment of Philippines
103
2000, purportedly the collective national vision of the Philippines reaching newly
industrializing status by the year 2000.
Ramos approved selling 51% of governments stake in NSC on 11
September 1992, based on Proclamation No. 50 under the Aquino government
mandating the privatization program for government-owned and controlled
corporations (NSC News, September 1992, p. 3). The consortium of All Asia
Capital and UKs Barclays de Zoete Wedd was selected as NSC privatizations
financial advisor tasked to formulate, develop and assist in implementing a plan
within a specific timetable. Pittsburgh-based Beddows and Co. and SGV Law Co.
reinforced the All-Asia and Barclays team as consultants (NSC News, July 1993).
Incidentally,
later
studies
such
as
Megginson,
Nash,
and
van
Randenborgh (2004) presented strong evidence from 61 firms in 12 industrial

and 6 developing countries, and thirty-two industries privatized in 1961-90 that
indeed this new phenomenon offered higher profits, greater efficiency, more
investments, higher output, lower leverage, and higher dividends, and as an
added bonus, increased employment. A similar study, (Boubakri and Cosset,
1998), considered 79 newly privatized firms, headquartered in 21 developing
countries, that experienced full or partial privatization during the period from 1980
to 1992, showed exactly the similar results.
On 31 January 1994, (NSC News, March 1994), from the eighteen (18)
prospective investors, four (4) groups were pre-qualified to participate in the
public bidding of 65% ownership of NSC, namely: Malaysian Wing Tiek Holdings
Corp. Berhad, Indias Nippon Denro Ispat Ltd., Exchange Capital Corp.
104
Consortium and AIA Capital Corp. Consortium. NDC selected Wing Tieks
proposal to acquire 55% NSCs primary shares for P12.375 billion, and the
former signed memorandum of understanding on 12 October 1994 in the
presence of Pres. Fidel V. Ramos and Malaysian Prime Minister Mahathir (NSC
News, October 1994).
Former NSC Chairman and CEO Luis M. Mirasol, Jr. in an interview with
NSC News explained that Wing Tiek Holdings Berhad, composed of seven
subsidiaries. It was involved in the importation, exportation, and stocklist of steel
materials, aside from manufacturing wire mesh, cold-drawn mild steel and
stainless steel shafting bars, steel pipes and tubes. It is also an associate
company of the Westmont Group (NSC News Supplement, December-January
1995).
Wing Tieks NSC embarked on the continuation of the Five-Year
Expansion Program, designated as FYEP Phase II-A, which was completed in
the second quarter of 1995. FYEP II-A included the upgrading of 4-Stand
Tandem Mill electrical controls, the modernization of 5-Stand Continuous Mill
automation, the installation of the Acid Regeneration Plant to serve the new
Pickling Line No. 2, and Hydrogen Batch Annealing Furnaces (NSC News
Supplement. August 1995). The last capital investment was aborted due to the
fortuitous events: Wing Tiek sold NSC to Hottick, which had changed priorities.
In 1996, the Manufacturing Systems department (Noynay, 1996) rolled
out the Production Tracking System under the Manufacturing Automation System
Level 2, hereafter referred as PTS-MASS2, to replace the existing 1987-installed
105
Unisys A-Series mainframe-based Production Control System. The PTS-MASS2,

consisting of three (3) modules: Material Tracking, Quality Tracking, and Mill
Condition Monitoring, provided basic information infrastructure supporting the
production management of Cold Strip Mill and ETL3; linked to Level 2 (mill
process computers) and Level 4 (Production Planning and Finance) systems and
provided data to the Computerized Maintenance Management Systems for mill
delay monitoring. (Note: The four level hierarchies was conceptualized at Purdue
University as a model of Computer Integrated Manufacturing and adopted by
many modern steel mills. Level 1 handles direct automation, Level 2 for process
modeling, Level 3 for mill area supervisory control and Level 4 encompasses the
business systems).
On the last quarter of 1996, NSCs ownership changed hands from Wing
Tiek to Hottick after the formers failure of adhering to its original agreement with
NDCthe sale of additional 12.5% block of shares in NSC to the public. Private
ownership increased from 54.5% in November 1994, and then up to 74.5% in
September 1996 after WingTiek paid P3.9Billion for an additional interest,
however, it was effectively reduced to 69.2% when Wing Tiek issued new shares
to Marubeni. When Hottick took over Wing Tieks 69.2% NSC stake in December
1996, it also assumed NDCs 12.5% thus bringing Hotticks total NSC share to
81.7% by February 1997, see Appendix E: Transactions for NSCs Stake (19951998). Unfortunately, noted some management staff, all these capital infusion did
not benefit NSC but rather it went to NDCs coffers and other shareholders.
During a presentation of unaudited financial records for 1997, Tom L.
106
Galanis, NSCs Chief Operating Officer, highlighted three things: the incurrence
of huge deficit attributed to foreign exchange and loan interest; the dumping of
steel products from Russia and Korea affected NSCs market share; and the
negative cash flows because of loan payments (WEB: Workers Empowerment
Bulletin, 24 March 1998).
Moreover on 20 April 1998, NSCs COO Galanis issued a General Memo
announcing an absolutely non-voluntary streamlining, a continuation of the
previous year, to achieve organizationaladministrative and operational
efficiency. A month later, it closed the remaining operational Pasig tinning mill,
ETL2, citing that its operating fixed costs far outweighed its projected revenue;
and that with the continuous decline of NSCs market share for tin plates, the
ETL3 in Iligan could readily absorb the limited demand (NSC News Special
Bulletin, 20 April 1998).
The privatized NSC, from Wing Tiek to Hottick era, might prove to be the
exception to the popular results of aforementioned studies, whereby on 15
December 1998, NSC appealed to President Estrada for its survival in a Position
Paper re: Tariff Adjustments citing the effect of the Asian financial crises to its
bottom line (Navarro and Bidin, 1999).
It was only in August 1999 that President Estrada signed Republic Act
No. 8752, or the Anti-Dumping Act of 1999. R.A. 8752 provided the rules on the
imposition of duties on cheap, imported goods that threaten local industries
producing the same products. Furthermore, Estrada also signed RA 8751, which
amended Section 302 of Presidential Decree 1464 or the Tariff and Customs
107
Code. The amendments provided for countervailing duties will be slapped on

imported subsidized products that upon the Tariff Commissions determination
cause material injury, growth retardation or prevention of the establishment of an
affected domestic industry (Manila Bulletin, 13 August 1999)
Even Senator Juan Ponce Enrile echoed the same position in his Senate
Resolution 650 that while the privatization of the NSC was envisioned as a major
foreign investment that promised efficient management and operation of NSC the
outcome was opposite (Echeminada, 2000).
Many NSC managerial staff commented that the resulting privatization of
NSC failed to run the basic steel business because of short capital to reinvest in
raw material sourcing. NSC was managed by Wing Tiek from 1994 to 1996 who
were essentially steel traders thus not very much cognizant of the steel
manufacturing essentials. Meanwhile, Hottick taking over NSC from Wing Tiek in
1996 adopted a close-door type of management, which resulted to local
creditors mistrust; hence unwilling to acquiesce for more financing (various
interviews, 2007; refer to Appendix HH).
1995-1999 NSC Production Rate

NSC Production Rate is dependent on the rated capacities of various
facilities. All facilities were upgraded during the two phases of NSCs Five-Year
Expansion Programs (refer to Table 4 above, on page 59).
NSCs Production Rate was conventionally computed as the ratio of
108
processed tonnage over the net operating hours. Effective or Net Operating
Hours is equivalent to the Gross Calendar hours less ancillary and non-ancillary
delays. Figure 30 shows the computation of Net Operating Hours (NSC, 1998m).
Figure 30: NSC Plant Availability and Utilization Computation

(Source: NSC, 1998m)
Ancillary delays, charged as non-operating hours, included no operations
or scheduled mill stoppage, maintenance downturn or servicing, annual
maintenance shutdown. The Nerve Center and Production Planning issued
weekly plans for mill production, including days of no scheduled operation, based
on market projections. Maintenance downturns and servicing, scheduled by
Maintenance Planning department, allotted certain days for each respective line
on a revolving schedule with designated frequency. Annual Maintenance
Shutdown was usually scheduled after a certain production volume was reached
for critical production lines or when the recurrence of delays cannot be ignored;
109
that correction could only be done if the respective production line was totally
brought offline. During these annual shutdowns, Design-out Maintenance
activities were usually included, carried out by a Central Repair Group and
almost all the major equipment and respective components were sent to various
Mechanical and Electrical Shops for rehabilitation to their respective maximum, if
not original, capabilities. For each respective line, Operational Ancillary Delays
were also designated which included back-up roll change, change/inversion of
knives, preheating or certain activities that were essential for mill setup.
Non-Ancillary Delays were categorized into Operational, Electrical,
Mechanical or Miscellaneous delays.
Operational delays consisted of meal break, equipment or line inspection,
dry run, processing difficulty (welding delays, process testing, quality inspection,
strip break and rethreading) to name a few.
Electrical Maintenance delays included failure of electrical equipment and
controls, and troubleshooting, repair or replacement of defective electrical and
process control systems.
Mechanical Maintenance delays included breakdown of mechanical
equipment, and troubleshooting, repair or replacement of malfunctioning
mechanical, including pneumatic and hydraulic, systems.
Miscellaneous delays consisted of all others that cannot be classified
under the first three aforementioned delays, e.g., power failure or fluctuation
charged to Electrical Power Distribution, no available steam or compressed air
110
charged to Central Utilities, unscheduled roll changes charged to Roll Shop, or

out-of-order OHTC charged to Crane Repair Group.
Shift
delays
were
encoded
to
the
Computerized
Maintenance
Management System (CMMS). These were then monitored, collated, and

analyzed by the Cold Strip Mills Maintenance Information Systems of the
Maintenance Planning department, as to their effect on productivity, mill
availability and utilization.
Pickling Lines' Production Rates (1995-1999)
105
70
CSM Total Production (MT) [right scale]

PKL1 Actual Production Rate (MT/hr)
PKL2 Actual Production Rate (MT/hr)
Thousands
95
85
60
50
75
40
65
30
55
20
45
10
35
25
J F MAM J J A SOND J FMAM J J A S ON D J FMAM J J A SON D J FMAM J J A SOND J F MAM J J A SON
1995
1996
1997
1998
1999
Figure 31: Pickling Lines Production Rate MT/EOH (1995-1999)

(Data: NSC)
Although it was reactivated in January 1995, unfortunately, Pickling Line

No. 1 was intermittently operated beginning October 1996 because of recurring
111
delays caused by deteriorated pickling tanks and fume exhaust system coupled
with a problematic tension leveler, and ultimately stopped production exactly the
following year.
The Cold Strip Mill of NSC was comprised of 14 mills and process lines
(see Appendix C). From 1995, it was the accustomed practice that respective
production rates were computed each mill and on per line basis. Among the
operations staff, there was the traditional perception of impossibility in
determining the Cold Strip Mills production rate as a single entityas opposed
to Hot Strip Mills continuous configuration. Thus, the Effective Operating Hours
of Pickling Line No. 2 formed the basis of this study; see Figure 31, as the input
mill for all HRCs coming from Hot Strip Mill No. 2. PKL2s production rate as
basis, however, gives an approximate manner of relating this factor to CRC
production.
Table 17: Correlation of NSC Production and monthly NSC's Production Rate
Data shows, refer to Table 17, monthly NSC production is positively

correlated (0.633) to monthly Production Rate. There is sufficient statistical basis
that Production Rate and NSC Production are significantly correlated. In fact,
correlation is highly significant, p-value = 0.000 < 0.05 (also <0.001).
One manager suggested that instead of production rate, the mill utilization
112
would be a more relevant quantity to correlate with NSC production, refer to

Appendix U for this exposition.
1995-1999 NSC Material Yield

NSC Material Yield is a function of input and output weights of materials
processed in various mills. Respective material yields are also computed per
processed coil for each processing line, but for the Quality Assurance
departments monthly report, Material Yield is computed by comparing the HRC
weight from Pickling Line No. 2 versus the output weight of the finished product
full hard or annealed coils (see Appendix C).
NSC CRC Material Yield, 1995-1999
% MY
99
Production
Actual MY
Standard MY
97
'000 metric tons

60
50
95
40
93
30
91
20
89
10
87
85
J FMAMJ JASONDJ FMAMJ JASONDJ FMAMJ JASONDJ FMAMJ JASONDJ FMAMJ JASOND
1995
1996
1997
1998
Figure 32: NSC CRC Material Yield vs. Production, 1995-1999

(Data: NSC)
1999
113
The Material Yield is computed from the input weight less the off-gauge
head-end and tail-end scraps; squaring-off prior to welding the coil ends, and
side-trimmings at Pickling Lines and Coil Preparation Lines. Low Material Yields
were occasionally experienced because of severe material damage during
handling and storage; telescopicity beyond customers specifications; or in the
event of loose coiling, which would lead to total or partial collapse of coils.
Actual Material Yield, in percent, Figure 32, lingered at 90% from January
1995 to December 1996, usually higher than the standard yield for each month.
From January 1997 to until NSC closed, however, actual Material Yield
tended to go above the standard set for each month. The shift was evident at the
start of 1997 after the Quality Assurance department, as mandated by top
management, revised the manner of setting material yield standards based on
previous campaigns instead of using variance standards anchored on theoretical
computations (Que Estevez, 1997).
Table 18: Correlation of NSC Production and monthly NSC Material Yield
Data shows, refer to Table 18, a highly significant correlation (pvalue=0.001 0.05, also 0.01) between monthly NSC production and monthly
Material Yield. As such, aiming for higher Material Yield could result to a
slowdown in NSC production.
114
1995-1999 NSC Prime Yield

NSC Prime Yield is also a function of input and output weights of
materials processed in various mills; however, croppings and quality defects are
subtracted for each processed material.
The same with Material Yield, NSC Prime Yields were also computed per
processed coil for each processing line, but for the Quality Assurance monthly
report, Material Yield was computed by comparing the HRC weight from Pickling
Line No. 2 versus the output weight of the finished productfull hard or annealed
coils (refer to Appendix C).
NSC CRC Prime Yield, 1995-1999
% PY
96
'000 metric tons

60
Production
Actual PY
Standard PY
94
50
92
40
90
30
88
86
20
84
10
82
80
1995
1996
1997
1998
Figure 33: NSC CRC Prime Yield vs. Production, 1995-1999

(Data: NSC)
1999
115
The actual Prime Yield for each month, Figure 33, from January 1995 to
December 1996 hovered less than the standard Prime Yield per month. Prime
Yields on the last year of NSCs production were skewed to higher percentages
because of smaller volume of production. Similar to the Material Yield, a shift was
also visible starting January 1997 when the actual Prime Yields went beyond the
standard Prime Yield. The 1997 Prime Yield Standard commitments (Que
Estevez, 1997) were derived using the 1997 Material Yield commitments less the
1997 proposed maximum downgrading, which is based on the actual January to
September 1996 downgrading, its root-cause analysis and occurrence reduction.
It should also be noted that in 1997, a Breakthrough Action Team for
Yields Improvement was formed with Quality Assurance heads of various
facilities of NSC plus a Union representative, as Area Champions. The teams
objective was to increase material and prime yields of various products using
material-balance flowcharts. Mill abnormalities were analyzed for possible
causes, and respective action plans were programmed for implementation.
Table 19: Correlation of NSC Production and monthly NSC's Prime Yield
Data shows, refer to Table 19, that NSC production is not significantly
correlated (p-value=0.788 > 0.05) to the monthly Prime Yield. Consequently,
increasing the Prime Yield would not necessarily mean a change in the volume of
NSC flat steel production.
116
1995-1999 NSC Product Quality

Product Quality and customer after-sales service were paramount to the
privatized NSC. In 1995 (NSC News, 3 Aug 1995), it adopted a slogan: New
NSC: A Partner You Can Rely On, later known by its acronym: PYCRO and
incorporated this in its NSCs Corporate Vision, which specifically state:
to survive we must produce and market our products which are world-class in
quality, cost efficient, reliability, timely delivery and price in partnership with our
customers for the advancement of our stockholders, our fellow employees, our
dependents and ourselves and in the process to enjoy our endeavours.
A Partner You Can Rely On. (Italics in the original)
Yearly Trend of NSC Customer Complaints , 1988-1999

('000 metric tons)
900
Asian
1988-1994 Mean: 1.3%
Financial
800
1995-1999 Mean: 2.0%
Crisis
700
2.4
1.8
1.2
2.0
2.1
1.6
500
1.3
1.7
1.7
1.2
300
200
2.5
2.1
600
400
%CC/FG
3.0
0.9
1.5
1.0
0.9
0.5
100
NSC Production
-
0
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Figure 34: Yearly Trend of NSC Customer Complaints, 1988-1999

(Data: NSC CSM-QA)
117
Historically, Figure 34, prior to its privatization, NSCs customer

complaints amounted to about 1.3% of the total Finished Goods (the bulk of
which was cold-rolled coils) sold. This yearly average peaked to 2.0% between
1995 and 1999. On a monthly basis, customer complaints peaked at 2.75% of
Finished Goods sold in April 1995.
A former Quality Assurance supervisor explained that the uptrend of
customer complaints between 1993 and 1996, see Figure 34, could possibly be
explained by the trade import liberalization pursued by the Philippines starting in
1993. The fluctuating drop of complaints from 1997 until 1999 was in reaction to
lesser goods sold to customers.
A management conference on Challenges Facing NSC highlighted
customers comments on NSC product quality, product pricing, technical
assistance and after sales service. Among the customers interviewed were from
Philsteel Coating Corporation, Bacnotan Steel, Oriental Tin Can, Philippine Can
Industrial Corporation, Italit, and Phoenix Iron & Steel Corporation. Most of these
interviewed customers claimed problems with late deliveries, noted the
competitive yet reasonable pricing and high prime yields, but criticized some
quality problems like waviness, flatness, and tensile strength. William J.K. Leong,
Wing Tieks NSC Executive Vice President & COO, urged NSC to take active
steps and make others participate in the organizational change (Andersen and
SGV Consulting, 1995).
During Wing Tieks era, customer complaints were summarized per
month in terms of major product quality defects but no attempt was made to
118
connect these complaints to the actual production dates.

From the start of 1995, CSM Quality Assurance closely monitored five
quality parametersthickness (dimensional measurement and sheetage for
galvanized iron applications), shape (flatness), formability for pre-painted
application, hardness and edge quality (NSC, 1996q).
When Hottick took over the management reins in 1996, with the ISO
9002:1994 certification already on its second year, top management issued a
Corporate Quality Policy (see Appendix W). Subsequently, this triggered the
revision of respective Quality Policy of each division, notably that of Cold Strip
Mill, which incorporated quality in all aspects (see Appendix X: Cold Strip Mill
Vision and Quality Policy).
Thus, aside from Prime Yield and Material Yield, Cold Strip Mills QA
department added another measure of quality: the Customer Acceptance, in
percent, equivalent to 100% less percentage of customer complaints against
products sold. Customer complaints were categorized into operations-, material-,
and handling/storage-related for both regular and developmental products. The
complained products, after a thorough investigation by Process Quality
Engineers including ocular inspection at site, were downgraded, refunded or
replaced. Some complaintslow sheetage (less number of sheets per coil
versus customers norms), over gauge (strip thickness exceeds specifications),
mis-tagging (attached finished goods tags information different from actual coils
parameter/s) or under gage (strip thickness below specifications) products,
however, were negotiated.
119
By the first quarter of 1996, customer complaints were collated each

month and correlated with actual period of production. As customer complaints
were distributed during the succeeding monthssay, for customer complaints
filed with NSC in January, the QA department backtracked the actual date when
each coil was producedthe total for each month were continually updated (refer
to Appendix Y: Customer Complaints, 1995-1999). Backtracking also revealed
the age of products sold. Unfortunately, with the retrenchment of all employees
including the managerial staff in November 1999, customer complaints reports
for the last two months of that year remained unfiled (Interview with J. Roa,
2008).
A real Prime Yield in percent was then computed as the product of the
percent Customer Acceptance (%CAR) and the nominal Prime Yield prior to
product purchase. The difference between the real and nominal Prime Yield
revealed the inspection efficiency of each lines quality assurance inspectors
(Interview with N. Vicente, 2008).
Using Statistical Process Control methods, process capability indices
were also plotted for each rolling mill: 4-Stand Tandem Mill and 5-Stand
Continuous Mill, in addition to frequency distribution charts, time series graphs,
and the like. Comprehensive analyses, using these SPC-generated graphics,
were done through ANOVA and itemized defect-root cause-contribution
produced respective action plans addressing these quality problems (NSC,
1996q).
120
% PY, % CA
105
NSC % Customer Acceptance, 1995-1999

'000 metric tons
60
Production
Plant %PY
Customer Acceptance
50
100
40
95
30
90
20
85
10
80
0
1995
1996
1997
1998
1999
Figure 35: NSC's % Customer Acceptance, 1995-1999

(Data: NSC Quality Assurance Monthly Reports, 1995-1999)
Figure 35 shows a high acceptance rate for NSC products at customers
end even when production waned towards the fourth quarter of 1999. Evidently,
the customer acceptance of NSCs CRCs started to fall in January 1998, when it
decided to close ETL2 in Pasig that month, even reached a low point in May
1998. Interestingly, the undulations in customer acceptance occurred during the
second year of the Asian Financial Crises 1997-98.
From the aforementioned peak of 2.72% in April 1995, apparently the top
managements prior directives plus the concerted efforts of production
management and personnel successfully brought the customer complaints to
less than 1% in succeeding months.
121
% CC/FG
7
6
Monthly Trend of NSC Customer Complaints, 1995-1999

'000 metric tons
Asian Financial Crisis
60
Production
%CC/FG
50
40
4
30
3
20
10
1
0
0
1995
1996
1997
1998
1999
Figure 36: Monthly Trend of NSC Customer Complaints, 1995-1999

(Data: NSC Cold Strip Mill Quality Assurance)
Figure 36 shows, however, that customer complaints came vigorously on
the second year of the Asian Financial Crises 1997-98. Several Process Quality
Engineers interviewed claimed that customers then were choosier and preferred
more quality products than ever before. The complaints abated during the last of
NSCs productive months.
Table 20: Correlation of NSC Production and monthly NSC's Quality Rate
(Percent Customer Acceptance Rate, %CAR)
122
Data shows, refer to Table 20, that there is a positive correlation (0.327)
between the monthly NSC production versus Quality, or % Customer Acceptance
Rate (%CAR). There is sufficient statistical evidence to conclude that Quality, in
terms of % Customer Acceptance Rate (%CAR) and NSC Production are
significantly correlated, (p-value=0.013 ). Thus, as % Customer Acceptance
Rate increases, monthly NSC production has a tendency to increase as well.
Summary: NSC Production versus Internal Factors

Monthly Production Rate: Data shows monthly NSC production is
positive, highly and significantly correlated to monthly Production Rate, using the
Effective Operating Hours of Pickling Line No. 2 as basis. Note that PKL2 is the
input mill for all HRCs coming from Hot Strip Mill No. 2.
Monthly NSC Material Yield: Data shows that there is a negative, highly
significant correlation between NSC production and monthly Material Yield. As
such, aiming for higher Material Yield could result to a slowdown in NSC
production. Actual Material Yield, usually higher than the standard yield for each
month, lingered at 90% from January 1995 to December 1996. From 1997 to
1999, however, actual Material Yield tended to go above the standard set for
each month.
Monthly NSC Prime Yield: The actual Prime Yield for each month, from
123
January 1995 to December 1996 hovered less than the standard Prime Yield per
month. Prime Yields on the last year of NSCs production were skewed to higher
percentages because of smaller volume of production. Furthermore, data shows
that NSC production is not significantly correlated to the monthly Prime Yield, or
succinctly, aiming for higher Prime yield would not necessarily mean a
substantial change in NSC Production volume.
Monthly Quality, in terms of Monthly Customer Acceptance Rate:

There was a high acceptance rate for NSC products at customers end even
when production waned towards the Q4 of 1999. Customer acceptance of NSCs
CRCs started to fall in January 1998. The fluctuations in customer acceptance
occurred during the second year of the Asian Financial Crises 1997-98. Data
shows that there is a positive, significant correlation between monthly NSC
production versus Quality, or % Customer Acceptance Rate; meaning as
%Customer Acceptance Rate increases, monthly NSC production has a
tendency to increase as well.
Events and Emerging Trends in 2000 and Beyond

Globalization escalated in 2000, while NSC status was clouded with
uncertainty. The insecurity among NSC employees dragged on for four years,
2000 to 2004, and then a glimmer of hope was provided by a foreign steel entity,
Global Steel Holdings, Ltd. (GSHL).
124
Although there was virtually no flat steel production during this period,
events following NSC closure would be essential to understanding the
resurrection of NSC in 2004 as GSPI and the foregoing recommendations.
NSC on Liquidation, 2000 2004

The Liquidators phase in NSC history officially began in 07 May 2000,
when all employees of NSC were retrenched, thus there was no management
and the NSC Board of Directors ceased to function. Between November 1999
and April 2000, many employeesmanagerial staff and most employees with 15
years or more tenureopted for early retirement.
Meanwhile, the Interim Receivership Committee (IRC), appointed by SEC
on 21 December 1999, was commissioned to preserve the existing assets then
and if the feasibility of continuing the basic business NSC is determined, to
instigate a rehabilitation plan. SEC Chairman Lilia Bautista, a former
undersecretary of Department of Trade and Industry thus Corporate Secretary of
NSC in 1980s, ordered the liquidation of the steel firm in 03 October 2000. The
SEC-appointed interim receivership committee (IRC) headed by Monico Jacob
has been ordered to submit a liquidation plan in 60 days. (The Philippine Star,
10 November 2000)
Rommel Ynion wrote in a national newspaper (The Philippine Star, 17
October 2000) that Hottick Investment Ltd threatened to drive overseas Filipino
workers (OFWs) out of Malaysia in a bid to stop the liquidation of the firm.
125
Furthermore, lawyer Arturo de Castro, NSC counsel, added, "Under the

Corporation Code, the jurisdiction of the Securities and Exchange Commission to
order involuntary dissolution is limited only to the grounds provided by existing
laws, rules, and regulations." De Castro claimed that SEC could only order the
liquidation of any corporation if it has been proven, among other things, to be:
inactive for at least five years, guilty of committing illegal acts or illegally
organized (The Philippine Star, 10 November 2000).
Undaunted by the steel firms liabilities estimated at around P16 billion in
2000, SEC claimed that six Arab-Chinese investors have expressed interest in
buying NSC. The National Steel Labor-FFW led by its president Simplicio H.
Villarta Jr., however were concerned: "if NSC would be sold at a price less than
its outstanding debts the workers claim will be truly jeopardized" (The Philippine
Star, 17 October 2000).
Between 2000 and 2004, a succession of offer-proposals were brought
forth to resolve the NSC issue.
As early as January 2000, Russia's Novolipetsk Iron and Steel Corp.
(NISC) teamed up with local downstream producers of steel products and began
conducting a due diligence review of NSC to determine its actual prospects and
rehabilitation requirements (The Philippine Star, 21 January 2000).
There have been unconfirmed reports in 2000 that Lucio Tan, who owned
35% of PNB, was eyeing the purchase of NSC through a local steel firm. At the
end of 1999, NSC owed PNB about 5.64-billion peso (US$139.7 million at
P40.376:US$1). PNB, however, denied reports that it was amenable to the
126
condonation of NSCs debt (Business World, 07 January 2000).

Even the Philippine government supported the Swiss-company Duferco,
Inc., represented by Credit Agricole, to acquire controlling interest in NSC (The
Philippine Star, 17 February 2000).
Swiss Glencore presented a $150 proposal for NSC in October 2000;
Allengoal offered to lease-operate NSC in April 2000 then again in January 2001
and signed lease agreement with NSC on 14 September that year for a fixed
monthly rental plus a share of net profits (The Philippine Star, 18 September
2001).
The Allengoal plana team-up of Alexander Delmo and Simplicio L.
Villarta, Jrwas quite impressive. It entailed the whole enchilada: operate the
plant within 45 days saving P12 million a month in maintenance costs; a P20.5
million monthly lease for two years until NSC finds a new buyer; share 40% of
the net income; and a P100-million cash-and-performance bond deposited to
ensure safety and facilities preservation. In addition, it had a technical tie-up with
Hatch Associates, NSCs consultant since its inception, and an initial P400million credit line from International Exchange Bank. When it was presented to
Hottick, the latter readily accepted. Hottick and the creditors endorsed the
original April 2000 Allengoal proposal to Malacaang, where an impeachment in
November 2000 overtook it (Bondoc, 2001).
Furthermore, DTI received three lease proposals from Allengoal,
Capasco, and Austrias Voest Alpine on 26 October 2001, and then the NSC
Evaluation Committee studied in November that year. The committee was
127
created by the Philippine government to receive, evaluate and select proposals

for the interim lease of the NSCs Iligan plant, after the company was taken over
by Pengurusan Danaharta Nasional Bhd., Malaysias equivalent of the Philippine
Assets and Privatization Trust. (The Philippine Star, 17 September 2001). Refer
to Appendix E: Transactions for NSCs Stake (1995-1998).
A breakthrough finally came in January 2002, when creditors agreed to
write-down Malaysia's $800M debt exposure in NSC. President Arroyo ordered
DTI to foreclose NSC on February 2002 after she succeeded Estrada last
January 2001 (The Philippine Star, 06 February 2002).
In February 2002, the shareholders of NSC planned to create a special
purpose vehicle before the liquidation of its P30 billion assets or a sale of NSC
through public bidding. NSC special purpose vehicle was to be incorporated with
SEC as an Asset Management Co. (AMC) right after the signing of a
shareholders agreement, which will convert NSC's outstanding debtabout P16
billion in 2002into equity (Jao-Grey, 2002).
The Philippine government enacted the Special Purpose Asset Vehicle
(SPAV or SPV) Law, R.A. 9182, in January 2003 and became effective in April
the same year. The SPAV Act provided a legal framework for the establishment
of SPVs on asset management companies (AMC) that will acquire the nonperforming assets (NPAs) of the covered financial sector. These SPVs could
then avail of fiscal incentives, such as value-added and capital gains tax
exemptions, for the transfer transaction of the NPAs from Financial Institutions to
SPVs, which could rehabilitate the acquired assets then could sell them off for a
128
profit within five years (Villanueva, 2003).

Meanwhile from 2000 to 2004, NSC facilities were accounted, maintained
and secured by a group of personnel dubbed as Plant Facilities Preservation
(referred henceforth as PFP) team in a monthly rotating schedule, refer to
Appendix CC. Under the able leadership of Engr. Ruben A. Pinaroc, this team
also devised a rehabilitation plan (this researcher was the secretariat), and
consolidated the plant assets through the Asset Retrieval Task Force, or ARTAF,
to a designated warehouse and satellite storage areas. Only the ARTAF group
remained when GSPI took over NSC facilities in 2004.
The PFP team produced a meticulously detailed Rehabilitation and PreStart-up Plan (NSC, 2003) for each mill from Hot Strip Mills, Cold Strip Mills and
Electrolytic Tinning Line. The PFPs plan even included the Billet Steelmaking
Plant, plus all the support facilities: utilities and power distribution, engineering
shops, laboratories, logistics and warehouses, administration services, including
information systems, building and grounds.
Based on this rehabilitation plan, a three-stage rehabilitation proposal
was presented in July 2003 to a task force headed by then Vice President
Teofisto Guingona mandated by Administrative Order 45 to oversee the
development of the countrys steel industry with the establishment of an
integrated steel plant in Mindanao (The Philippine Star, 23 September 2003).
Incidentally, the President Gloria Macapagal-Arroyo issued on 18
February 2004 Memorandum Order No. 136 approving the 2004 Investment
Priorities Plan (IPP) pursuant to Article 29 of the Omnibus Investments Code of
129
1987. In the memorandums National List, Section B declared Iron and Steel
under mandatory inclusions in the IPP as required by an existing law, particularly
R.A. 7103 (Iron and Steel Industry Act of 1991).
The Recharged NSC: GSII to GSPI, 2004

With the SPV Law in place, this paved the way in dealing with the fouryear old NSC question. Like the mythical phoenix, NSC rose back from
bankruptcy through the acquisition of its plant assets by a subsidiary of Global
Infrastructures Holdings Ltd. (hereafter referred as GIHL). GIHL, the sister
company of Indias Ispat International Ltd (IIL), acquired NSC through its
subsidiary then called Global Steelworks Infrastructures, Inc. (GSII). It officially
changed its corporate name to Global Steel Philippines (SPV-AMC), Inc. (GSPI)
reflecting the company's commitment to the Philippines but also presented a
clear, strong, and unified brand presence for Global Steels operations in Asia,
Africa, and Europe, as its own press release on 25 August 2005 stated.
Its sister company, Ispat Industries Limited, is headquartered at Mumbai,
employs a total of 2000 people and is the Indias leader in special steels market.
IIL's core competency is the production of high quality steel employing cuttingedge technologies and stringent quality standards. It produces world-class
sponge iron, galvanized sheets and cold rolled coils, in addition to hot rolled
coils, through its two state-of-the art integrated steel plants, located at Dolvi and
Kalmeshwar in the state of Maharashtra (IILs corporate web site, accessed 10
130
October 2006). The 1,200-acre Dolvi complex houses the 2.4mtpa hot rolled coils
plant combining the Conarc process for steel making and Asias first compact
strip process. It hosts a 1.4mtpa sponge iron (DRI) plant commissioned in 1994,
a 2MTPY blast furnace and a mechanized multi-functional jetty for raw material
handling. Kalmeshwar complex houses a 0.5mtpa cold rolling including a
galvanized plain/galvanized corrugated (GP/GC) lines and Indias first color
coating mill.
After a brief rehabilitation phase, NSC facilities were promptly put into
commercial operations in 2005. Mill by mill, the former NSC facilities was
operated after a month or so rehabilitation phase.
McLellan Consultants were initially hired in December 2004 to conduct a
due diligence and come up with a rehabilitation plan. McLellans services were
officially terminated by GIHL three days after a plant tour cum due diligence.
GIHL sequestered the NSC-Liquidator PFPs rehabilitation plan and became its
own tentative rehabilitation plan. The original PFP-prepared rehabilitation plan, at
US$:P53 exchange rate, amounted to P935million (US$18M) for the first stage
alone, plus a P530million (US10M) for start-up spares needed to operate the
plant in the first quarter, the first year.
GIHL claimed to have spent US$20 million in 2004 even before the deed
of sale was finalized, to rehabilitate the plant then promised to invest $15 million
in 2005, and another $10 million in 2006 (Philippine Daily Inquirer, 13 September
2004).
Many operations supervisors and maintenance planners involved during
131
the GSPIs rehabilitation phase of NSC facilities, and subsequently resigned

thereafter, observed that although the PFP rehabilitation plan formed as basis,
most of the activities in that plan were scrapped to its barest minimum as capital
investments were deemed unnecessary for the respective facilities rehabilitation.
A typical example was: if the PFP plan called for a replacement of essential parts
with new spares, especially imported spares, the replacement was deferred and
a repair of the installed part was pursued instead. In addition, instead of
procuring some required spares from either the NSC central warehouse or the
retrieved spares from ARTAF, if similar partsfrom bolts, electronic cards,
cylinders to pumps and motorswere available somewhere in the various NSC
plant facilities; these were then transferred from one facility to the other. This
latter practice continued up to the present day.
GSPI registered with Board of Investments on 07 December 2004,
making it 13th place in the top 100 companies of the BOI during the current
administration. It is the only steel manufacturing firm registered with BOI from
January 2001 (PCIJ, 2006).
From 2004, it also embarked on several management initiatives, such as
Total Productive Management, Six-Sigma, and in 2007 initiated ISO 9002:2000
certification for its Cold Rolling Mills. On 12 March 2008, GSPI received the TPM
Excellence
Award1st
Category
from
the
Japan
Institute
of
Planned
Maintenance (JIPM) after successfully hurdling its quest for certification with
Yoshitaka Murase, JIPM Senior Counselor (GSPI Flash TPM, February 2008).
In December 2005, however, it dissolved its Iligan-based Business
132
Strategy department, tasked to analyze its corporate presence in the domestic

and global market; and instead relied its corporate planning through directives
from the Managing Director and his trusted advisers.
Several attempts to secure GSPI production data for the purpose of this
study, however, were denied by a number of key holders of GSPI management
positions. Even the simple request to view the GSPIs Functional Chart or Table
of Organization for the same purpose was received with incredulity bordering on
suspicion. This dilemma was even highlighted during the constitution of GSPIs
Core Team for ISO9001:2000 certification of its cold-rolled manufacturing
division, formed in 21 March 2007, when the ACTTI consultants requested
Management for the same, and after days of fidgeting, the copy was delivered in
a sealed envelope with a caution that it should be for the consultants eyes only!
In July 2007, GSPI presented to a bank-consortium that it had started
operating Hot Strip Mill No. 2 on 02 March 2006, with an initial production of
32,078 metric tons. Furthermore, it claimed 67,570 metric tons exported to
ASEAN and China in 2005 plus 82,093 metric tons up to May 2006; while GSPIs
domestic sales grew from 9,121 metric tons in 2004 to 52,166 metric tons in
2005 plus 30,043 metric tons up to May 2006 (GSPI, 2006).
Table 21 below shows the tabular comparative analyses of production

parameters: man, machine, methods and markets. An expanded version is also
included in Appendix EE in page 267.
133
Table 21: Comparative Analyses: NSC Before, After, Now

(Source: NSC for 1984-2000; GSPI are researchers estimates)
Table 21 is a summary of various data and facts gathered during this

research. The primary source was NSC News, particularly for 1984 to 2000. For
GSPI, news reports were relied, if not the researchers estimates were supplied,
except for work force strength came from GSPIs Human Resource department.
134
CHAPTER 6
SUMMARY, CONCLUSION AND RECOMMENDATIONS
This chapter summarizes the findings of this research and the events
hurdled by NSC in 1994-2000. A Strength-Weakness-Opportunities-Threat
(SWOT) matrix for any NSC in the future is also devised to show the
interdependence of these four (4) matrix parameters based on the results and
discussions in Chapter 5.
Summary of Findings
NSCs Monthly and Annual Flat Steel Production
NSC was the only manufacturer of hot-rolled flat steels in the Philippines
but its hot-rolled production waned by June 1999. NSC monthly production of
cold-rolled coils is dependent on the volume of hot-rolled coils produced at NSCs
Hot Strip Mill No. 2.
On a quarterly-basis, flats production, particularly cold-rolled coils, at NSC
also peaked in the third quarter of 1997. NSCs production was severely affected
by the accidental fire sustained at its Five-Stand Continuous Mill (5-STCM) in
March 1998 that cold-rolled production considerably declined thereafter and
never regained its pre-Asian Financial Crises level until its liquidation in 1999.
The year-on-year percent change in NSC Production shows a decreasing
at an increasing rate, refer to Table 1 page 45.
135
Effects of External Factors to NSCs Flat Carbon Steel Production

The table below summarized the effects of external factors to NSCs Flat
Carbon Steel Production.
Table 22: Effects of External Factors to NSC's Flat Carbon Steel Production
World/ASEAN Steel Supply (Capacity). World and ASEAN steel

capacity was ruled by consolidation and globalization. Koda, et. al. (1995)
observed that self-support ratio between capacity expansion and steel demand
increase over time, but a situation of lack of supply capacity in ASEAN continued
until 2005.
136
World/ASEAN Steel Supply (Production). While the World crude

production oscillated in the 10% year-on-year band, and the ASEAN crude
production moved between 20% and +40% year-on-year, NSC spiraled down to
its lowest point of 72.78 % year-on-year by 1999 from a peak of 56.25% yearon-year six years earlier. The downhill trend for NSC production began in 1994,
when was privatized during the Ramos administration, i.e., before the Asian
Financial Crises in 1997-98.
The data shows that there is no significant correlation between NSC
crude (hot-rolled and cold-rolled coils) production and the Philippine crude,
ASEAN and World crude production.
World/ASEAN Steel Demand (Consumption). In terms of Apparent

Consumption per Capita (ACC), in kilograms, the Philippines apparent
consumption hovered at 45kg per capita, almost one-fifth that of the averaged
ASEAN at almost 200kg per capita; or one-third that of the world at 132kg per
capita. During the Asian Financial Crises 1997-98, the ACC the world over,
including ASEAN, decreased. The Philippine steel intensity was steadily climbing
since 1984, but wavered in 1994 as a reaction with the then impending
privatization of NSC. The trend recovered until 1996 and for the successive years
circled between 1998 and 2001.
NSC crude, particularly cold-rolled coils, production shows a significant
correlation to the ASEANs apparent steel consumption per capita (ACC), while
there is no significant correlation with the apparent consumption of finished steel
137
(ACFS) for both the Philippines and ASEAN; and a moderate correlation with the
Philippines apparent steel consumption per capita (ACC).
Table 23 below is a continuation of Table 22 found in page 135 above.
Table 23: Effects of External Factors to NSC's Flat Carbon Steel Production
Raw Steel Imports. The hot-rolled coils imported by NSC remarkably

decreased in 1995 when NSC brought Hot Strip Mill No. 2 into commercial
operations, thus imported slabs increased until 1996.
The results of price elasticity for NSCs slabs at 0.12, and NSCs hotrolled coils at 0.50, although accounted for in a short-run, i.e., 1995 to 1999, are
138
consistent with the range of long-run price elasticity of demand for steel, between
0.2 and 0.3 (Barnett and Crandall, 2002).
The price inelasticity of both NSCs imported slabs and hot-rolled coils
suggests that even if the respective import prices of these raw materials were
low, the quantity demanded of these input steels remained low.
NSC flat carbon steel crude production shows a strong correlation to the
following factors: Philippine CRC, HRC, HRP, TP imports. There is no significant
correlation to the Philippines, ASEANs and Worlds Semi-Finished and Finished
(SF&F) steel imports, respectively.
Steel Prices. NSC flat carbon steel production shows a highly, significant
correlation to the following monthly steel prices: Global, Flats, Asia, and North
American Steel Price indices. Thus, as these price indices increased, so would
NSCs production of flat steel. Similarly, NSC production is positively correlated
to most of the average import prices for both hot-rolled and cold-rolled coils.
Quarterly NSC, particularly cold-rolled coils, production is positively
correlated to all Steel Price Indices, but shows a highly, significant correlation
particularly to Asia Flats and Global Steel price indices.
Effects of Internal Factors to NSCs Flat Carbon Steel Production

The table below summarized the effects of internal factors to NSCs Flat
Carbon Steel Production.
139
Table 24: Effects of Internal Factors to NSCs Flat Carbon Steel Production
1995-1999 NSC Production Rate. This research used the Effective

Operating Hours of Pickling Line No. 2 as basis. PKL2 is the input mill for all hotrolled coils coming from Hot Strip Mill No. 2.
Correlation between NSC Production Rate and NSC Production is highly
significant. Thus, as Production Rate is increased, there is a high tendency that
NSC Production to increase as well.
1995-1999 NSC Material Yield. Actual Material Yield, in percent lingered

at 90% from January 1995 to December 1996, usually higher than the standard
yield for each month. From January 1997 to until NSC closed, however, actual
Material Yield tended to go above the standard set for each month.
Correlation between NSC Material Yield and NSC Production is highly
significant, thus seeking for higher Material Yield has a high tendency that NSC
Production would substantially decrease. As such, aiming for higher Material
Yield could result to a slowdown in NSC production.
1995-1999 NSC Prime Yield. The actual Prime Yield for each month,
from January 1995 to December 1996 hovered less than the standard Prime
140
Yield per month. Prime Yields on the last year of NSCs production were skewed
to higher percentages because of smaller volume of production.
Furthermore, correlation between Prime Yield and NSC Production is not
significant. Thus, aiming for higher Prime yield would not necessarily mean a
substantial change in NSC Production volume.
1995-1999 NSC Product Quality. Historically, prior to its privatization,

NSCs customer complaints amounted to about 1.3% of the total Finished Goods
sold. This yearly average peaked to 2.0% between 1995 and 1999, when NSC
was a private company. On a monthly basis, customer complaints peaked at
2.75% of Finished Goods sold in April 1995.
There was a high acceptance rate for NSC products at customers end
even when production waned towards the fourth quarter of 1999. Customer
acceptance of NSCs CRCs started to fall in January 1998. The fluctuations in
customer acceptance occurred during the second year of the Asian Financial
Crises 1997-98.
Data shows that there is a significant correlation between the monthly
NSC production versus Quality, or percent Customer Acceptance Rate (%CAR).
Thus, as %CAR increases, NSC Production has a tendency to increase as well.
Conclusion
Several changes occurred in the steel industry for the decade from 1995.
141
Through these years, NSC became privatized in 1995, liquidated in 2000, and
then revived in 2004.
NSCs foray as a private enterprise from 1995 under Wing Tiek then
under Hottick has been a tumultuous phase; its flat steel production was subject
to forces that would prove fatal to its corporate existence. NSC liquidation in
2000 brought rippling economic effects to the immediate community, in particular,
Iligan City, and in general, the Philippines; as well as changed the legal
environment for the Philippine steel industry; and threatened Philippine trade
relations, especially with Malaysia. The revival of NSC facilities into operative
state in 2004 offered new possibilities for the Philippines quest to become a new
industrialized country by decades end; re-opened the question of steel
integrationthe pursuit for the countrys Integrated Steel Mill; and changed,
however minute, the inter-trade of steel products within the ASEAN, AFTA, and
WTO communities.
Applying the merged versions of corporate strategic factors introduced by
Stevenson (1990), Friedman and Gyr (1998), these forces came from external
factors: the omnipresent globalization and trade liberalization, influx of new
technology, fierce competition, cyclical steel prices, the hitch of raw materials
imports, and the same suppliers of steel imports. The economic conditions and
the political scenario might have changed personalities but considering the
general state of the Philippines before and at present, most Filipinos, and even
foreign observers, would say that it remained unchanged.
In addition, the contemporary internal factors are very similar. Majority of
142
NSC employees were absorbed by both Wing Tiek-Hottick and GSPI. The
privatized NSC, both then and now, operated with unchanged rated capacities of
various rolling facilities, yet with slightly improved equipment capability. The list of
domestic customers dealing with NSC are invariably the same, however, one or
two changed their corporate identities. The minimal export steel trade are still
thatminimal; and the products offered are HRC, HRP and CRC, although
customers specifications has became more stringent as ever before. The
constantly evolving organizational structure at GSPI is patterned from the
privatized NSC with additional interrelationships acquired from Ispat. Last but not
the least, while the NSCs ISO9002:1994-certification may have lapsed in 2000,
but work processes, systems and standards at still based on these ISO
documents and GSPI incorporated many new Ispat-based standards, including
Total Productive Management (TPM) activities, and Six-Sigma. On the
manufacturing aspect, GSPI introduced a new type of steel grade 1006 and
improved production of thin gauge CRC.
Thus, if push comes to shove, although possibly that there is no apple-toapple comparison with the pre-privatized NSC versus its later rebirths, both as
Wing Tiek-Hottick or GSPI, however, the same factors then, from this studys
viewpoint, still exist in the current business environment, albeit different in
intensity, focus and personalities.
Atom Henares (2006a) in his foreword to his fathers book series summed
it all:
143
. . . running of a manufacturing enterprise requires 4 Ms:money, machines,

materials, and the management which combines the first three Ms in productive
and profitable relationship. The four pillars of a business enterprise are: the
investor who provides the money for financing, the government which takes care
of the business environment, the employees who provide the labor, and the
consumer who buys its products. It is management that ties them all together
giving the investor an adequate return for his investment; the government the
taxes that it needs to run the country; the employee a fair compensation for his
work; and the consumer his wants and needs with the highest quality at the
lowest price.
Recommendations for Future NSC

Claessens and Henderson (2007) noted, A wave of consolidation is
sweeping the industry, but other industry wide changes are also unfolding, such
as a shift away from developed countries, rising production costs and
globalization. They recommended, . . . each steel company should revisit its
market position and aim for one of strength.
Thus, for any reincarnation of NSC, not just GSPIthe latter is only used
as the base case scenarioa need to analyze its strength (S) and weaknesses
(W), explore its opportunities (O) and threats (T), to come up with strategies
affecting flat production. The top five (5) issues, most are interconnected, of each
of the four (4) parameters of the SWOT matrix, summarized in Appendix GG,
Table 66, are enumerated below.
Strengths (S): NSCs strength came from its well-trained professional

technical and managerial personnel; adherence to world- class standards and
production methods; comparable state-of-the-art high-tech facilities and
equipment; favorable customers reception; and its proximity to ASEAN and
144
Asian markets.
S1. Well-trained Personnel: NSCs claim to fame during the 1990s was its
well-trained personnel. Training, seminars, and workshops, including continuing
educational modules, were foremost in NSCs Human Resource development
agenda. Most of its engineers and other technical personnel underwent foreign
trainings in the United States, Japan and other countries. Most managerial and
supervisory personnel have undergone the Industrial Engineering and the
Engineering Management Training programs in 1980s and 1990s, respectively.
In addition, managers were afforded access to Asian Institute of Management
courses to augment their baccalaureate degrees (San Pedro, 1994).
On one hand, with GSII tapping these ex-NSC employees from the
different phases of its corporate existence, some from the pre-privatized NSC but
mostly from the Wing Tiek-Hottick era, the same competency and adeptness can
be achieved through re-training and enrichment. With the reintroduction of Total
Productive Maintenance (TPM) and 5-S, which initially came to NSCs
consciousness in 1993, high mill availability and reduced maintenance costs are
definitely assured.
On the other hand, while GSPIs rehired ex-NSC employees were well
trained, these same employees are now older and aging. Based on the survey of
the list of retrenched employees in 1999, the average age of most employees
when NSC ceased operations was in their early 40s with an average length of
service of about 12-15 years. Mosner and Craig (2003) emphasized the value of
retaining
experienced
and
capableyet
agingemployees,
versus
the
145
significant costs of employee turnover. Retention, Mosner and Craig continued,

will slow this exodus from the workforce and the knowledge and talent drain
while maximizing older workers productivity. For GSPI, however, dealing with
older and aging technical personnel and skilled crew could pose a two-prong
future corporate financial problem. Retention requires the acquisition of
accessible and assistive technology, while retirement obliges GSPI the
disbursement of retirees benefits.
S2. Adherence to World Standards and Production Methods: Prior to its
shutdown,
NSC
was
Bureau
Veritas
Quality
International
(BVQI)
ISO9002:1994-certified company specifically ETL3, Cold Strip Mill and Billet

Steelmaking Plant. Only Hot Strip Mills certification was unrealized because of
economic constraints. Internal Quality Auditors have been trained to check
continually the certified mills compliance to ISO9002:1994 systems. Product
quality has been maintained at highest standards possible adhering to the
Philippine National Standard (PNS), Japan Industrial Standard (JIS) and
Deutsche Internationale Normen (DIN). NSC products were granted the
Philippine Standards (PS) mark in 1992. Back when Kaizen was still a novelty,
NSC supervisory and rank-and-file personnel have been active participants since
1986 of Productivity Improvement Program for Operating Lines (PIPOL). PIPOL
(Sinangote, 1993) was NSCs comprehensive program of quality circles
comprised of personnel from different departments, such as, operations, quality
assurance, mechanical and electrical maintenance, roll shop and utilities dealing
with team projects ranging from productivity and quality improvement; to delay,
146
cost and defect reduction. Thus, each of them have put to heart the concept of
quality work, quality product and quality process.
S3. State-of-the-Art High-tech facilities: NSC facilities were at par, if not
more advanced, with other international steel mills. Most of the installed
equipment was supplied by original equipment manufacturers with constant
consultation with USX Engineers, Kawasaki and Nippon Steel experts. Most
process-computer systems are new, and vintage electronic systems have been
upgraded to suit new applications (Hatch, 1996). Maintenance of these facilities
is paramount to the continued efficient and effective quality operations of the mill
and process lines, without which could derail customer relations because of
unrealized production, thus translated to delayed deliveries.
S4. Favorable Customers Reception: NSC enjoyed a good reputation
among customers. Complaints were relatively at a minimum and were promptly
attended to by a Customer Service Department plus the fact that recurring ones
were treated with all the helptechnical or otherwisefrom all concerned
parties, e.g. operations, quality assurance, maintenance, support, research and
development (NSC News, May 1995).
Based on this study, even during the privatized NSC phase, mean
number of complaints were at a meager two (2%) of the total sales, when NSC
were selling almost 30 to 35,000 metric tons per month. Although this is not the
best, compared to GSPIs Six-Sigma quest, back then this was a feat not to be
looked down. Hearing the prospective resumption of NSCs operation in 2004,
many NSC customers, especially those that were then led by ex-NSC
147
employees, such as the former Executive Vice President for Cold Strip Mills, sent
words to adopt GSPI as their primary supplier of their steel requirements. Their
affinity to NSC came from the long-held belief that the resurrected plant would
supply them quality products once supplied by NSC before.
This is better explained by the former Customer Service Department
head, in an interview (NSC News, May 1995), who described NSCs relationship
with its customers as one of transparent, open reciprocitya mutual exchange
of goodwill with a healthy awareness of each others capabilities and limitations
while resolutely upholding the interest of both.
S5. Proximity to ASEAN and Asian markets: Competitively located at the
heart of the ASEAN markets, NSCs geographical location can supply products
by sea routes promptly. Iligan to Manila is about 525 nautical miles. From Manila,
most ASEAN and Asian countries are accessible.
Weaknesses (W): Some NSCs weakness remained with GSPIs taking

over specifically, its dependence on imported raw materials and the outdated
NSCs business networks and e-commerce. Moreover, based on the four-year
GSPIs 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
148
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 GSPIs 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 ones
home country! When GSPI took over management reins, they offered rehired exNSC personnel their 1999 salary levels with a gentlemans 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
149
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 MBMs Management Information Systems and Expert
Systems in Business provided an analysis of GSPIs 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 GSPIs
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 GSPIs
Information Systems Department head, who remarked that the claims made
150
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 (4) four
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 NSCs 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 personnels 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
151
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 NSCs 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 DOLEbrokered resolution was hinged on managements presentation to employees of
the GSPIs financial status, which the company refused to do. The rank-and-file
attributed the crisis to the governments 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. NSCs
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 GSPIs marketing department, mostly
staffed 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, however, 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.
152
Opportunities (O): Emerging markets are considered here both as a

threat and as opportunity, but rather than present a gloomy outlook, this study
proposes to positively deal with it as an opportunity. Other opportunities abound.
The recapture of the Philippine domestic steel market with governments support
of the steel industry as stipulated in the Medium-Term Philippine Development
Plan for 2004-2010. The quest for Special Economic Zone status for GSPI is
beckoning. The realization of the Japan-Philippine Economic Partnership
Agreement (JPEPA) in January 2008 and the proposed implementation of the
ASEAN Community by 2010, and the new production technologies, processes
and methods.
O1. Emerging markets: Terril (2007) sees three possibilities for China:
status quo or commercialized Leninism lasting for another 25 years; national
democracy or at least a liberalized politics; or fracture due to incompatibility
between authoritarian state and a free economy. China learning from Mikhail
Gorbachevs mistake, however, wants economic but not political change; thus
either way the future leads China, the Philippines will benefit from its close
economic interaction with it through the November 2002 China-ASEAN FTA. Any
excess steel from the Philippines, thus from the resurrected NSC, will find its way
to China.
In addition, with CRUs projection (CRU, 2004) that the Western Europe
and the Other Worldconsisting of all countries outside of North America, Latin
America, Europe, the CIS, East and South East Asiawould become net
153
importers in the coming years, it would be wise to gain a foothold on these

markets.
O2. Special Economic Zone. The Philippine Economic Zone Authority
approved National Steel Corporation as a Special Economic Zone (SEZ) on
October 15, 1997 as stipulated under Republic Act No. 7916 as amended by
Republic Act No. 8748 (The Special Economic Zone Act of 1995). The NSC-SEZ
would cater to downstream steel products manufacturing, fabrication industries,
and related sectors. What it lacks is the presidential stamp of approval.
O3. Favorable Government Support for the Steel Industry: Romulo L.
Neri, then Secretary of Socioeconomic Planning, (NEDA, 2004) emphasized that
the basic task of the Medium-Term Philippine Development Plan (MTPDP) for
2004-2010 is to fight poverty and build prosperity for the greatest number of
Filipino people. For Trade and Investment affecting the steel industry, the focus
would be on exports: drawing up incentive packages for the following priority
areas: automotive and shipbuilding. Other areas with direct impact to steel
industry are housing and infrastructure. For housing, a total of 1.1M units were
expected for construction between 2005 and 2010 with the expansion of private
sector participation in socialized housing construction. For infrastructure, the
creation of Philippine Infrastructure Corporation, as a subsidiary to NDC,
jumpstarted strategic projects to include: transport infrastructure, e.g., bridges
and ports, to complete the Nautical Highway System (Roll-on-Roll-off).
Furthermore, the MTPDP outlined eight (8) realities in developing a
responsive Foreign Policy, most notable of which are: (1) The United States,
154
Japan and China are the determining influences in East Asia and (2) Policy
decisions should be made on the context of ASEAN. (3) European Union will
remain the largest source of portfolio investment. In this context, more trade
should be developed in these areas (NEDA, 2004).
O4. The Ascendance of the ASEAN Economic Community: By 2010,
under the ASEAN Economic Community, (Anigan, 2007) ASEAN will become a
single market and production base. Being a member of ASEAN, the Philippines
has a direct stake in the creation of an ASEAN Community, ranging in benefits
from intra-regional trade and economic progress to political stability. Exporters
can likewise benefit from the reduced administrative, political and economic costs
of dealing with a market that promotes the free flow of goods, services,
investments and people. Although this can contribute to profitability leading to
business expansion and further employment opportunities; this can, however, put
pressure on companies to enhance their competitiveness and productivity
precisely because of the stiffer competition from counterpart foreign exporters.
Thus, with two years until 2010, GSPI should position itself appropriately now
against these challenges if it is to survive.
O5. New technologies, processes, methods: Gone are the days of
scientific management, here comes doing things the Toyota way. Total
Productive Management may have been new in the 1990s, when NSCs attempt
through the 5S route ended when the company closed. It also tried the Total
Maintenance Management System, a new paradigm of linking maintenance with
production and dealing with the former as a vital component of the latter thus,
155
shattering the old concept that production needs maintenance only when
production ceases or encounters equipment difficulty.
Between 1999 and 2008, new technologies abound the steel industry,
some of which are acquired from different fields and are similarly applied to steel
such as benchmarking, business process reengineering, scenario planning, etc.
Whatever new technologies are declared, GSPI should analyze each one and
pick which of these would give greater returns for a great number of its corporate
public: investors, stockholders, management, employees, and customers.
Furthermore, although GSPI inherited a substantial volume of books,
literature and multimedia archives from the former NSC Library, its contents are
not updated and no new acquisitions have been made except for those free trade
bulletins and magazines. Even some of the technical books in the library, loaned
to expats during their first year at GSPI, has not been returned but rather kept at
separate locations in the plant. Although GSPI is vigorously pursuing its various
management initiatives, such as TPM and Six Sigma, only a handful of books are
present for reference purposes.
Moreover, the Knowledge Management envisioned for GSPI in 2005, with
the purpose of sharing information across all of Global Steel production firms
India, Nigeria, Bulgaria, the Philippines, etc., remains an elusive dream without
the necessary infrastructure in place (Jha, 2005).
Sharing and collaboration are key components to innovation (IBM, 2004).
Knowledge Management across all Global Steel firms is innovation-in-waiting.
As globalists say, Information is power. With an updated GSPI Library,
156
in terms of new acquisitions, actual trainings could be augmented with

information from technical books and literature, as well as from the Knowledge
Management database.
Threats (T): 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--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-Arroyos 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
157
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; singly 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, the
establishment of wholesale electricity spot market (WESM), the creation of new
regulatory body, the governments absorption of P200 billion of NPCs liabilities,
and the 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. NSCs
electrical system used both 138kV and 69kV power supplies. Most sheetproduction 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 2002, transmission charge for 138kV was about
158
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 personnelflocked in hordes hoping to
be slotted for at least an interview. Employees who were hired in 2004, promised
159
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
yearspegged 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, claimed a former
manager, 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. Peters College and
Xavier University, were immediately drafted to fill the void, but by 2007, these
same replacements followed suit their predecessors for high-paying foreign jobs.
T5. The Challenge of the Natural Environment: Philippine government is a
160
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 companiesCoca- 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 NSCs 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 NSCs
Environmental Management Group dealing with all this concern.
S-O Strategies: the following strategies might turn opportunities (O) into
strengths (S).
Pursue ISO9001:2000 certification. (S2, S4, O1, O4): Western quality
standards previously and currently dictate the present market (Allio, 2006). A recertification would greatly increase the companys reputation to customers. Once
161
ISO9001 re-certification is achieved, an ISO14000:2000 certification should also

be considered. Incidentally, GSPIs Core Team for ISO9001:2000 certification of
its cold-rolled manufacturing division was formed last 21 March 2007. The team
is presently on its second review of all required documents for certification. With
these, plus the fact that NSC products are already afforded the PS mark, the
whole world could be GSPIs market!
Develop technical cooperation with ASEAN, Asian counterparts. (S3, S5,
O2, O5) With a recommencement of partnership agreement or technologytransfer with Japanese TMBP manufacturers, the company could gain a foothold
in pineapple tin cans for Dole and Del Monte, if it decides to rehabilitate then
operates Electrolytic Tinning Line No. 3 (ETL3). At present, with all of the three
tinning lines in the Philippines remaining closed, all tinplates for the manufacture
of tin cans are imported to the Philippines (compare this with Appendix O).
Okayama (2007) surveyed the use of economic partnership agreements
(EPA) between 24 January and 16 February 2007 and found that 43.1% of
Philippine respondents have no interest in Japan-Philippines EPA, while only
20.8% wants to know details. However, with the Philippines and Japan signing
the JPEPA last 06 September 2006, and the projected Senate ratification slated
this March 2008, it would be wise if the agreement would be looked upon now
and explore its effects to the burgeoning Philippine steel industry, particularly its
implications to GSPI.
Roxas (2007) reporting for The Manila Times, wrote the Department of
Trade and Industry stresses that JPEPA will help Philippine business become
162
globally competitive and achieve success across numerous markets, not just
Japan. When the agreement comes into force, it will create new benefits and
opportunities for Philippine society. . . The agreement spells out the framework
for the expansion of trade in goods and services between the two countries,
paving the way for wider market access bigger investments and technology
transfer from Japan.
Technical cooperation with other ASEAN and Asian steel companies, like
Nippon Steel or POSCO, or even the US Steel, could address productivity and
yield improvement, cost reduction and benchmarking. Presently, only Ispat
expatriates are hired for this purpose, to which a number of local personnel
countered that most of these expats are still learning the ropes instead of
sharing their supposedly expertise on steel manufacturing.
Maximize use of BOI incentive to maintain equipment's capacity and
capability. (S1, S3, O3). NSC was registered as a pioneer enterprise with BOI
and was entitled to up to 100% tax credits for the purchase of domestic capital
equipment and parts. Presently, however, production runs are often stopped at
GSPI because a critical spare is not available, a part or section of mill is
continuously operated up to breakdown point; delays could even drag on for
hours, even days, because certain replacement parts or necessary tools are not
immediately available. Maintenance downturns, instead of behaving in a cycle of
15 or so days, are done on a spontaneous basis, yet inspection, repair,
replacement or servicing activities on equipment are usually incomplete because
of lacking materials and supplies to perform the scheduled maintenance work
163
orders. Several mill supervisors attested to this fact and most lamented that
GSPI is running the former NSCs plant facilities to breakdown.
One engineer emphasized his observation of the GSPIs cycle of facilities
rehabilitation: rolls-out an initial rehabilitation plan; wait for spares, which is
prolonged because of lack of funds; puts the plan on-hold; then a new president
comes in, which changes the rehabilitation focus, and pursue another
rehabilitation plan of another equipment, and the cycle is repeated.
Initiate long-term agreements with ASEAN and Asian countries. (S5, O4)
China is still the most volatile market in Asia, but with the projection that it will
slow down in the coming years Terril (2007). Guerrero (2007) wrote in Global
Finance, Chinas continuing economic expansion may be a bumpy ride, but the
countrys prospects still look remarkably good. Thus, other ASEAN markets
should be pursued.
These agreements could also include slab and hot-rolled coils supply, or
eventually, including tin-milled black plates supply; as well as technical
cooperation on product and yield improvement, cost reduction and management
systems.
Re-inculcate the importance of quality in methods, products and services.
(S1, S2, O5) With adherence to world standards plus the companys appreciation
and application of Six Sigma technology, boosting confidence of ex-NSC
customers to be lured back as users of the GSPIs product as enthusiastic as
before.
Updated and relevant seminars, trainings and workshops on Quality
164
should be included in the training schedule. Attendance to various Quality

Conferences should also be looked into, and personnel attendance to such
events should be included in the annual budget. Subscription to pertinent
publications on quality would be an added bonus.
W-O Strategies: the weaknesses (W) can be transformed into

opportunities (O) by these strategies, such as:
Total overhaul of organization based on worldwide benchmarks. (W2,
W3, W4, W5, O1, O5) Andrew and Sirkin (2006), in a Senior Management
Survey,
found
that
globalization,
organizational
issuesmetrics
and
measurement, structure, and peopleand leadership remain three of the biggest

challenges facing companies that are seeking to become more innovative.
A Performance Appraisal system and Key Results Anchors must set the
level of performance based on worldwide comparative benchmarks, not just of
equipment but of personnel, too. Presently, a supervisor claimed that some
production hurdles are based on either Dolvi or Kalmeswhar that are
incompatible with the equipment at the former NSC facilities.
Revive the ISM project. (W1, O1, O2, O3) Senator Gloria MacapagalArroyo, then undersecretary of the Department of Trade and Industry under
Aquinos presidency, disagreed with NEDAs 1992 judgment that the Integrated
Steel Mill (ISM) was not viable and feasible. She was instrumental to the NEDAs
funding approval when NSC made a new study, which showed otherwise (NSC
News, September 1992). The ISM project remained complicated then shelved,
165
however, because of the proposed privatization, and subsequently, the Jacinto

litigation in 1992.
Henares (2006) urged the public to lets get it on with our steel industry,
after lamenting that, the Philippines steel industry lagged 35 years behind that of
South Korea and Taiwan. The Integrated Steel Mill dream for the Philippines has
been scuttled, not just once but thrice, by IISMI (NSC News Supplement, 12
September 1990), during the Marcos era, and the Aquino era when privatization
was prioritized before backward integration.
Former NSCs CEO, Dr. Antonio V. Arrizabal, and president & COO,
Rolando S. Narciso, prior to privatization, both claimed that integration is a
necessity, and privatization is a sacrosanct government policyand . . . are 100
percent behind it (Henares, 2006). When Wing Tiek took over, it embarked on
the start of FYEP Phase II-B, but Phase III (ISM) discussions were also on the
agenda.
Last 23 May 2007, Lalit Kumar Sehgal, Global Steel managing director,
announced that GSPI is investing $1.5-billion two-phase Integrated Steel Mill
project in Iligan City to be completed in 2010, or two years from now (Valdez,
2007m). This news surfaced after speculations that GSPIs Iligan plant was to be
sold to Tata Group (Osorio, 2007) and the brouhaha regarding cold-rolled coils
exports to Vietnam (SEAISI Newsletter, March 2007). Exported cold-rolled coils
were slapped with higher tariff by Vietnam claiming that the raw materials used
did not come from the Philippines but instead from India (Valdez, 2007j). This
was reminiscent of the Jakarta Form D issue in October 2005, when the
166
Association of Galvanized Steel Manufacturers in Indonesia complained against

GSPIs availing reduced tariff rate using Form D for its cold-rolled coils
questioning the source of raw hot-rolled coils allegedly from India rather than the
required 40% local content from the Philippines (de Pedro, 2005).
With the ISM, the next logical step is an application for Special Economic
Zone status for GSPI, which promises (de Lima, 1999) investment incentives for
ecozone developers, operators and locators such as Income Tax Holiday, access
to official development assistance (ODA) and other sources of financing, among
others.
Pursue favorable tariff rates for raw materials imports. (W1, O3) The
greatest threat is the steel tariffs. The overall trend is a gradual decrease of
Weighted Average Tariffs since 1990 (Remo, 2004). The Philippine government
announced in July 2004, the Cabinet Committee on Tariff Related Matters would
take time to study opposing positions on raising steel tariffs, which is expected to
cause increases in prices of basic commodities manufactured by downstream
steel users like canned goods and construction materials. Prior to the purchase
of NSCs assets by GIHL, the latter have vigorously announced its concerns
regarding the tariff rates, presently from zero to 3%, imposed on steel products.
GSPIs, known then as GIHL, position highlights (Inquirer News Service, 22 July
2004) that there should be a difference in the tariff between the raw materials
used for the production of steel products and the finished products itself to make
the operations of NSC, now GSII, feasible and viable. This issue remains
unresolved, pending the evaluation of GSPIs status whether it is already on
167
commercial operation or not. Eano (Manila Standard Today, 23 July 2004)

wrote, This did not sit well with opponents of the planned tariff increase.
The Philippine Chamber of Commerce and Industry (PCCI) had been
very vocal about this issue. Government should not give preferential treatment
to any group who has intentions of reviving operations of a closed company. All
companies should compete normally without special favors. As in the case of
NSC, Global should not be allowed to raise tariffs and then adopt an import-parity
pricing system, it said. Rather, prices should be based on normal market
forces... and other relevant factors such as cost efficiency, terms, quality and
service. (Manila Standard Today, 23 July 2004)
Under the Implementing Rules and Regulations of Executive Order 375,
the 7% tariff on HR and CR steel products will be imposed once GSIIs
production volume is found to have reached certain level. This is 50% of GSPIs
BoI-registered capacity for flats products or 50 percent of average Philippine
importation volume of HR or CR steel products for five years immediately prior to
the state of operations (Manila Standard Today, 25 June 2007).
Upgrade Business networks and systems using new technologies. (W3,
O1, O5) Before any hardware and software system gains user applicability, userfriendliness, and continuous improvement, an upgrade of antiquated hardware
should be the first and foremost concern. Computerization does not come cheap,
thus initial investments should be programmed to ensure deployment without
sacrificing the operational capability of the basic business: steel manufacturing.
One option to consider: instead of buying a new corporate server, the
168
Mainframe System could be re-deployed to tackle the business process for the
whole plant. In 1997, IBM (Layland, 1997) released its High Performance Routing
(HPR) for Mainframe System offering better performance and fault tolerance than
TCP/IP, the protocol used by Windows-based systems, especially those involving
transaction processing and electronic commerce.
Strengthen domestic markets with local partnerships & new product
development. (W5, O5) Andrew and Sirkin (2006) also found that among
industrial goods companies, including steel, the financial returns of innovation are
satisfactory. Furthermore, of the four possibilities on the new products and
services axis of innovation, 71% of the respondents rated new offerings for
existing customers are considered important or highly important, thus most
valuable and worth pursuing.
S-T Strategies: To alter perhaps the threats (T) into strengths (S), the
following strategies are proposed:
Revive Corporate Communications to update employees of all issues.
(S1, S4, T1, T4). NSC News, associated with the Company itself rather than with
any of its sectors, enjoyed almost 21 years of being the corporation publication
for NSC from 1976 to 1997. Bayani Santos, Jr., NSC News editor-in-chief, wrote
in November 1992 issue, The magazine ... has become our peoples collective
intellectual and written tradition ... as they build this Institution. For years, it
featured corporate affairs, news updates, regular columns, forum, miniature art
and literary pieces written or drawn from a small editorial staff of ten, plus at most
169
55 area coordinators-contributors.
On 06 January 2005, then GSPIs president Sushant C. Das appointed
twenty-two employees to comprise the editorial staff and communications
coordinators for the companys quarterly newsletter, aptly named: Global
Phoenix. The newsletter aimed an added communication link between the
organization, its employees and their families by informing of the events,
updates, plans and direction of the company (Internal memo to author). Drafts
were laid out for the maiden issue, but except for the appointment memo, it never
saw the light of day.
When Indian expats first came to NSC, they had the mistaken notion that
events regarding NSC written in the newspapers then at the end days of
liquidators phase were not allowed inside the corporate grounds. Employees
caught reading or disseminating the clipped news items were made to explain to
their respective heads. Every so often, even recent office memoranda regarding
personnel matters are marked for your eyes only or restricted to the recipient.
Moreover, a Total Productive Maintenance (TPM) newsletter, Flash TPM, is
sometimes published aggrandizing the breakthroughs of the Management
Initiatives department. Although there is the facility of using Lotus Notes, for
select individuals who has ready access to a networked computer, the system is
more often than not used for recycling spam or forwarding memos, but not used
as a communication tool for the entire corporate arena because of software and
hardware limitations. The same dilemma is faced by the Intranet, which can only
be viewed by select individuals excluding most rank-and-file personnel. Thus,
170
this researcher doubts the sincerity of the efforts to revive a semblance of a

printed- and publicly-viewed corporate communication newsletter at par with the
defunct NSC News. Yet, it is common knowledge that corporate communication
is the key to disseminating the right information at the right time rather than
building-up loose talks through the grapevines.
Use local talent to address power conservation.
(S1, T2) During the
trying times under the Wing Tiek-Hottick NSC, cost reduction and austerity
measures were the key words, as exhibited by the constant articles on this
subject on many issues of the NSC News. Power conservation means were
suggested by local personnel. Recycling, i.e., writing on the other unused side of
a used paper, saved the company money intended to buy reams of crisp clean
sheets; refilling of used computer printer ink cartridges; etc. was a fashionable
money saver. Using the available local talent, pooling them together could result
in a much bigger savings than just turning off the lights in a room when nobody is
around.
Maximize base capacity production through efficient use of resources.
(S2, S3, T3) People are the key to manufacturing or production of steel,
especially if the facilities are yet to be fully automated. Maintenance spare parts
are the juice, as one maintenance supervisor said, to make those facilities
operate efficiently, safely and cost-effectively. Last but not the least is the
capability of the installed base capacity of the facility. A balance of all these three
elements must be met for an equitable accounting of contribution to the totality of
production process.
171
Create common corporate memories, symbols, etc.
(S1, T4) In any
organization, corporate symbols and corporate ceremonies create semblances of

community and commonality. Management creates the means that these
facades are transformed into personal convictions or group dynamics.
Initiate concept- sharing on environmental measures in AEC. (S5, T5)
Three major agreements were reached at the Earth Summit in Rio de Janiero,
Brazil in June 1992. These are the Rio Declaration, Agenda 21 and Forest
Principles (Cola, 1993). The Rio Declaration contains the statement of principles,
the basis of Agenda 21moral, just, habitable, clean, cooperative, secure,
prosperous and shared world. Agenda 21 addressed to governments, nongovernment organizations, groups and the public, all of which must be involved
to diminish environmental catastrophe in the 21st century. Forest Principles
provide for a future convention on forest conservation and restoration. These
three agreements signed by 170 nation states should be dealt with also by the
future ASEAN Economic Community in a concept-sharing method. The
Community sharing common tropical weather has virtually the same ecology and
natural environment, thus any improvement in one could be replicated in another.
W-T Strategies: To diminish the threats (T) into weaknesses (W), and
then possibly revamp these into strengths, the following strategies are
recommended:
Partner with national agencies to address compensation package. (W2,
W4, T1, T4) GSPI could seek the help of locally based government agencies to
172
address the disparity in compensation package. For more than two years since
2004, there were no promotions, no salary increases for hired local employees.
This disparity seems less among managements priorities, but the impact to
productivity is huge. Most rank and file are handled by local supervisors. If these
supervisors form their own union, during NSC era there were two contending
groups representing the level, thus this is a potential threat to productivity.
Study the viability of SCADA, self-generation and mechanics of WESM.
(W3, T2). Monitoring of electric power usage at NSC facilities used traditional
meters, and these are located on some entry points only. No individual meters
are available on a per mill basis, thus load scheduling and load shedding cannot
be effectively done. Supervisory Control and Data Acquisition (SCADA) systems
or an Energy Monitoring System (EMS) have been used by steel mills the world
over, and they surely are applicable to GSPI scenario.
With the WESM on its initial stages of spot market tests, GSPI being a
large user of electric power should be prepared to have a competent and WESMaccredited electricity broker upon the implementation of open access (Mendoza,
2007). Furthermore, a technical feasibility and economic viability study of selfgeneration of power for GSPI could also offer another option.
Partner with steel end-users on Tariff resolution.
(W1, W5, T3). In
contrast, on May 24, 2002, China has set custom duties on steel imports ranging
from 18% to 26% depending on the type of steel products (China Watch, 26 July
2003)
Also, on December 20, 2001 the US International Trade Commission
173
recommended: a four-year program on tariff and tariff-rate quotas for plate, hotrolled, cold-rolled and coated sheets 20% for the first year, 17 for the second,
14% for the third and 11% for the fourth (Walker, 2002).
Similar rates should be vigorously pursued to protect investments. It is
hoped that dumping of steel products be reduced to a minimum if the tariff rates
are imposed favorable to all players in the Philippine steel industry, not just one
company.
Augment legal pay with perks and fringe benefits. (W4, T4). Wing TiekHottick NSC offered competitive salaries comparable to other multinationals in
the country. Not just that but also with a comparable package of other benefits on
top of those mandated by law which extends beyond what was required by the
Collective Bargaining Agreement, notable of which are: maternity, hospitalization,
100% cost-free medicines, free infirmary services, housing loans, insurance,
dependents scholarship, corporate wellness, 1.5 months per year of service
retirement, and bereavement assistance. (NSC News, August 1992)
All
these
paved
the
way
of
harmonious
relationship
between
management and union during NSC (NSC News Supplement, October 1992).
The matter of unionism at GSPI, as explained in the SWOT fourth
weakness (W4) above, however, remains on deadlock with management not
budging on its first and last offer of economic benefits.
Although, GSPI offered volume production incentive for its pickling line
and rolling mills since 2005, citing their bottleneck constraints, thus other
production lines have been deliberately excluded. Several supervisors have
174
pointed out this discrepancy since then, but suggestions for correction have not
been heeded, aside from the delayed disbursement of deserved incentives.
Update
Environmental
Monitoring
equipment
and
beef-up
EMS
personnel. (W4, T5) Most environmental monitoring equipment was sequestered

by NSC liquidator, as added-value equipment to manufacturing. With the global
thrust of protecting the ecology and the environment (Cola, 1993), such
equipment are vital to the issuance and renewal of an Environmental Certificate
of Compliance by the DENR, without which GSPI could end up like Sonic Steel
Industries.
Sonic operates a galvanized iron factory at Trece Martirez, Cavite. The
Foundation for National Development alleged that Sonic Steel failed to put up an
environment monitoring fund (EMF) and create a multi-partite monitoring team to
regularly check on the factorys air, noise and wastewater emissions as required
by the ECC. Sonic Steel, however, denied these allegations (The Philippine
Star, 06 February 2005).
With only one personnel assigned to monitor GSPIs environmental
management, truly a job for a specialized department with dedicated
environmental engineers in 1999, additional staff should be hired to beef-up
Environmental Monitoring Systems (EMS) group.
Recommendations for Further Studies

In as much as this study only dealt with a very brief period of time in
175
NSCs history (1994-2000) and limited in scope (production), as a follow-up to

this research, the following studies could be done in the future:
The NSC Flat Steel Production from 1974 to 1994: This study could
provide insights on the internal changescapacity and technology upgrades,
management initiatives, etc.during this period and explain its growth in terms of
production parameters over time.
The comparison of NSCs financial performance for the period 1983-1994
versus 1995-2000: This study could give insights on the impact of privatization to
NSCs corporate performance, in line with previous studies, such as Megginson,
Nash, and van Randenborgh (2004), and Boubakri and Cosset (1998).
The impact of Plant Facilities Preservation activities during the NSCLiquidator period 2000-2004 to the eventual resumption of NSC facilities
operational status: This study could give an alternative viewpoint on the
effectiveness of the Liquidator-NSC preservation efforts, which might have
benefited GSPIs shorter rehabilitation of NSC facilities to months rather than
years, as initial assessments predicted.
A feasibility study of of Electrolytic Tinning Line No. 3s commercial
operations in Iligan City. This study could provide pointers to the technical
feasibility and economic viability of commercially operating Electrolytic Tinning
Line No. 3 in Iligan City.
Several points have been raised in the recommendations after the SWOT
analyses above. These are all worthy of separate studies, such as: the effect of
Human Resource on NSC production, including the impact of supervision, the
176
effect of unionism, or the perceived contribution of expatriates; the viability of

installing
new
business
systems,
e-commerce,
SCADA,
environmental
monitoring system to production, and others.

With these abovementioned further studies, it is imperative that all NSCs
electronic and paper-based documentsfinancial and production records,
standards, and the likeshould be preserved, microfilmed, catalogued, and kept
in a designated archives open to researchers for the benefit of future
generations. If US Steel and Bethlehem Steel have libraries keeping records
dating back from their respective inception dates, the former NSC, if not the
Philippines steel industry, deserves to have one, too.
National Steel Corporation may no longer physically exist but lessons
from its existence for thirty years from its incorporation in 1974 to its corporate
demise in 2004 are relevant to any of NSCs future incarnations as well as its
future researchers. To paraphrase a proverb: not learning from the past is a
presage to repeating the same.
177
BIBLIOGRAPHY
Articles, Journals:
Allio, Robert J. (2006), Strategic thinking: the ten big ideas. Strategy &
Leadership, Vol. 34 No. 4 Emerald Group, 26 September 2006, pp. 4-13,
Ahearn, James, (2002). Should Southeast Asia Devalue? Issues in Political
Economy, Vol. 11, Elon University, pp. 14-15.
Boubakri, Narjess and Cosset, Jean-Claude (1998), Privatization in Developing
Countries: An analysis of the performance of newly privatized firms.
Public Policy for the Private Sector, No. 156, November 1998. pp 1-4
Bustelo, Pablo (2000), Novelties of Financial Crises in the 1990s and the Search
for New Indicators. Emerging Markets Review, Vol 1, No. 3. pp. 1-32,
August 2000.
Clarete, Ramon L. (2005) What Freer Trade Meant for the Philippines School of
Economics, University of the Philippines, 2005.
Claessens, Dirk and Allan Henderson (2007), Seize the strong positions. Steel
companies in an era of consolidation. NY, USA: IBM Global Services,
IBM Institute for Business Value, June 2007. pp. 1-20.
Cook, Paul and Yuichiro Uchida (2003) Privatization and Economic Growth in
Developing Countries. The Journal of Development Studies, Vol.39, No.
6, August 2003. pp. 121-154.
China Watch (2003), Tariffs Boosting Steel May Have Short Life. China Watch
Orbis Publications, 26 July 2003.
Dachin, Anca (2006), Structural changes of international trade flows under the
impact of globalization, Economie teoretic si aplicat, ECTAP, 18 August
2006. pp. 47-52.
Deardorff, Alan V. and Robert M. Stern (2001), What You Should Know about
Globalization and the World Trade Organization, USA: The University of
178
Michigan, 29 Dec 2001. p. 4-5

Fenton, Michael (2000), Iron and Steel, Metals Prices in the United States
through 1998, USA: US Geological Services, 12 April 2000. pp. 63-66.
Filipovic, Adnan (2005). Impact of Privatization on Economic Growth Issues in
Political Economy, Vol. 14, August 2005: 17
Glasmeier, Amy K. and Robin M. Leichenko (1999), What Does the Future Hold?
What Globalization Might Mean for the Rural South, Southern Rural
Sociology, Vol. 15, 1999, pp. 59-83.
Guerrero, Antonio (2007). Country Reports: ChinaGrowth Pains. Global
Finance. Vol. 21, No. 10. New York: Joseph D. Giarraputo, November
2007. pp. 36-38
Layland, Robin (1997), Mainframe Makeover, Data Communications New York:
Penwell Publications, August 1997, pp. 85-92.
Megginson, William L., Robert C. Nash, and Matthias van Randenborgh (1994).
The Financial and Operating Performance of Newly Privatized Firms: An
International Empirical Analysis. Journal of Finance, Vol 49: pp. 40352.
Mosner, Ellen and Craig Spiezle (2003), The Convergence of the Aging
Workforce And Accessible Technology: The implications for commerce,
business and policy. USA: Microsoft Corp. and AgeLight Marketing
Consultancy, July 2003. p. 16.
Osorio, Ma. Elisa P. (2007). No plan to sell Iligan plant, says Global Steelworks,
The Philippine Star, 22 May, 2007
Payne, Mark (2001), "Consolidation in EU steel industry -- A global model?"
USA: MBP Research, The Gale Group, Inc., 2001.
Santiono, Jati (ed.) (2007), Vietnam imposes 7% tax on Philippine CRC.
SEAISI Newsletter, Selangor, Malaysia: Tan Ah Yong, March 2007. pp. 7,
9.
Sauer,
Christine, Kishore Gawande, and Geng Li (2003). Big Push

Industrialization: Some Empirical Evidence for East Asia and Eastern
179
Europe, Economics Bulletin, Vol. 15, No. 9 pp. 17

Schwartz, Alan (2005). A Normative Theory of Business Bankruptcy, Virginia
Law Review, Vol. 91:1199, USA: August 23, 2005, p. 1200-1203
Smith, Tim (ed.) (2006). Mittals bid for Arcelor closely monitored in US. Steel
Time International. Vol. 20 No. 3. Surrey, England: DMG World Media
(UK), Ltd., April 2006. p. 9.
Kwek, Kim (2000). A Rebuttal of Danahartas lies. Kuala Lumpur: The Sun, 22
September 2000.
The Economist (1997). Financial Indicators: Privatization. London: The
Economist, 22 March 1997, p. 125.
The Economist (2004), Emerging-market indicators, Vol. 371, No. 8371:
London: The Economist, April 17-23, 2004, p.98
Walker, Andrew (2002), Q&A: World steel dispute, London: BBC News, 05
March 2002.
World Trade Organization (WTO, 2005). Understanding the WTO, New York:
WTO, October, 2005. pp. 1-10.
Weston, J. Fred (2002), M&As As Adjustment Processes, Journal of Industry,
Competition and Trade. CA, USA: 12 March 2002. pp. 18
Zinter, Courtney (2002) Explaining Decreased Employment in Minnesotas Iron
and Steel Industry, Issues in Political Economy, 2002, Vol. 11, pp. 14-16
Books:
Barnett, Donald F, & Robert W. Crandall (2002), Industry Studies Steel: Decline
and Renewal. USA: M.E. Sharpe, 2002. Duetsch, Larry L. (ed), p. 129.
de Melo, Jaime (2004), "Regional Integration Agreements," The Growth of
Trading Blocs. Geneva: University of Geneva, 26 November 2004. p.5-6.
Friedman, Lisa and Herman Gyr (1998), The Dynamic Enterprise: Tools for
Turning Chaos into Strategy and Strategy into Action. New York: Jossey-
180
Bass Publications, 1998. pp. 58-65.

Friedman, Thomas L. (2005), The World Is Flat: A Brief History of the TwentyFirst Century, USA: Farrar, Straus and Giroux, April 2005. pp 1-488
Henares, Hilarion M. Jr. (2006), "National Steal Corporation," Give and Take.
Book 9. Manila: Philippine Folio, 2006.
International Business Machines Corporation (IBM, 2004). Global Innovation
Outlook 2004. New York: November 2004. pp. 16, 62-63.
Lankford, William T., Sr., et. al. (ed.) (1985). The Making, Shaping and Treating
of Steel. United States Steel and Association of Iron & Steel Engineers,
Pittburgh. PA: Herbick & Held, 10th ed., 1985. pp. 1069-1100.
Maurice, S. Charles, and Christopher R. Thomas (1995), Managerial Economics.
Chicago: McGraw-Hill, Irwin, 1995. 5th ed. pp. 19-31, 321-322.
Stevenson, William J. (1990). Production/Operations Management. New York:
Richard D. Irwin, Inc. & Toppan Co., 3rd ed., 1990, pp. 28-29.
Dissertations, Theses:
Adeva, Evelyn B. (2002). The Management of Change in NPC-Mindanao
Regional Center vis--vis Privatization. Masteral Thesis. Iligan City:
Mindanao State University-Iligan Institute of Technology.
Bond, Timothy J. and Marcus Miller (1999), Financial Bailouts and Financial
Crises. Masteral Thesis. January 1998, Revised January 1999.
Drapeau, Richard (2004). Bankruptcy Prediction Model Using Discriminant
Analysis on Financial Ratios Derived from Corporate Balance Sheets.
Doctoral Dissertation. Australia: Lamar University.
Paglomutan, Rogelio V. (1981) Steel Consumption in the Philippines: An
Economic Analysis. Masteral Thesis. Quezon City: School of Economics,
University of the Philippines, March 1981.
Wong, Marie (2004) The Asian Financial Crisis and the Integration of Regional
Stock Markets. Masteral Thesis. Middlesex University Business School,
181
2004, pp. 1-34.

Final Reports, Research Papers:
Alexander, Craig & Pricila Kalevar (2004), Understanding the Spike in Steel
Prices, TD Economics Topic Paper, USA: TD Bank Financial Group, 27
April 2004. pp. 1-8.
Amponsah, William A. and Victor Ofori Boadu (2002), Crisis in the U.S. Textile
and Apparel Industry: Is It Caused by Trade Agreements and Asian
Currency Meltdowns? NC, USA: International Trade Center, Department
of Agribusiness, Applied Economics and Agriscience Education, May,
2002. pp. 1-14.
Andrew, James P. and Harold L. Sirkin (BCG) (2006), Senior Management
Survey: Innovation 2006. Worldwide: The Boston Consulting Group, 20
July 2006. pp. 1-30.
Anwar, Salman (2004), Special Report: Overview of Global Steel Industry,
KWR International, Inc., 2004. pp. 1-8
APEC (2005), APEC Trade Facilitation, APEC#205-SE-05.3. Singapore: APEC
Secretariat, 09 November 2005, p. 2.
APEC Study Centre (2003). Asian Financial Crisis: Causes and Development,
China: Hong Kong Institute of Economics and Business Strategy, 2003. p.
48.
Austria, Myrna S. (1998). The Emerging Philippine Investment Environment.
Discussion Paper. Manila: Philippine Institute of Development Studies,
Series No. 98-27; July, 1998
Basilio, Leilanie, and Jeremiah Cabasan (2004), Local Governance and the
Challenges of Economic Distress: The Case of Iligan City, Discussion
Paper. Manila: Philippine Institute for Development Studies, Series 200445, December 2004, p. 2-3.
Bustelo, Pablo (1998), The East Asian Financial Crises: An Analytical Survey,
ICEI Working Papers, Num. 10, Madrid: Universidad Complutense de
Madrid, 1998.
182
Bustelo, Pablo (2004). Capital Flows and Financial Crises: A Comparative

Analysis of East Asia (1997-98) and Argentina (2001-02), Madrid:
Department of Applied Economics, Complutense University of Madrid,
Working Paper No. 2004-17. October 2004, p. 1-29.
Caprio, Gerard Jr. (1998). "Banking on Crises: Expensive Lessons from Recent
Financial Crises," New York, USA: Development Research Group, The
World Bank, Working Paper F1979, June, 1998, p. 3.
Considine, Timothy J. (2005), The Transformation of the North American Steel
Industry: Drivers, Prospects, and Vulnerabilities, Pennsylvania: The
Pennsylvania State University, April 21, 2005. p. 14, 24.
Cronin, Richard P. (1998), Asian Financial Crisis: An Analysis of U.S. Foreign
Policy Interests and Options, CRS Report for Congress 98-74F, USA:
Congressional Research Service, 23 April 1998.
Cuyvers, Ludo & Wisarn Pupphavesa (1996), From ASEAN to AFTA. Antwerp,
Belgium: Centre for ASEAN Studies, September 1996
Hanrahan, Chris J. (ed.) (2002), Southeast Asia to recover in 2002. The AFTA
Monitor Vol. 10:4. Makati City: Options Information Company, 17 April
2002
Hatch
Associates Ltd. (1996), National Steel CorporationPhilippines:

Benchmarking, Optimization, and Overview of Materials Management
Policies, Final Report PR 64624.001, 14 June 1996, p. 15-16.
Ikenson, Dan (2002), Steel Trap: How Subsidies and Protectionism Weaken the
U.S. Steel Industry, USA: Center for Trade Policy Studies, March 1,
2002; Trade Briefing Paper No. 14, p. 1- 16.
Koda, S., Kaihara, T. and Dobashi M. (1995), Steel Demand Projection in Asia,
Tokyo: Kawasaki Steel, 03 August 1995. pp. 1-5.
Lyday, Travis Q. (1995), The Mineral Industry of Philippines. Research Paper.
New York: US Geological Survey, April 1995. p. 687.
Lyday, Travis Q. (2002). The Mineral Industry of the Philippines2000.
Research Paper. New York: US Geological Survey, 2002, p. 21.3.
183
Moitti, Luis and Frdrique Sachwald (2006), The Old Economy in the New
Globalization Phase. Paris, France: Institut Franais des Relations
Internationales, 2006, p. 16.
Muhd Zulkhibri Abdul Majid and Mohammed B. Yusoff (2004), "Sources of Asian
Currency Crisis." Malaysia: Monetary and Financial Policy Department,
Central Bank of Malaysia, May 2004, p. 14.
Noland, Marcus (2000) "How the Sick Man Avoided Pneumonia: The Philippines
in the Asian Financial Crisis." Institute for International Economics,
Working Paper 00-5.
Orbeta, Aniceto C. Jr., (2002) "Globalization and Employment: The Impact of
Trade on Employment Level and Structure in the Philippines" Discussion
Paper. Manila: Philippine Institute for Development Studies, Series 200204, February 2002, p. 13.
Radelet, Steven and Jeffrey Sachs, (1998) The Onset of the East Asian
Financial Crisis, Research Paper. Cambridge: National Bureau of
Economic Research, August, 1998. p. 41.
Shiraishi, Takashi (2005) The Asian Crisis Reconsidered Discussion Paper.
Kyoto, Japan: Center for Southeast Asian Studies, Kyoto University,
2005. RIETI Discussion Paper Series 05-E-014.
Tomita, Toshiki (2000), The Mechanisms of "21st-Century-Type" International
Financial Crises, Research Paper. NRI Papers No. 10, Japan: Nomura
Research Institute, 01 August 2000. pp. 1-17.
Zhuang, Juzhong and Malcolm Dowling (2002) Causes of the 1997 Asian
Financial Crisis: What Can an Early Warning System Model Tell Us?
ERC Policy Brief Series, ISBN: 1655-5260, Manila: Asian Development
Bank, June 2002. p. 4.
Conference Proceedings:
Arthur Andersen and SGV Consulting (1995), Challenges Facing NSC,
Proceedings of the Challenges Facing NSC Conference, Makati: National
Steel Corporation, 21 July 1995.
Christmas, Ian (2003), Global Steel Demand Continues to Grow. Proceedings of
184
the 37th IISI Annual Conference, MPT, Vol. 26, No. 6, Dsseldorf,
Germany: Verlag Stahleisen GmbH, December 2003. pp 24-26.
Eichengreen, Barry (2002), What to Do with the Chiang Mai Initiative.
Proceedings of the Asian Economic Panel Meeting, Tokyo: Asian
Economic Panel, May 2002.
Goodyear, C W (2007), BHP Billiton Resourcefully Growing. Proceedings of
Merrill Lynch Global Metals, Mining and Steel Conference, Dublin: Merrill
Lynch, May 2007, Powerpoint Presentation, Slide 5.
Hatch Associates Ltd. (2001), Effective Due Diligence for Steel Capital
Investment Decisions, Proceedings of the 4th Middle East Steel
Congress, Crowne Plaza Hotel, Dubai: Hatch Associates, 27 30 May
2001, p. 12-13.
Ikenson, Dan (2001). Whats Wrong with the Steel IndustryAgain? Proceedings
of The Cato Institute Policy Forum. F. A. Hayek Auditorium, Washington,
D.C.: Cato Institute's Center for Trade Policy Studies, February 20, 2001.
Katrak, Firoze E., et.al. (2002). Is Globalization "good" for the North American
Steel Industry? Proceedings of American Iron and Steel Technology's
2002 Steelmaking Conference. Boston, USA: Charles River Associates,
2002. p. 519.
Laplace Conseil (2003), The Steel Industry Globalization Trends. Proceedings of
(London Metal Exchange) LME Conference, London: Laplace Conseil, 23
May 2003. Powerpoint Presentation. Slide 14.
Laplace Conseil (2007), View on the Future of the Global Steel Industry.
Proceedings of Merrill Lynch Global Metals, Mining and Steel
Conference, Dublin: Merril Lynch, May 2007. Powerpoint Presentation.
Slide 5.
Mendoza, Edward L. Essentials of Open Access and Retail Competition.
Proceedings of the 12th Region VIII (Nothern Mindanao) Regional
Conference. Elena Tower Inn, Iligan City: Institute of Integrated Electrical
Engineers of the Philippines, Inc. 26-18 August 2007.
Okayama, Hidehiro (2007), Use of Preferential Treatment under FTA.
Proceedings of Reiti Policy Symposium, Tokyo, Japan: REITI, Tokyo
185
Chamber of Commerce & Industry, 23 March 2007.

Taccone, Tony (2006), Emerging from the Dark Period: The Steel Industry in an
Enlightened Age. Proceedings of The Steel Industry in the 21st Century:
A Trans-Atlantic and Global View, Pittsburgh: University of Pittsburgh, 12
September 2006.
Terrill, Ross (2007), Dealing With China in the Coming Years. Imprimis, Vol.
36:7. MI, USA: Hillsdale College, July 2007. Transcript of remarks
delivered at Hillsdale College National Leadership Seminar, Fort Myers,
Florida: 13 February 2007.
Treado, Carey Durkin, (2004). Imports, Technology, and the Success of the
American Steel Industry, Proceedings of Sloan Industry Centers Annual
Conference, Atlanta, Ga., USA: Center for Industry Studies, University of
Pittsburgh, April 19-21, 2004.
Villanueva, Cesar L. (2003). Philippine Trends in Addressing Distressed Assets
and Vehicles for Maximising Value. Proceedings of the Forum for Asian
Insolvency Reform (FAIR): Maximising Value of Nonperforming Assets,
Seoul, South Korea: Asian Forum, 10 - 11 November 2003.
Woetzel, Jonathan et.al. (2002), Transition in Asian Steel--The Ultimate
Challenge or an Opportunity for Chinese Companies? Proceedings of
First Far East Steel Summit 2002, Shanghai, China: October 21, 2002.
Philippine Publications:
Abrenica, Ma. Joy V. (2004), Contracting for Power: The Philippine Case.
Manila: Asian Development Bank, 01 December 2004. pp. 18-19.
Anigan, Gerardo R. (ed.) (2007), Q&A Primer: ASEAN for Philippine Business,
Pasay City: Philippine Exporters Confederation Inc., 18 November 2007.
Arroyo, Joker P. (2005), Journal of the First Special Session, Thirteenth
Congress, Manila: Senate of the Philippines, January 5-7, 2005
Bondoc, Jarius (2001) GOTCHA: Restart National Steel, restart north
Mindanao. Manila: The Philippine Star, 17 November 2001
Bulan, Ma. Susana T. (2004) "An Economic and Social Development Framework:
186
Five Pillars of Growth," Manila: SEPO, 2004. pp. 7-10.

Cagahastian, Diego C. (1999) Erap signs 2 bills protecting local industries.
Manila: Manila Bulletin, 13 August 1999.
Calica, Dymphna R. (2000) Finance dept thumbs down PNB write off of
National Steels debt. Business World. Manila: Businessworld Publishing,
07January 2000.
Congress of the Philippines (1991), Republic Act 7103, Iron and Steel Industry
Act, Manila: Congress of the Philippines, 1991.
de Lima, Lilia B. (1999). Economic Zones: Creating Employment & Other
Opportunities Particularly in the Countryside, Proceedings of the 8th
Mindanao Business Conference, 12-14 August 1999, Iligan City, Lanao
del Norte.
de Pedro, Helegarde S. (2005), Letter of Assistant Director to Commissioner,
Bureau of Customs re: Trade Complaints re GASPI. Manila: DTI, 19
October 2005.
Echeminada, Perseus (2000), "Enrile seeks Senate probe of NSC deal," Manila:
The Philippines Star Publications, 06 January 2000.
Eano, Ray S. (2004), NSC protection wont just go away. Manila: Manila
Standard Today, 23 July 2004.
Ferriols, Des (2000), Russian steel giant eyes National Steel. Manila: The
Philippine Star, 21 January 2000.
Go, Marianne V. (2002), Malaysians, banks agree on NSC rehab. Manila: The
Philippine Star, 12 November 2002
Henares, Alfredo Tomas (2006a), Foreword to Give and Take, Make My Day
Book 9 by Larry Henares. Mania: Philippine Folio, 2006. pp. ii-ix.
Inquirer News Service (2004), Gov't reviews position on steel tariff, Manila:
Inquirer News Service, 22 July 2004
Jao-Grey, Margaret (2002). NSC shareholders to form SPV. Manila: The
187
Philippine Star, 14 February 2002.

Jha,
Vinodanand (2005). Proceedings from the seminar Knowledge

Management People, Process and Technical Interaction Iligan: GSPI,
08 December 2005.
Lamberte, Mario B., et. al. (1999), Impacts of the Southeast Asian Financial
Crisis on the Philippine Manufacturing Sector. Discussion Paper No. 9909 (Revised), Manila: Philippine Institute for Development Studies, 11
May 1999. pp. 1-55.
Luken, Ralph A. (1999), "Industrial Policy and the Environment in the
Philippines," Manila: United Nations Industrial Development Organization,
NC/PHI/97/020, July 1999.
Molina, Gay (ed.) (2008), GSPI Gets JIPM Confirmation for TPM Excellence
Award1st Category. Flash TPM. Issue 18. Iligan City: GSPI, Ferbuary
2008
The Philippine Star (2000), Gov't favors Swiss firm to take over Nat'l Steel.
Manila: The Philippine Star, 17 February 2000.
The Philippine Star (2001). Lease of NSC facilities to proceed despite Hottick.
Manila: The Philippine Star, 17 September 2001
The Philippine Star. (2001) "National Steel employees back Allengoal proposal"
Manila: The Philippine Star, 18, September 2001
The Philippine Star (2003), "Steel industry task force pushes for integration,"
Manila: The Philippines Star, 21 September 2003.
The Philippine Star (2005), "Advocacy group seeks closure of steel plant,"
Manila: The Philippines Star, 06 February 2006.
National Statistical Coordination Board (NSCB) (2004). 2003 Philippine Statistical
Yearbook. Manila: NSCB, 2004.
National Economic and Development Authority (2004), Medium-Term Philippine
Development Plan 2004-2010. Manila, Philippines: NEDA, 09 December
2004. pp. 59-68, 77-78, 269-273.
188
Orbeta, Meynardo (2003), "Is Competition Policy Necessary? The Philippine

Case," Manila: Bureau of Domestic Trade, Department of Trade and
Industry, 2003. pp. 2-7.
Philippine Center for Investigative Journalism (PCIJ) (2006), 100 Biggest
Projects Arroyo Administration. Manila: PCIJ, 13 August 2006. pp. 1 3.
Ramos, Elaine Ruzul S. (2007). Govt to hike tarrif on steel to 7%. Manila
Standard Today. Manila: Manila Standard, 25 June 2007.
Remo, Michelle V. (2004), National Steel Bidder Asks for Tariff Protection,
Manila: Inquirer News Service, 06 January 2004.
Rimando, Lala (2004), "A sleeping giant wakes up," Manila: Philippine Daily
Inquirer, 13 September 2004.
Roxas, Cipriano S. "Special Report: Whats in it for us?" Manila: The Manila
Times, 26 August 2007
Salceda, Joey Sarte (2004), Dimensions of the Philippine Fiscal Crisis: A
Roadmap to Fiscal Rehabilitation, Manila: Economic Affairs, House of
Representatives, 17 September 2004
Tariff Commission (TC, 1999). Anti-Dumping Case No. 1-2000: The Matter of
Protest against the Importation of Electrolytic Tinplates (ETP) from South
Korea, Manila: Tariff Commission, 18 October 1999.
Tariff Commission (TC, 2000). Anti-Dumping Inv. No. 99-02: Report on Findings
on the Dumping Protest against the Importation of Hot-Rolled Steel
Coils/Sheets from Russia, Manila: Tariff Commission, 30 Aug 2000.
Tariff Commission (TC, 2001). Anti-Dumping Investigation No. 00-02: Report on
Findings on the Anti-Dumping Protest against the Importation of Cold
Rolled Coils/Sheets from Taiwan. Manila: Tariff Commission, 24 April
2001.
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.
189
United Nations Development Program (2003) Philippine Progress Report on the

Millennium Development Goals, Manila: United Nations Development
Program, 2003. p. 51.
Valdez, Katrina Mennen A (2007m). Global Steel prepared to put up
integrated manufacturing plant. Manila: The Manila Times, 23 May, 2007
Valdez, Katrina Mennen A. (2007j) "Global Steel to hurdle Vietnam challenge,"
Manila: The Manila Times, 25 July 2007
Valdez, Katrina Mennen A. (2007n), Global Steel workers restrained from protest
actionn, Manila: The Manila Times, 20 November 2007.
Villanueva, Marichu A. (2002), "GMA orders Roxas to proceed with foreclosure of
National Steel." Manila: The Philippine Star, 06 February 2002.
Ynion, Rommel (2000), Hottick threatens to drive OFWs out of Malaysia.
Manila: The Phiippine Star. 17 October 2000.
Ynion, Rommel (2000n), SEC cant order NSC liquidation Hottick Manila: The
Philippine Star, November 10, 2000
National Steel Corporation Documents:
Altres, Norberto J. (1991), Para sa NSC Employee: Part Ownership ng NSC.
NSC News, XVI: 4, Makati: Corporate Communications, NSC, 30 April,
1991. pp. 16 - 18.
Balali, Macky P.(1993), 1:7 in 97: NSCs Response to the Times. NSC News,
XVIII: 5, Makati: Corporate Communications, NSC, 31 May, 1993. pp. 12
- 13.
Balali, Macky P. (ed.) (1994), Wing Tiek Wins. NSC News, XIX: 10, Makati:
Corporate Communications, NSC, 31 October 1994. p. 11.
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.
Balali, Macky P. (ed.) (1995), TPM. NSC News Supplement, Makati: Corporate
190
Communications, NSC, August 1995, pp. 1 12.

Balali, Macky (ed.) (1995), Dialogue: Poised for Growth. NSC News Supplement,
Makati: Corporate Communications, NSC, December-January 1995. pp. 3
- 4.
Balali, Macky (ed.) (1995), Settling Customer Complaints. NSC News, XX: 5,
Makati: Corporate Communications, NSC, May, 1995. pp. 5 - 7.
Balali, Macky (ed.) (1995), All Time High Production Records. NSC News, XX: 7,
Makati: Corporate Communications, NSC, July, 1995. p. 11.
Balali, Macky (ed.) (1995), Protect and Preserve. NSC News, Vol. XX: 8. Makati:
Corporate Communications, NSC, August 1995. pp. 8 - 10.
Baares, Oscar (1990), Rationale: An Integrated Steel Mill for the Philippines.
NSC News, XV: 4, Makati: Corporate Communications, NSC, 30 April
1990. pp. 1 - 3.
Baares, Oscar (1994), The Integrated Steel Mill: Prospects for Financing. NSC
News, XV: 6, Makati: Corporate Communications, NSC, 30 June 1990.
pp. 2 - 3.
Cola, Doods (1993), Agenda 21: Survival in the Next Century. NSC News, XVIII:
6, Makati: Corporate Communications, NSC, 30 June, 1993. p. 11-14.
Illut, Jek (1994), NSC Cited for Environmental Concern. NSC News, XIX: 5,
Makati: Corporate Communications, NSC, 31 May, 1994. p. 13.
Longakit, Glenmoore (1993), Probing the ISM Study. NSC News, XVIII: 2,
Makati: Corporate Communications, NSC, 31 March, 1993. pp. 4-10.
Longakit, Glenmoore (1990), Privatization and NSC Potentials. NSC News, XV:
7, Makati: Corporate Communications, NSC, 31 July, 1990. pp. 10-11.
Monsanto, Federico (1993), COREX for NSC Iligan Plant. NSC News, XVIII: 9,
Makati: Corporate Communications, NSC, 30 September 1993. p. 31.
Narciso, Rolando S. (1992), In pursuit of NSCs reason for being Speech
delivered during the In Search of the Asian Manager for the year 2000
191
Conference, Makati: Asian Institute of Management, March 1992.

Excerpts published in NSC News, XVII: 3, Makati: Corporate
Communications, NSC, 31 March, 1992. pp. 19-22.
Narciso, Rolando S. (1994),Together, We'll Reach Our Goals. NSC News, XIX:
3, Makati: Corporate Communications, NSC, 31 March 1994. p. 4.
National Steel Corporation, Annual Report. Iligan City: NSC, various years (19801992). Cited as NSC and Annual Report Year.
National Steel Corporation (1996q). Quality Assurance Performance Report for
the month of December, 1995. Iligan City: Cold Strip Mill Quality
Assurance, NSC, 03 January 1996.
National Steel Corporation (1998q). ISO9002:1994 Quality Management
Systems Manual. Iligan City: Cold Strip Mill Division, NSC, 01 December
1998. pp. QMS.CMS.200-210.
National Steel Corporation (1998m). ISO9002:1994 Maintenance Planning ISO
Manual. Iligan City: Applied Maintenance Planning, Cold Strip Mill, NSC,
01 December 1998.
National Steel Labor Union (1998), Update on the meeting with TL Galanis,
WEB: Workers Empowerment Bulletin. Iligan City: National Steel Labor
Union Federation of Free Workers (NASLU-FFW), 24 March 1998.
National Steel Corporation (1994). NSCs Expansion & Modernization Plans.
Iligan City: Project Engineering, NSC, 24 February 1994.
National Steel Corporation (PFP, 2003), Rehabilitation and Pre-Start-Up Plan for
NSC. Iligan City: Plant Facilities Preservation, NSC, July 2003.
Navarro, Rizalino S. and Ibrahim bin Bidin (1999), Re: National Steel
Corporation Survival, Letter to Philippine President Joseph Ejercito
Estrada. 15 December 1998, pp. 1 3.
NSC News (1976), NSC Exports Products, NSC News, Vol I: 1. Iligan City: NSC,
30 November 1976, p. 1.
NSC News (1990), What Employees Should Know About The Jacinto Claim,
192
NSC News Supplement, Iligan City: NSC, 12 September 1990, p. i-ii.

NSC News (1993), Steeling Our Resolve for Philippines 2000, NSC News
Supplement, Makati: Corporate Communications, NSC, July 1993.
Transcript of speech delivered by President Fidel V. Ramos, Hot Strip Mill
No. 2 Inauguration Ceremonies on 17 July 1993.
NSC News (1990), What the Employees Should Know About The Jacinto Claim,
NSC News Supplement. Makati: Corporate Communications, NSC, 12
September 1990. pp. i iv.
NSC News (1992), National Steel Corporation: Building a Country Together,
Eighteen Years of a Most Meaningful Commitment. NSC News
Supplement. Makati: Corporate Communications, NSC, 23 October 1992.
NSC News (1995), Organizing Ourselves for Customers, NSC News Special
Bulletin. Makati: Corporate Communications, NSC, 03 August 1995.
NSC News (1998), General Memo, NSC News Special Bulletin. Makati:
Corporate Communications, NSC, 20 April 1998.
Noynay, R.R. (1996). Production Tracking System: Conceptual Design. Iligan
City: Manufacturing Automation & Control Systems, NSC, 24 August
1996.
Plant Facilities Preservation (PFP, 2002), Power and Energy Analysis, Iligan:
Plant Facilities Preservation, NSC, 07 October 2002.
Que Estevez, Wilkie C.Jr. (1997), "Derivation of Cold Mill Material & Prime Yield
Standards," Internal Memo. Iligan: Quality Assurance, Cold Strip Mill,
NSC. 01 April 1997.
Ramos, Fidel V. (1994), "Steel and ASEAN Modernization" excerpted from the
Proceedings of the 38th Southeast Asia Iron and Steel Institute (SEAISI)
Conference, Makati, 23-28 March 1994. NSC News, XIX: 6, Makati:
Corporate Communications, NSC, 30 June 1994. pp. 4 - 7.
San Pedro, Angelo A. (1994) It Was Twenty Years Ago Today . . . NSC News,
XIX: 2, Makati: Corporate Communications, NSC, 28 February 1994. pp.
4-5.
193
Santos, Bayani Jr. (ed.) (1990), Managing Our Raw Materials Requirements.
NSC News, XV: 4, Makati: Corporate Communications, NSC, 30 April
1990. pp. 7-8.
Santos, Bayani Jr. (ed.) (1992), 18th Anniversary Supplement: Milestones. NSC
News. Makati: Corporate Communications, NSC, 29 February 1992. pp.
46-47.
Santos, Bayani Jr. (ed.) (1992), Steel isnt just for things; Its for people. NSC
News, XVII: 8, Makati: Corporate Communications, NSC, 31 August
1992. pp. 8-15.
Santos, Bayani Jr. (ed.) (1992), FVR OKs sale. NSC News, XVII: 9, Makati:
Corporate Communications, NSC, 30 September 1992. p. 3.
Santos, Bayani Jr. (ed.) and Loy Concepcion (1992). NSC should be privatized
as soon as possible. Interview with Senator Gloria Macapagal-Arroyo.
NSC News, XVII: 9, Makati: Corporate Communications, NSC, 30
September 1992. p. 6-7.
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.
Santos, Bayani Jr. (ed.) (1993) Privatization advisor named. NSC News, XVIII: 7,
Makati: Corporate Communications, NSC, 31 July 1993. p. 26.
Santos, Bayani Jr. (ed.) (1993), The integration riddle. NSC News, XVIII: 9,
Makati: Corporate Communications, NSC, 30 September 1993. pp. 3 -5.
Santos, Bayani Jr. (ed.) (1993), Steeling Our Resolve for Philippines 2000,
transcript of speech delivered by President Fidel V. Ramos, Hot Strip Mill
No. 2 Inauguration Ceremonies on 17 July 1993. NSC News Supplement.
Makati: Corporate Communications, NSC, July 1993. pp. 2-3.
Santos, Bayani Jr. (ed.) (1994), The ABC's of Privatization. NSC News, XIX: 3,
Makati: Corporate Communications, NSC, 31 March 1994. pp. 12-13.
Sinangote, Nards (1993), Total Quality Management: Is National Steel ready for
it? NSC News, XVIII: 2, Makati: Corporate Communications, NSC, 28
February 1993. pp. 8-9.
194
Valencia, F.C. (1995), Alternative Source of Power, Department Memo. Iligan

City: Project Engineering, Cold Mill Expansion, NSC. 20 June 1995.
Interview/Electronic Mail Correspondence:
Interview with Teresita Panganiban, Analyst, Philippine Iron and Steel Institute,
Makati City. 16 and 17 April 2007.
Interview with Necitas C. Vicente, former Process Quality Engineer, NSC, Iligan
City. November 2007 and February 2008.
Interview with Jonathan Leo M. Roa, former Statistician, NSC, Iligan City.
February 2008.
Electronic mail correspondence with Esteban V. Cabrera, Jr., formerly Executive
Vice President, Manufacturing, NSC. 2006.
Electronic mail correspondence with Christine Cabrera-Manuel, formerly
Researcher, Applied Research & Technical Department, NSC. Various
dates.
Interviews with persons who wished to remain anonymous (refer to Appendix
HH), various dates.
Statistical Data:
Composite Resources Unit (CRU) (2004), International Steel Sheet Quarterly
Industry and Market Outlook. London: CRU, January 2004.
Composite Resources Unit (CRU) (2005), International Steel Sheet Quarterly
Industry and Market Outlook. London: CRU, April 2005.
Composite Resources Unit (CRU) (2008), Steel Products Index, CRUspi.
Online. February 2008. http://www.cruspi.com
International Iron and Steel Institute (IISI) (2002), Steel Statistical Yearbook
2001, Brussels, Belgium: IISI, Committee on Economic Studies, 19
December 2002.
195
2003, Brussels, Belgium: IISI, Committee on Economic Studies, February

2004.
2004, Brussels, Belgium: IISI, Committee on Economic Studies, 16
November 2004.
2006, Brussels, Belgium: IISI, Committee on Economic Studies, 15 March
2007.
International Iron and Steel Institute (IISI) (2006w), World Steel in Figures 2006,
Brussels, Belgium: IISI, Committee on Economic Studies, 29 May 2006.
International Iron and Steel Institute (IISI) (2007), World Steel in Figures 2007,
Brussels, Belgium: IISI, Committee on Economic Studies, 04 September
2007.
Ispat Industries Ltd (2006). Corporate Profile. Ispat Industries Ltd. Online. 16
October 2006. http://www.ispatind.com.
Nippon Steel Corporation (2006), World Steel Industry: Apparent Consumption of
Finished Steel Products, Japan: Nippon Steel Corporation, 24 July 2006.
Organisation for Economic Development (OECD) (2001), Steel Statistics 19912001, France: OECD, 21 March 2001.
South East Asia Iron and Steel Institute (SEAISI) (2004), Annual and Quarterly
Statistics,
1994-2003..
SEAISI
Online.
15
October
2006.
http://www.seaisi.org.
Software:
Mueller, Joerg (2004). FreeMind A Program for creating and viewing
Mindmaps, version 0.8.0. GNU General Public License. Free Software
Foundation. 2004. http://freemind.sourceforge.net
Minitab Inc. (2003). MINITAB Statistical Software, Release 14 for Windows, State
College, Pennsylvania. 2003.
196
APPENDIX A
KEY INFORMANT INTERVIEW QUESTIONAIRE
The researcher will introduce the study to respective key informant

interviewees by citing the title, delivering a short background, highlighting the
main purpose and objectives of the study and emphasizing the value of any
information gathered. The name and position of the interviewee, place and date
of interview will be noted. Personal recollection of key informants in relation to
their NSC experience, either as employee, customer or supplier, will also be
documented.
A tentative set of questions for the interview will primarily include the
following:
1. Of the six external environmental factors: economic conditions,
political scenario, legal, technology, competition, and markets, which
one of these greatly affected NSCs flat carbon steel production
between 1994 and 2000? Why do you think so?
2. Of the seven internal environmental factors: human resources,
facilities and equipment, financial resources, customers, products and
services, technology, and suppliers, which one of these greatly
affected NSCs flat carbon steel production between 1994 and 2000?
197
Why do you think so?

3. What other factors not mentioned above could have had a major
impact on NSCs flat carbon steel production between 1994 and
2000? Why?
4. Of the three economic events between 1994 and 2000, such as the
Asian Financial Crises of 1997-98, the Philippine Economic Reform
and Liberalization, and the global slowdown of the Steel Industry in
the 1990s, which of these greatly affected the flat carbon steel
production of NSC? Why?
5. Knowing what you know now, any suggestions how NSC might have
managed the company after its privatization? What other changes in
the any aspect of the company: man, machine, process, etc., should
have been made by NSC management team after privatization?
6. Based on your personal experience, how did the closure of NSC
affected you? Your company?
7. Could the foreclosure proceedings and eventually the liquidation of
NSC have been averted in 1999? How? Was the liquidation of NSC
the only logical solution then or not? Why?
198
APPENDIX B
KEY INFORMANTS
National Steel Corporation (NSC)

Esteban V. Cabrera, Jr. EVP Manufacturing
Isidro F. Hynson, Jr AVP Engineering
Eduardo F. Soriano, AVP Cold Strip Mills
Gemeniano A. Valdeleon, Manager, CSM Area II
Norberto G. Oller, Head, Engineering
Ruben A. Pinaroc, Plant Manager, NSC-Liquidator
Simplicio M. Villarta, President, NASLU
NSCs former customers
President, Puyat Steel
Manager, Philippine Steel Corporation
Head of Operations, Steel Corporation of the Philippines
Plant Manager, Bacnotan Steel
Head, Iligan Service Center
Iligan City personages
Alejo A. Yaez, former Mayor, Iligan City
Lawrence Ll. Cruz, Mayor, Iligan City
Henry C. Dy, Vice Mayor, Iligan City, and former President, Philippine
Chinese Chamber of Commerce
Orlando M. Maglinao, Councillor, Iligan City Council, and former Manager
TED, NSC
Wilfredo A. Bacareza, Councillor, Iligan City Council, and former
Manager, Utilities, NSC
Refer also Appendix FF: Special Acknowledgement for former NSC personnel,
for additional list of key informants
199
APPENDIX C
NSC PROCESS FLOW
Figure 37: NSC Process Flow

(Source: NSC)
200
APPENDIX D
ECONOMIC AND STEEL INDUSTRY TIME LINE
201
ECONOMIC AND STEEL INDUSTRY TIME LINE, continued
World Economy and

Steel Industry Timeline
01 Jan: Kofi Annan becomes UN Sec-Gen
Mittal acquires Germanys Thyssen Duisburg
Thyssen Stahl and Krupp-Hoesch
merged as ThyssenKrupp Stahl
30 Jun: Britain handovers Hong Kong to China
Dow Jones Industrial plunged 554 points, 7,2%

10 Dec: Kyoto Protocol is signed
13 Dec: EU plans to admit 6 nations.
ASEAN and Philippine

Historical Timeline
NDC options 12.5% stake of NSC
Hottick acquires 81.7% of NSC
BSP raised interest rates by 1.75%
Thais baht hit by speculative attacks
02 Jul: Philippines devalues peso
23 Jul: Laos and Myanmar joins ASEAN
11 Aug: IMF approves two bailout packages for Thailand
14 Aug: Indonesian rupiah plunges
PEZA declares NSC a Special Economic Zone
IMF grants $10B standby to Indonesia
07 Nov: Seoul Stock Exchange falls 4.00%
Dec: 1st ASEAN+3 leaders meet
11 Dec: R.A. 8424 amends Income Taxes
Mittal acquires USAs Inland Steel

03 May: Europe agree on single currency: euro
NSC closes Pasigs ETL No. 2.

20 May: Malaysia enacts Danaharta Act of 1998
21 May: Suharto resigns after 32 years.
16 Jun: WB warns Asia of deep recession
Usinor buys Belgiums Cockerill Sambre
17 Jun: US intervenes to rescue yen

30 Jun: J. Estrada becomes Philippine president
17 Aug: Russian virus financial crisis

29 Sep: US Acme Steel files Chapter 11.
30 Nov: US Laclede Steel files Chapter 11.
19 Dec: US House impeaches Clinton
01 Jan: European EMU starts
01 Feb: US Geneva Steel files Chapter 11.
24 Mar: US Qualitech Steel files Chapter 11.
June: G8 meets
16 Nov: Asian Growth and Recovery $10bn fund

31 Dec: Thais Nakornthai Strip mill declares bankruptcy
15 Jan: E.O. 65 brings down HRC tariff from 7 to 3%
04 Mar: NKK announces to liquidate Toa Steel
16 Mar: Danaharta buys Hotticks NPL.
30 Apr: Cambodia joins ASEAN
26 May: NSCs 5-STCM succumbs to fire!
01 Jul: US Gulf States Steel files Chapter 11.

13 Jul: US restrics Russias steel imports
Mittal acquires Frances Unimetal
06 Oct: British Steel and Koninklijke
Hoogovens merge as Corus Steel
17 Nov: Oil prices at nine-year high
30 Aug: East Timor cedes from Indonesia
07 Nov: NSC ceases operations.
Nov: China joins WTO.

Dec: Protesters disrupt WTO talks in Seattle
04 Jan: Dow Jones Ind average drops 3.17%
INI Steel takes over Kang Won Ind.
01 May: Europe and USA protests global capitalism
16 Jun: Corus cuts 1,430 jobs
22 Jun: Europes steelmakers set B2B.
06 Nov: Chinas Baosteel offers IPO.
16 Nov: Wheeling-Pittsburgh files Chapter 11
29 Dec: LTV Steel files Chapter 11
INI Steel takes over Sammi Steel
NSC asks DTI for one-year moratorium on Russian steel imports

JP Enrile files Senate resolution for NSC inquiry
Philippines invites Spanish group to invest in NSC
SEC appoints Monico V. Jacob as NSC lead-receiver
Creditors opposes 30-day extension on NSC rehab.
26 May: NSC Liquidator agrees with Allengoal lease proposal.
03 Jun: North and South Korea sign peace accord.
S. Koreas POSCO privatized
Glencore offers $150M proposal for NSC
NSC wins CRC-dumping case vs. Taiwan
06 Dec: Koreas Sammi Steel bankrupt
202
203
Figure 38: Economic and Steel Industry Time Line

(Sources: as cited above)
204
APPENDIX E
TRANSANCTIONS FOR NSCS STAKE (1995-1998)
Figure 39: Transactions for NSCs Stake (1995-1998)

(Sources: as cited above)
205
APPENDIX F
ANDERSON-DARLINGTON NORMALITY TESTS
Using Minitab 14, the Anderson-Darlington Test for NSC flat carbon steel
production, particularly cold-rolled coils, does not follow normal distribution.
Statistical Summary for NSC CRC Production, 1995-1999
A nderson-D arling N ormality Test
12000
24000
36000
48000
60000
A -S quared
P -V alue
0.87
0.024
M ean
S tDev
V ariance
S kew ness
Kurtosis
N
29805
14976
224295032
-0.309852
-0.930624
60
M inimum
1st Q uartile
M edian
3rd Q uartile
M aximum
0
16690
33241
42040
57922
95% C onfidence Interv al for M ean

25936
33673
95% C onfidence Interv al for M edian

26203
36281
95% C onfidence Interv al for S tDev
9 5 % C onfidence Inter vals
12695
18266
Mean
Median
25000
27500
30000
32500
35000
37500
Figure 40: Statistical Summary for NSC CRC Production, 1995-1999

(Data: NSC; Source: Minitab 14)
The Minitab-computed p-value is 0.024 is less than the predetermined
significance level of 0.05. The kurtosis statistic implies that the distribution is
flatter than normal. The box-plot indicates that the data is skewed. There are no
indications of outliers.
206
ANDERSON-DARLINGTON NORMALITY TESTS, continued
Using Minitab 14, the Anderson-Darlington Test for NSC flat carbon steel
production, particularly hot-rolled coils, also does not follow normal distribution.
Statistical Summary for NSC HRC Production, 1995-1999
A nderson-Darling N ormality Test
16000
32000
48000
64000
A -S quared
P -V alue
0.98
0.013
M ean
S tDev
V ariance
S kew ness
Kurtosis
N
32662
17069
291349412
-0.357095
-0.928944
60
M inimum
1st Q uartile
M edian
3rd Q uartile
M aximum
0
17399
37018
46333
63853
95% C onfidence Interv al for M ean

28253
37071
95% C onfidence Interv al for M edian

29567
39699
95% C onfidence Interv al for S tD ev

9 5 % C onfidence Inter vals
14468
20818
Mean
Median
30000
32500
35000
37500
40000
Figure 41: Statistical Summary for NSC HRC Production, 1995-1999

(Data: NSC; Source: Minitab 14)
The Minitab-computed p-value is 0.013 is less than the predetermined
significance level of 0.05. The kurtosis statistic implies that the distribution is
flatter than normal. The box-plot indicates that the data is skewed. There are no
indications of outliers.
APPENDIX G
TABLES OF WORLD / ASEAN STEEL DATA, 1991-2004
Table 25: World / ASEAN Total Production of Crude Steel, 1991-2004 (Data: IISI, various years)
207
TABLES OF WORLD / ASEAN STEEL DATA, 1991-2004, continued

Table 26: World / ASEAN Hot-Rolled Flats Production, 1991-2004 (Data: IISI, various years)
208
Table 27: World / ASEAN Tinplates Production, 1991-2004 (Data: IISI, various years)
209

Table 28: World / ASEAN Apparent Consumption of Finished Steel, 1991-2004 (Data: IISI, various years)
210

Table 29: World / ASEAN Apparent Consumption per Capita, 1991-2004 (Data: IISI, various years)
211

Table 30: World / ASEAN Imports of Semi-Finished and Finished Steel, 1991-2004 (Data: IISI, various years)
212

Table 31: World / ASEAN Exports of Semi-Finished and Finished Steel, 1991-2004 (Data: IISI, various years)
213
214
APPENDIX H
PHILIPPINES STEEL INTENSITY DATA, 1984-2004
Steel intensity (SI) is the ratio of steel consumption (i.e., steel demand) to Gross
National Product (GNP), the monetary value of the total production of final goods
and services (Laplace Conseil, 2007). GNP here is represented by PCI.
Table 32: Philippine Steel Intensity Data, 1984-2004
215
APPENDIX I
MULTIPLE REGRESSION ANALYSIS: EXTERNAL FACTORS
The following tests and criteria are applied for each respective External Factor,
denoted by [X] or particularly World, ASEAN and the Philippines. Using Minitab
14, the relationship between NSC Production versus the four external factors [X]
was tested, for the model (eq. 3), page 40:
Thus, for example the [X] could mean [World], [ASEAN], or [Philippine]. For the
Index Prices [IP], the Flats IP was used for the World; while for ASEAN and the
Philippines, the Asia IP was used.
Test for Ho: None of the predictors explicitly stated in the model can significantly
explain the variation in NSC Production. 0 = XCrude = XACC = XSF&F = IP = 0.
Test for Ha: At least one predictor explicitly stated in the model can significantly
explain the variation in NSC Production.
Decision Rule: Reject Ho is p-value corresponding to F-stat is less than or equal
to = 0.5
Criteria for Best Subset:
R2 describes the proportion of variation in the response data explained by
the predictors in the model.
R2 (Adj) is a modified version of R that has been adjusted for the number
of predictors in the model.
Mallows Cp is another statistic for assessing how well the model fits the
data.
s is the error standard deviation.
A good model should have high R2 and adjusted R2, small s, and C-p close to
the number of predictors contained in the model. Using these criteria, the
highlighted model appears to be the best among all the candidates.
216
MULTIPLE REGRESSION ANALYSIS: WORLD FACTORS, continued
Using Minitab 14, the relationship between NSC Production versus the four
external factors (World) was tested, for the model (eq. 3), page 40:
Table 33: Best Subsets Regression for NSC Production and World Factors
highlighted model (Model M) appears to be the best among all the candidates.
217
MULTIPLE REGRESSION ANALYSIS: WORLD FACTORS, continued
Table 34: Analysis of Variance: External Factors: World
Analysis:
The p-value (regression) of F-Stat is 0.152, which is greater than a pre-selected
a-level of 0.05, thus: Ho is NOT REJECTED. The F-value, 23.79%, is less than
the confidence level of 95%, thus the current model fits the data well. The
variation in NSC Production is decomposed into 1.31E+11 explained sources
and 1.38E+10 unexplained sources. The Regression Sum of Squares is bigger
than the Residual Error Sum of Squares, thus the linear regression is good.
The estimated equation is
NSC Production = 186914 + 7.33 World Crude - 27443 World ACC
- 11.3 World SF&F Imports + 8232 Flats IP
S = 37140.7
R-Sq = 99.0%
R-Sq (adj) = 94.8%
Table 35: Multiple Regression Analysis: External Factors (World)
Analysis:
The T-value for World Crude and Flats Index Prices are greater than =0.05,
thus with 95% confidence, the prediction is significant for these factors.
Comparing the coefficient p-values to =0.05, all predictors are statistically
insignificant. Thus, there is no sufficient statistical evidence that at least one of
the predictors explicitly stated in the model can significantly explain the variation
in NSC Production.
218
APPENDIX J
MULTIPLE REGRESSION ANALYSIS: EXTERNAL FACTORS (ASEAN)
external factors (ASEAN) was tested, for the model (eq. 3), page 40:
Table 36: Best Subsets Regression for NSC Production and ASEAN Factors
The Model I was not selected because of the five (5) criteria only three (3) were
satisfied. The second best (Model I) was also run in MINITAB's regular
regression command and model assumptions were then checked. Comparing the
results for both Models, Model M proved sufficient for this study.
219
MULTIPLE REGRESSION ANALYSIS: ASEAN FACTORS, continued
Table 37: Analysis of Variance: External Factors (ASEAN)
Analysis:
The p-value (regression) of 0.316 is greater than a pre-selected a-level of 0.05,
thus: Ho is NOT REJECTED. Moreover, the F-value, 5.22%, is less than the
confidence level of 95%, thus the current model fits the data well. The variation in
NSC Production is decomposed into 1.27E+11 explained sources and 6.06E+09
unexplained sources. The Regression Sum of Squares is bigger than the
Residual Error Sum of Squares, thus the linear regression is good.
The estimated equation, using Model M, is
NSC Production = - 844172 + 71.8 ASEAN Crude - 585 ASEAN ACC
- 18.8 ASEAN SF&F Imports + 11740 Asia IP
S = 79019.6
R-Sq = 95.3%
R-Sq (adj) = 76.5%
Table 38: Multiple Regression Analysis: External Factors (ASEAN)
Analysis:
The T-value for ASEAN Crude and Asia Index Prices are greater than =0.05,
insignificant. There is no sufficient statistical evidence that at least one of the
predictors explicitly stated in the model can significantly explain the variation in
NSC Production.
220
APPENDIX K
MULTIPLE REGRESSION ANALYSIS: EXTERNAL FACTORS (PHILIPPINES)
external factors (Philippines) was tested, for the model (eq. 3), page 40:
Table 39: Best Subsets Regression for NSC Production and Philippine Factors
The Model E was not selected because of the five (5) criteria only three (3) were
satisfied. The second best (Model E) was also run in MINITAB's regular
regression command and model assumptions were then checked. Comparing the
results for both Models, Model M proved sufficient for this study.
221
MULTIPLE REGRESSION ANALYSIS: PHILIPPINE FACTORS, continued
Table 40: Analysis of Variance: External Factors (Philippines)
Analysis:
The p-value (regression) of 0.32 is greater than a pre-selected a-level of 0.05,
thus at least one coefficient is zero. Furthermore, Ho is NOT REJECTED. The Fvalue is less than the confidence level of 95%, thus the current model fits the
data well. The variation in NSC Production is decomposed into 1.26E+11
explained sources and 6.24E+09 unexplained sources. The Regression Sum of
Squares is bigger than the Residual Error Sum of Squares, thus the linear
regression is good.
The estimated equation is
NSC Production = - 622253 + 154 Phil Crude - 25.4 Phil SF&F Import
+ 2071 Phil ACC + 8996 Asia IP
S = 77843.6
R-Sq = 95.4%
R-Sq (adj) = 77.2%
Table 41: Multiple Regression Analysis: External Factors (Philippines)
Analysis:
The T-values for Philippine Crude and Asia Index Prices are greater than =0.05,
insignificant. Thus, there is no sufficient statistical evidence that at least one of
the predictors explicitly stated in the model can significantly explain the variation
in NSC Production.
222
APPENDIX L
MULTIPLE REGRESSION ANALYSIS: INTERNAL FACTORS
internal factors was tested, for the model (eq. 6), page 40:
Test for Ho: None of the predictors explicitly stated in the model can significantly
explain the variation in NSC Production. 0 = PR = PY = MY = %CAR = 0.
Test for Ha: At least one predictor explicitly stated in the model can significantly
explain the variation in NSC Production.
Decision Rule: Reject Ho is p-value corresponding to F-stat is less than or equal
to = 0.5
Table 42: Best Subsets Regression for NSC Production and Internal Factors
highlighted model appears to be the best among all the candidates. However, to
make the final selection, the second best (Model E) were also run in MINITAB's
regular regression command and model assumptions were checked.
223
MULTIPLE REGRESSION ANALYSIS: INTERNAL FACTOR, continued
Criteria for Best Subset:
R2 describes the proportion of variation in the response data explained by
the predictors in the model.
R2 (Adj) is a modified version of R that has been adjusted for the number
of predictors in the model.
Mallows Cp is another statistic for assessing how well the model fits the
data.
s is the error standard deviation.
Table 43: Analysis of Variance (Internal Factors)
Analysis:
Only the first p-value (Regression) is shown. The p-value (regression) is smaller
than a pre-selected -level of 0.05, thus at least one coefficient is not zero. The
F-value is less than the confidence level of 95%, thus the current model fits the
data well. The variation in NSC Production is decomposed into 5.585E+09
explained sources and 5.609E+09 unexplained sources. The Regression Sum of
Squares is almost the same the Residual Error Sum of Squares, thus Mean
Squares is used statistically for comparison. The Regression Mean Squares of
1.396E+11 is bigger than the Residual Error Mean Squares of 1.079E+08, thus
the linear regression is good.
Conclusion:
Since p-value of F-Stat is zero (0) which is less than or equal to =0.5, REJECT
Ho. There is sufficient statistical evidence that at least one of the predictors
explicitly stated in the model can significantly explain the variation in NSC
Production. In fact, the test is highly significant.
224
MULTIPLE REGRESSION ANALYSIS: INTERNAL FACTOR, continued
The estimated model is
NSC Production = - 53813 + 865 PR - 196 PY - 1044 MY + 1263 %CAR
S = 10385.8
R-Sq = 49.9%
R-Sq (adj) = 46.0%
Table 44: Multiple Regression Analysis: Internal Factors
Analysis:
The T-values of both Production Rate and % Customer Acceptance Rates are
greater than =0.05, thus with 95% confidence, the prediction is significant for
these factors. Comparing the coefficient p-values to =0.05, only Production
Rate (PR) is statistically significant.
For Production Rate: Ho vs. Ha
Since the p-value of the predictor Production Rate [PR] is equal to 0, the test is
significant, In fact, highly significant (using =0.01). Also, 49.9% of the variation
in NSC Production is explained by Production Rate [PR].
Interpretation:
z There is an average expected increase of 864.6 metric tons (MT) in NSC
Production per unit increase in Production Rate, holding Prime Yield,
Material Yield and %CAR constant.
z There is an average expected decrease of 196.1 metric tons in NSC
Production per unit increase in Prime Yield, holding Production Rate,
Material Yield and %CAR constant.
z There is an average expected decrease of 1043.6 metric tons in NSC
Production per unit increase in Material Yield, holding Production Rate,
Prime Yield, and %CAR constant.
z There is an average expected increase of 1263 metric tons in NSC
Production per unit increase in % CAR, holding Production Rate, Prime
Yield, and Material Yield constant
225
APPENDIX M
TABLES OF CORRELATION
Table 45: Correlations of External Factors to NSC Production
225
226
TABLES OF CORRELATION, continued
Interpretation of Correlation coefficient:
-1 means a strong NEGATIVE correlation. As one variable increases, there is
a tendency for the other to decrease and vice versa.
1 means a strong POSITIVE correlation. As one variable increases, there is a
tendency for the other to increase as well and vice versa.
0 means a WEAK or NO correlation.
Analyses of Table 45: Correlations of External Factors to NSC Production
True Correlation for all Pairs are not zero, thus Correlation is significant,
respectively.
The following pairs are highly significant:
NSC Production and ASEAN ACFS at p=0.05= (0.05)
NSC Production and ASEAN ACC at p=0.002 < (0.05)
NSC Production and Global Index Prices at p=0.008 < , also < 0.01
NSC Production and Flats Index Prices at p=0.017 < (0.05)
NSC Production and Asia Index Prices at p=0.006 < , also < 0.01
NSC Production and N. American Index Prices at p=0.022< , also < 0.01
World Crude and ASEAN Crude at p=0.00 < (0.05), also < 0.01
World Crude and ASEAN SF&F Imports at p=0.007 < , also < 0.01
World Crude and World SF&F Imports at p=0.000 < , also < 0.01
World Crude and ASEAN ACFS at p=0.005 < , also < 0.01
World Crude and World ACFS at p=0.000 < , also < 0.01
ASEAN Crude and Philippine SF&F Imports at p=0.016 < (0.05)
ASEAN Crude and ASEAN SF&F Imports at p=0.00 < , also < 0.01
ASEAN Crude and World SF&F Imports at p=0.00 < , also < 0.01
ASEAN Crude and Philippine ACFS at p=0.021 < (0.05)
ASEAN Crude and ASEAN ACFS at p=0.000 < (0.05), also < 0.01
ASEAN Crude and World ACFS at p=0.000 < (0.05), also < 0.01
Philippine Crude and Philippine ACC at p=0.006 < , also < 0.01
Philippine Crude and ASEAN ACC at p=0.002 < , also < 0.01
Philippine Imports and ASEAN SF&F Imports at p=0.001 < , also < 0.01
Philippine Imports and Philippine ACFS at p=0.000 < , also < 0.01
Philippine Imports and ASEAN ACFS at p=0.002 < , also < 0.01
Philippine Imports and Philippine ACC at p=0.001 < , also < 0.01
227
Table 46: Correlation of Internal Factors to NSC Production
Analyses of Table 46: Correlation of Internal Factors to NSC Production

True Correlation for all Pairs are not zero, thus Correlation is significant,
respectively.
The following pairs are highly significant:
NSC Production and Material Yield at p=0.001 < (0.05), also < 0.01
NSC Production and Quality (%CAR) at p=0.013 < (0.05)
NSC Production and Production Rate at p=0.000 < (0.05), also < 0.01
Quality (%CAR) and Prime Yield at p=0.024 < (0.05)
Quality (%CAR) and Material Yield at p=0.000 < (0.05), also < 0.01
Production Rate and Material Yield at p=0.004 < (0.05), also < 0.01
Production Rate and Quality (%CAR) at p=0.05=
228
Table 47: Correlation of NSC Flats Production versus World, ASEAN and
Philippines Steel Production, in Metric Tons
Analysis: The data shows a significant correlation between NSC crude (HRC
and CRC) production and the Philippine crude production, World crude
production, World Hot-Rolled (HR) production.
229
Table 48: Correlation of NSC Flats Production versus World and ASEAN Steel
DemandApparent Consumption of Finished Steel, in Metric Tons,
and Apparent Consumption per Capita, kg
Analysis: NSC Crude (CRC) production is significantly correlated to the ASEAN

Apparent Consumption per capita (ACC) and World Apparent Consumption of
Finished Steel (ACFS).
230
Table 49: Correlation of NSC Flats Production versus World, ASEAN &
Philippines Steel Trade, in Metric Tons
Analysis: NSC flat carbon steel crude production is significantly correlated

Philippine Hot-Rolled Plates (HRP), Tinplates (TP) Imports and is significantly
correlated to the World Semi-Finished and Finished (SF&F) steel imports.
231
Table 50: Correlation of NSC Flat Steel Production versus World & Regional
Yearly Steel Prices, in US$
Analysis: NSC flat carbon steel production is significantly correlated to the

following annual steel prices: Global, Flats, Asia, North American Steel Price
Indices. Similarly, NSC production is not significantly correlated to most of the
Average Import annual prices for both HRC and CRC.
232
Table 51: Correlation of NSC Flat Steel Production versus Monthly World &
Regional Steel Prices, in US$
233
Table 51: Correlation of NSC Flat Steel Production versus Monthly World &
Regional Steel Prices, in US$, continued
Analysis: NSC flat carbon steel production is highly, significantly correlated to

the following monthly steel prices: Global, Flats, Asia, North American Steel Price
Indices.
234
Table 52: Correlation of NSC Monthly Production Tonnage vs. Prime Yield and
Material Yield, in percent
Table continued next page.
235
Table 52: Correlation of NSC Monthly Production Tonnage vs. Prime Yield and
Material Yield, in percent, continued
Analysis: NSC (HRC and CRC) production is not significantly correlated to

Actual % Prime Yield, while it is highly, significantly correlated to Actual %
Material Yield.
236
Table 53: Correlation of NSC Monthly Production Tonnages and Production
Parameters
Analysis: Monthly NSC production is significantly correlated to monthly

Production Rate and Quality Acceptance Rate; is not significantly correlated to
Mill Utilization.
237
Table 54: Correlation of NSC Quarterly Production Parameters
(Data: NSC)
Analysis: Quarterly NSC production is significantly correlated to Material Yield,

(MY) and PKL2 Production Rate (PR), while shows no significant correlation to
actual Prime Yield (PY), and Capacity Utilization.
238
Table 55: Correlation of NSC Production vs. Quarterly World Steel Index Prices
(Source: NSC, CRUspi)
Analysis: Quarterly NSC (CRC) production is positively correlated to all Steel

Price Indices, but show higher correlation to Asia Flats and Global Steel price
indices.
239
APPENDIX N
NSC STEEL IMPORTS (1994 1999)
Table 56: NSC Steel Imports (1994 1999)
239
Source: NSC; Note: No published data available for 1994Q3 to 1996Q4; No raw steel imports planned for 1999Q4.
240
APPENDIX O
PHILIPPINE STEEL SCENARIO
Figure 42: Philippine Steel Scenario in 1995

(Source: NSC, 1998q)
241
PHILIPPINE STEEL SCENARIO, continued
Figure 43: Philippine Steel Scenario in 2000

(Authors analyses)
242
APPENDIX P
FLAT STEEL MERGERS & ACQUISITIONS, 2000
Table 57: Flat Steel Mergers & Acquisitions, 2000
Target / Acquisition
LTV asset
Birmingham Steel Corp.
National Steel Corp., U.S.A.
LTV Copperweld Corp.
Atlas Steels (Australia) Pty Ltd
Uzbekmetzavod
Belle Steel
Irish Ispat Limited
Heartland Steel
Great Lakes Metals
Usinor, Arbed and Aceralia
CSC Ltd.
Caemi Mineracao e Metalurgia S.A.
Nova Hut AS
Antara Steel Mills Sdn Bhd
Kawasaki Steel Corp.
Isdemir
VSZ Ocel Ltd
Fuchs Systemtechnik
Grupo Simec, S.A. de C.V.
Chicago Cold Rolled
Metal Services Int'l-Louisville, Ky.
Acquirer
W. L. Ross
Nucor Corp.
United States Steel Corp.
Edgcomb Metals Company

Cia Siderurgica Nacional
Arcelor
BHP - Broken Hill Pty Co Ltd.
Amsteel Mills Sdn Bhd
NKK Corp.
Erdemir - Eregli Demir
US Steel Group, USX Corp.
Voest-Alpine Ind.
Industrias CH SA
Mill Steel Co.
Note: Highlighted M&As are completed deals on date stated.

Source: Steel Profiles, http:www.steelprofiles.com
Start Date
27.02.2002
14.02.2002
01.01.2002
01.12.2001
01.12.2001
01.10.2001
21.08.2001
01.07.2001
21.06.2001
30.04.2001
16.02.2001
12.02.2001
12.02.2001
01.02.2001
01.02.2001
04.01.2001
01.12.2000
24.11.2000
15.11.2000
01.11.2000
01.11.2000
08.10.2000
243
FLAT STEEL MERGERS AND ACQUISITION, 2000, continued
Table 57: Flat Steel Mergers & Acquisitions, 2000, continued
Huntco-Arkansas cold mill
LTV Tin Plates Operation
AG der Dillinger Huttenwerke
American Steel & Wire Co.
Outokumpu
Ste des Aciers d'Armature
Siderurgica SA Hunedoara
MSC Pinole Point Steel Inc.
Acos Villares SA
IFC Kaiser, Inc.
Vitkovice a.s.
Raymond steel plant
Metaltech, NexTech, Galvtech
Rohrwerk Neue Maxhutte
Neue Maxhuette-NMH Stahlwerke
North Ltd
Acme Steel
CSR SA Resita
United Steel Mills Ltd (USM)
Salem Plant
Poldi Steel
WorldClass Processing Inc.
Ornasteel Corp (M) Sdn Bhd
Group Steel Corp. (Malaysia)
Amorim SA Aos Inoxidveis
BHP Coated Steel Corp.
Mannesmann-Rohrenwerke AG
Acquirer
US Steel Group, USX Corp.
Charter Steel
Avesta Sheffield AB
Riva Group
Sidenor SA
The Hatch Group of Canada
EBG Gesellschaft
Worthington Industries Inc.
Rio Tinto Limited

WCI Steel Inc
Noble Ventures
Trinecke Zelezarny AS
Samuel Manu-Tech Inc.
Acesita SA
Grupo Imsa, S.A. de C.V.
Salzgitter AG
Start Date
01.10.2000
01.10.2000
28.09.2000
28.09.2000
26.09.2000
04.09.2000
01.09.2000
01.09.2000
27.08.2000
25.08.2000
23.08.2000
21.08.2000
16.08.2000
15.08.2000
15.08.2000
03.08.2000
01.08.2000
01.08.2000
06.07.2000
05.07.2000
01.07.2000
26.06.2000
23.06.2000
23.06.2000
16.06.2000
14.06.2000
13.06.2000
Note: Highlighted Mergers & Acquisitions are completed on date stated.

244
FLAT STEEL MERGERS AND ACQUISITIONS (2000), continued
Table 57: Flat Steel Mergers & Acquisitions, 2000, continued
Toma Metals, Inc.
Samitri
Sammi Steel Co Ltd
Izhorskie Steelworks
Email Limited
Alkar Steel, Inc.
Ryerson Tull's subsidiary (Mexico )
Gibraltar's Chattanooga
Hagerty Steel division
Auburn Steel Co Inc (Austeel)
First Miss Steel, Inc.
Rollforming Corp. (RFC)
Sammi Steel Co Ltd
Indian Iron & Steel Co Ltd (IISCO)
Perwaja Steel Sdn Bhd (Malaysia)
Sydney Steel Corp. (Sysco)
Sendzimir Iron & Steel Works)
Huta Cedler
Huta Florian
Hanbo Steel Co., Ltd.
Huta Katowice
Acquirer
Reliance Steel & Aluminum
Cia Vale do Rio Doce
Inchon Iron & Steel Co., Ltd.
Severstal JSC
Smorgon Steel Group Ltd.
Cold Metal Products, Inc.
Grupo Collado
Metals USA, Inc.
Reliance Steel & Aluminum
Nucor Corp.
Hoganas AB
Voest-Alpine Stahl AG
Inchon Iron & Steel Co., Ltd.
Duferco Group, Duferco SA
Note: Highlighted M&As are completed deals on date stated.

Start Date
06.06.2000
31.05.2000
02.05.2000
26.04.2000
19.04.2000
02.04.2000
22.03.2000
21.03.2000
11.02.2000
01.02.2000
20.01.2000
07.01.2000
01.01.2000
01.10.1999
06.09.1999
01.08.1999
01.01.1999
01.01.1999
01.01.1999
01.01.1999
01.01.1999
245
APPENDIX Q
GEOGRAPHICAL LOCATIONS OF STEEL-PRODUCING COUNTRIES
Table 58: Geographical Locations of Steel-Producing Countries

(Sources: IISI, 2007; CRU, 2004)
246
APPENDIX R
LIST OF ASIAN STEEL COMPANIES
Table 59: List of Asian Steel Companies

Company Location
Country/Company
Association of Southeast Asian Nations
Indonesia
Amien Steel Works
Surabaya
BHP & Krakatau Steel
Cilegon
Bisma Narendra
CRMI
Cilegon
CV Wira Mustika Indah
Medan
Dhama Niaga
Palembang
Essar Dhananjaya
Bekasi
Fumira
Semarang
Fumira
Jakarta
Industri Baja Garuda
Medan
Kalimantan Steel
Surabaya
Krakatau Steel
Cilegon
Polyguna Nusantra
Padang
PT Industri Galvanneal Mas
Medan
PT Industri Baja Berlian
Medan
PT Kerismas Witikco Makmur
Jakarta
PT Tumbakmas Inti Mulia
Bekasi
PT Witikco
Bitung
PT Baja Inti Manunggak
Surabaya
Semarang Makmur
Semarang
Sermani Steel
Ujungpadang
Tumbakmas Djaja
Surabaya
Total Indonesia
Malaysia
BlueScope Steel Malaysia
Klang
Cold Rolling Industry
Klang
HR
CR
GAL
0.04
0.10
0.10
0.85
0.02
0.02
0.20
0.06
0.15
0.04
0.03
2.70
0.95
0.22
2.70
1.37
0.02
0.05
0.10
0.05
0.06
0.02
0.06
0.05
0.03
0.02
0.74
0.15
0.20
247
LIST OF ASIAN STEEL COMPANIES, Table 59 continued
Country/Company
Malaysia, continued
Federal Iron Works
Group Steel
Megasteel
Ornasteel
Yung Kong Galvanizing
Other galvanizers
Philippines
Bacnotan
Bacnotan
Bacnotan
Chuyayaco
Group Steel
Jacinto Iron & Steel
Luzvizain Industrial
Mindanao Steel
NSC
Philippine Steel Coating
Philippine Steel Coating
Puyat Steel
Puyat Steel
Rizal Integrated Steel
Sonic Steel Industries
Southern Industrial Pro
Sugar Steel Industries
Tower Steel
Thailand
Bangkok Steel Industry
BlueScope Thailand
Far East Iron Works
Company Location
Selangor
Ayer Keroh
Selangor
Ayer Keroh
Kuching
Various
Total Malaysia
Calamba
Davao
Poro
Carmona,Cavite
Valenzuela
Novaliches
Cebu
Mindanao
Iligan
Laguna
Balayan
Mandaluyong
Rosario
Cainte
Cavite
Bohol
Cebu
Marikina
Total Philippines
Samuthprakarn
Mapta Phut, Rayong
Bangkok
HR
CR
GAL
0.20
0.20
2.20
2.20
1.70
0.40
0.56
1.16
0.10
0.50
0.30
1.70
0.90
0.02
0.30
0.10
0.09
0.74
0.03
0.02
0.02
0.06
0.04
0.03
0.04
0.34
0.12
0.24
0.04
0.15
0.05
0.03
0.03
0.03
0.06
1.33
0.12
0.15
0.07
248
Country/Company
Thailand, continued
Nakornthai Strip Mill
Sahaviriya Steel
Sangkasi Thai
Siam United Steel
Thai Coated Sheet
Thai Cold Rolled Steel
Thailand Iron Works
Siam Strip
Siam Integrated CR
Other galvanizers
Company Location
Chonburi
Bangsaphan
Bangkok
Rayong
Bangkok
Bangsaphan
Bangkok
Rayong
Rayong
Total Thailand
HR
CR
1.50
2.60
0.10
1.00
0.14
1.00
0.09
1.80
3.14
0.50
0.05
1.22
6.566
0.03
0.04
0.07
4.100
3.00
0.29
0.50
4.20
1.71
1.50
0.35
0.55
0.30
0.82
5.90
Vietnam
Posvina
Southern Steel Corp.
Ho Chi Minh City

Ho Chi Minh City
Total Vietnam
East Asia
China
Angang New Steel
Anshan Iron & Steel Co.
Anyang Iron & Steel
Baoshan Iron & Steel Co.
Baosteel
Baotou Iron & Steel Co.
Benxi Iron & Steel Co.
Chengde Iron & Steel
Chongqing Iron & Steel Co.
Chunawei Iron & Steel
Echeng Iron & Steel
Fujian Kaikan Steel Co.
Anshan City, Liaoning

Anyang, Henan
Baosteel, Shanghai
Shanghai
Baotou City, Neimongol
Benxi City, Liaoning
Hebei
Chongqing City, Sichuan
Lianje, Sichuan
Ezhou, Hubei
Sanming, Fujian
GAL
12.500
6.50
0.70
9.40
3.03
2.10
4.00
0.50
0.80
0.40
0.30
0.40
249
Country / Company
China, continued
Guangzhou Iron & Steel
Handan Iron & Steel Co.
Huangzhou Iron & Steel
Hongde
Hualing Iron & Steel Group
Hunan Valin Iron & Steel
Jieyang Daxing
Jinxi Iron & Steel
Jiuquan Iron & Steel
Kunming Iron & Steel Co.
Laiwu Iron & Steel
Lingyuan Iron & Steel Co.
Liuzhou Iron & Steel
Maanshan Iron & Steel Co.
Meishan Group
Nanfang Iron & Steel Co.
Nanjing Iron & Steel
Panzhihua Iron & Steel Co.
Posco Galvanised Sheet Co.
Pujing Steel Sheet Co.
Shenzhen Pohang Coated
Sheet
Shunde Pohang Coated Sheet
Taiyuan Iron & Steel Co.
Tangshan Iron & Steel
Tangshan Jianlong Iron &
Steel
Wuhan Iron & Steel Co.
Wuxi Yangtze Sheet.Co.
Yieh Phui Enterprise Co
Zhongshan Baohua
Zhongshan Jiemin
Company Location
Zhujiang Steel, Guangzhou
Handan City, Hebei
Huangzhou
Shaoguan, Guanzhou
Lianyuan Iron & Steel
Jieyang
Tangshan City, Hebei
Jiuquan
Laiwu
Liaoning
Liuzhou City, Guangxi
Maanshan, Anhui
Baosteel, Nanjing, Jiangsu
Sanshui, Guangdong
Nanjing, Jiangsu
Panzhihua, Sichuan
Zhangjiagang, Jiangsu
Dalian, Liaoning
HR
1.10
1.50
0.40
0.40
0.50
0.90
0.20
0.50
0.80
0.60
0.60
2.20
2.00
1.60
2.10
CR
GAL
1.30
0.49
1.10
0.11
0.35
0.50
0.20
0.10
0.50
2.50
0.70
Shenzhen, Guangdong
0.15
0.10
0.10
0.10
0.15
Taiyuan, Shanxi
2.00
1.80
0.20

Wuhan, Hubei
Wuxi, Jiangsu
1.20
4.50
0.20
4.20
0.13
0.15
Zhongshan
Zhongshan
0.20
0.10
0.20
0.20
250
Country / Company
China, continued
Zhujiang Steel
Japan
Daido Steel Sheet
Igeta Steel Sheet
JFE Holdings
JFE Holdings
JFE Holdings
JFE Holdings
JFE Holdings
Kawatetsu Galvanising
Kobe Steel
Kokkai Koki
Maruichi Steel Tube Ltd
Nakayama Steel Works
Nippon Steel
Nippon Steel
Nippon Steel
Nippon Steel
Nippon Steel
Nippon Steel
Nisshin Steel
Nisshin Steel
Nisshin Steel
Nisshin Steel
Sumitomo Metal Industries
Sumitomo Metal Industries
Taiyo Steel
Toho Sheet & Frame
Company Location
Guangzhou, Guangdong
Total China
Amagasaki
Osaka
Chiba
Fukuyama
Keihin
Mizushima
Okayama
Chiba
Matsudo
Tamashima
Kakogawa
Ebetsu
Takuma Plant
Osaka
Hirohata
Kimitsu
Muroran
Nagoya
Oita
Yawata
Ichikawa
Kure
Osaka
Sakai
Kashima
Wakayama
Funabashi
Yachiyo
HR
CR
55.93
0.80
18.93
5.40
8.20
3.60
5.00
3.60
2.90
5.70
4.90
5.70
4.70
0.48
0.10
3.05
4.65
1.08
2.77
0.36
1.70
4.32
0.16
3.67
4.91
GAL
5.11
0.36
0.12
0.66
1.92
0.78
1.08
0.30
0.24
0.07
0.24
1.18
0.14
0.36
0.18
0.20
1.91
1.69
0.92
0.76
4.00
5.00
0.38
2.39
3.40
1.32
0.04
0.74
1.38
0.70
0.40
0.10
251
Country / Company
Japan, continued
Tokushu Kinzoku
Tokyo Steel
Toyo Steel Sheet
Yodogawa Steel Works
South Korea
Dongbu Steel
Dongbu Steel
Dongbu Steel
Hanbo Steel
Hyundai Pipe
Jinbang Steel
Pocos
Pohang Coated Sheet
Posco
Posco
Union Steel
Others
Taiwan
An Feng
China Steel Corp.
Hong Yun
Jenn An
Kao Hsing Chang
Kao Hsing Chang
Li San
Mayer Steel Pipe Corp.
Company Location
Saitama
Okayama
Kudamatsu
Ichikawa
Kure
Osaka
Total Japan
Inchon
Seoul
Asan Bay
Asan Bay
Sunchon
Pohang
Kwangyang
Pohang
Pusan
Various
Total South Korea
Kaohsiung
Kaohsiung
Tainan County
Kaohsiung
Kaohsiung
Yung An
Nr. Taipei
HR
1.20
59.90
CR
0.01
0.25
0.25
0.26
0.48
36.03
0.48
0.68
0.65
GAL
0.24
0.15
0.33
0.38
0.09
17.62
0.55
0.35
2.00
15.20
6.70
23.90
8.06
1.81
1.15
0.20
13.03
2.00
7.55
2.20
1.00
0.25
0.12
1.80
0.20
0.28
0.25
1.80
0.30
0.85
6.38
0.50
0.06
0.30
0.10
0.02
252
Country / Company
Taiwan, continued
Ornatube
President Corp.
Shang Shing
Sheng Yu Steel Co.
Ta Fu
Yieh Loong
Yi Sen
Yieh Phui
Company Location
Kaohsiung
Kaohsiung
Kaohsiung
Nr. Taipei
Kaohsiung
Kaohsiung
Kaohsiung
Total Taiwan
East Asia
South Asia
Bangladesh
Abul Khair Steel Products
PHP Cold Rolling Mills
India
Bhushan Ltd.
Bhushan Steel & Strips
Bhushan Steel & Strips
Corp of Gujarat
Essar Steel
EBG India
Ispat Industries
Ispat Industries
JAI Corp
JVSL - Jindal Iron & Steel
JVSL - Jindal Iron & Steel
Jindal Vijayanagar
KR Steelunion
HR
Dhakar
Dhakar
Total Bangladesh
0.64
0.60
0.45
GAL
0.20
0.04
0.70
0.15
2.40
0.12
0.75
2.94
32.050
GAL
11.95
151.680
HR
1.20
6.46
74.446
CR
0.02
0.00
0.06
0.15
0.21
0.30
0.50
0.10
Bengihatti, West Bengal

Delhi
Khopoli, or Mumbai
Hazira
Nashik
Kalmeshwar
Dolvi
Maharashtra
Tarapur Works,
Maharashtra
Vasind Works,
Maharashtra
Torangallu, Karnataka
Gujarat
CR
0.02
0.25
0.50
0.08
0.20
0.50
0.18
0.18
0.09
0.60
0.45
0.35
0.40
2.40
2.40
2.00
0.10
253
Regional Group
India, continued
Lloyds Steel
Metalman Industries
National Steel
NSL
NSL
Rathi Alloys
Raymond Steel
Rocklane Steels
Ruchi strips & alloys
Sail
Sail
Sail
Surya Roshni
Tinplate Company
Tata Steel
UGS - Uham Galva Steel
Pakistan
Pakistan Steel Mills
HR
Wardha
Pithampur
Indore
Hyderabad
Madhya
Alwar
Bombay
Calcutta
Dhar
Bokaro
Rourkela
Salem
Haryana
Jamshedpur
Jamshedpur
Khalpoli
Total India
Bin Qasim
Total Pakistan
South Asia
East Asia
South Asia
Total Asia
Sources: CRU,SEAISI
CR
GAL
0.35
0.10
0.15
0.07
0.13
0.07
0.15
0.10
15.39
0.10
0.06
1.49
0.67
0.07
0.06
0.12
1.30
0.50
8.02
0.09
0.70
0.35
3.72
0.83
0.83
16.215
0.20
0.20
8.430
0.10
0.10
3.840
0.60
0.17
0.10
0.12
3.36
1.44
2.80
0.17
0.16
12.500
6.566
4.100
151.680
74.446
32.050
16.215
8.430
3.840
180.395
89.442
39.990
254
APPENDIX S
FLAT STEEL CORPORATE BANKRUPTCIES (1998-2002)
Table 60: Flat Steel Corporate Bankruptcies (1998-2002)
Company
National Steel, USA
Sheffield Steel Corp
Bethlehem Steel Corp.
GalvPro
Riverview Steel Corp.
Algoma Steel Inc.
Great Lakes Metals LLC
Republic Technologies Intll
Trico Steel
GS Industries, Inc.
Heartland Steel
CSC Ltd.
LTV - The LTV Corporation
Northwestern Steel & Wire
Wheeling-Pittsburgh Steel
J & L Structural Inc.
National Steel Corp.
Gulf States Steel Inc
Qualitech Steel Corporation
Nakornthai Strip Mill Public
Laclede Steel Co.
Acme Metals Incorporated
Segment
Steel Production
Steel Production
Steel Production
Intermediary Processing
Steel Production
Steel Production
Steel Production
Steel Production
Steel Production
Steel Production
Steel Production
Steel Production
Steel Production
Steel Production
Steel Production
Steel Production
Steel Production
Steel Production
Country
Date Filed
USA
USA
USA
USA
USA
Canada
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
Philippines
USA
USA
Thailand
USA
USA
03-Jun-2002
07-Dec-2001
15-Oct-2001
10-Aug-2001
07-Aug-2001
23-Apr-2001
11-Apr-2001
02-Apr-2001
23-Mar-2001
07-Feb-2001
26-Jan-2001
12-Jan-2001
29-Dec-2000
19-Dec-2000
16-Nov-2000
30-Jun-2000
01-Jun-2000
01-Jul-1999
22-Mar-1999
31-Dec-1998
30-Nov-1998
29-Sep-1998
Country
Date
Ended
Table 61: Companies That Ended in Bankruptcy
Company
Segment
Diosgyori Acelmuvek (DAM) Steel Production

Geneva Steel
Steel Production
Altos Hornos de Mexico
Steel Production
WorldClass Processing
Sammi Steel Co Ltd
Steel Production
AL Tech Specialty Steel Co., Steel Production
Hungary
USA
Mexico
USA
S. Korea
USA
04-Feb-2001
04-Jan-2001
21-Aug-2000
26-Jun-2000
12-Jun-2000
05-Nov-1999
255
APPENDIX T
STEEL INDUSTRY TARIFF SCHEDULE, 1991-2000
Table 62: Steel Industry Tariff Reform Schedule, 1991-2000

(Source: NSC)
256
APPENDIX U
NSCS MILL UTILIZATION, 1995-1999
% Utilization
85
NSC Production vs Mill Utilization, 1995-1999

'000 metric tons
60
Production
%Utilization
75
50
65
40
55
30
45
20
35
10
25
0
1995
1996
1997
1998
1999
Figure 44: NSC Production vs Mill Utilization, 1995-1999

(Data: NSC)
One manager suggested that instead of production rate, the mill utilization
would be a more relevant quantity to correlate with NSC production. Figure 44
shows that NSCs mill utilization, again based on the input millPickling Line No.
2fluctuated between 45% and 80%. During the Asian Financial Crises, NSC
utilization hovered at 65% until NSC closed in 1999.
257
NSCS MILL UTILIZATION, 1995-1999, continued
In contrast to Production Rate, refer to Table 63 below; NSC mill
utilization is negatively correlated to NSC steel production. Data shows that NSC
Production is not significantly correlated to NSC mill utilization. The correlation
coefficient of p-value=0.077 > (=0.05). As mill utilization increases, there is a
tendency for NSC production to decrease, and vice versa.
Table 63: Summary of Correlations: NSC Production, Production Rate and Mill
Utilization
Lamberte, et. al. (1999) examined the impacts of the Asian Financial
Crises 1997-98 on 541 Philippines manufacturing firms and found a clear
indication that their capacity utilization rates started to decline even before the
onset of the crisis in July 1997. Capacity utilization continued to drop possibly
caused by both cyclical and structural factorsas the crisis stretched to 1998
then Lamberte recommended drastic monetary and fiscal policies to kindle
aggregate demand in 1999.
258
APPENDIX V
NSC CORPORATE PHILOSOHY
To our Country
To be a major instrument in the countrys development, primarily in terms
of advancement of steel-making and steel-using technology, utilization of
domestic raw materials, training and employment of local labor, supply of steel
materials to major industrial users and improvement of the overall trade balance.
To our Customers
To become the reliable source for the countrys steel requirements. This
supply relationship with the market shall be guided by the three norms of
sufficient quantities, acceptable quality and competitive prices
To our Investors
To earn for our shareholders sufficient returns on their investment and to
safeguard the interest of creditors in the Company.
Towards Management
To operate with a positive and dynamic philosophy of management. This
will require the continuous and consistent upgrading of the sophistication and
effectiveness of managers under a development program that will assure an
adequate supply of competent executives for the long-range needs of the
Company.
To our Employees
To recognize that the personal interests of employees are not alien to
those of the company. To maintain high standards of performance and realistic
and fair compensation for that competence.
To our Community
To act as a responsible and concerned corporate citizen in the
communities where we have a presence and to encourage our officers,
employees, and representatives to do the same. To create an environment
characterized by high ethical tone, honest and forthright actions, and maintain
external relationships on a long-term and mutually beneficial basis.
Source: NSC
259
APPENDIX W
NSCs CORPORATE QUALITY POLICY (1998)
To become a world-class company in the global steel industry, we are committed

to produce and market products and services that consistently meet our
customers needs and expectations. In support of this commitment, we will
ensure that:
We take the lead in assuring achievement of this commitment by
providing proactive, responsible leadership through processthinking and customer-focused actions and behaviors.
Our customers and other stake holders see our company as a
reliable partner with whom they can plan their future.
We are empowered, committed, recognized and our values and
objectives are in harmony with that of our organization
We measure our overall performance from the customers point
of view and benchmark them against best-in-class, and our
internal and external processes are always anchored on
continuous improvement and customer focus.
At NSC, we will strive for the achievement of our vision, we will work as a team
committed to a common objectiveto be a reliable partner of our customer.
Ibrahim bin Bidin

Chairman, Interim Management Committee
Source: NSC (1998q)
Tom L. Galanis
Chief Executive Officer
260
APPENDIX X
COLD STRIP MILL VISION AND QUALITY POLICY
Cold Strip Mill Vision

A cohesive, people-oriented, professional and efficient organization
dedicated to producing superior quality cold rolled materials for a self-reliant and
world-class NSC contributing to the development of a progressive and
industrialized nation.
Cold Strip Mill Quality Policy

To be a world class Cold Mill in support of National Steel Corporations
role in the country development, we commit to provide quality cold rolled
products and services that consistently meet the needs and expectations of our
customers. We will achieve this through:
Continuous close interactions and mutual understanding with our
customers and suppliers.
Effective, efficient, and productive operations and processes.
Highly reliable and available process equipment and support
facilities.
Highly motivated, well-trained, responsible and value-driven
workforce.
Continuous improvement of operations and processes, and
Safe working conditions and consistent adherence to the
principles of environmental protection and preservation.
In pursuit of the above, we will always bear upon ourselves the responsibility and
commitment to QUALITY in all aspect of our work.
Source: NSC (1998)
261
APPENDIX Y
CUSTOMER COMPLAINTS, 1995-1999
Table 64: Customer Complaints, 1995 - 1999
Source: NSC, CSM QA
262
APPENDIX Z
NSC FUNCTIONAL TABLE OF ORGANIZATION (1993)
Figure 45: NSC Functional Table of Organization (1993)

(Source: NSC)
263
APPENDIX AA
NSC FUNCTIONAL TABLE OF ORGANIZATION (2000)
Figure 46: NSC Functional Table of Organization (2000)

(Source: NSC)
264
APPENDIX BB
NSCS CSM FUNCTIONAL TABLE OF ORGANIZATION (2000)
Figure 47: NSCs CSM Function Table of Organization (2000)

(Source: NSC)
265
APPENDIX CC
NSC LIQUIDATOR FUNCTIONAL TABLE OF ORGANIZATION (2004)
Figure 48: NSC Liquidator Functional Table of Organization (2004)

(Source: NSC)
266
APPENDIX DD
GSPI FUNCTIONAL TABLE OF ORGANIZATION (2007)
Figure 49: GSPI Functional Table of Organization (2007)

Source: Attempts to secure a copy of the above made in November
2006 was indomitably denied citing its confidential nature. Refer to
text for more details, see page 132.
267
APPENDIX EE
NSC: BEFORE, THEN AND NOW
Table 65: A Comparative Table of NSC: Before, Then and Now
267
268
NSC: BEFORE, THEN AND NOW, continued
Table 65: A Comparative Table of NSC: Before, Then and Now, continued
268
269
APPENDIX FF
FREEMIND CONCEPT-MAP FOR THIS RESEARCH
269
Figure 50: FreeMind Concept Map for this Research.

Generated using Joerg Muellers (2004). FreeMind v.0.8.0.
270
APPENDIX GG
SWOT MATRIX
Table 66: SWOT Matrix
Refer to text for discussion.
271
SWOT MATRIX, continued
Table 66: SWOT Matrix, continued
Refer to text for discussion.
272
APPENDIX HH
SPECIAL ACKNOWLEDGMENT FOR FORMER NSC PERSONNEL
* Acknowledgements to the following former and present NSC managerial,

support, operations, quality assurance and maintenance supervisors, staff and
assistant engineers, for their valuable contribution and timely assistance in the
preparation of this thesis, namely:
Engr. Ruben Pinaroc, NSC Iligan Plant Resident Manager (Liquidator):

for giving me advice to purse my MBM again and for one-on-one talks
about NSCs past, present and the future.
Engr. Esteban V. Cabrera, Jr, formerly NSC Executive Vice President

for Manufacturing; for pointing me to a number of right persons regarding
the questions raised in the informants interview.
Engr. Leonardo LAC A. Calderon, formerly NSC Assistant Manager,

Operations, CSM and presently GSPIs Area Manager, Finishing Lines,
CRM: for imparting his theories, anecdotes, observations of NSC and
GSPI, and for his understanding on my spur-of-the moment leaves of
absence in connection with my thesis preparation.
Engr. Nestor Bugoy G. Mirafuentes, formerly NSCs Head of

Industrial Engineering and Head, Nerve Center then Head, Asset
Disposal, NSC-Liquidator, and presently GSPIs Manager, Production
Planning and Control: for providing assistance in finding contact details of
former NSC customers, insights on the companys management
reporting, and industrial engineering.
Ms. Antoinette Bong G. Manzo, Financial Analyst, Finance and

Accounting, for both NSC and GSPI: for providing me historical yearly
NSC manufacturing database and insights on raw material importations.
Engr. Necitas Nene C. Vicente, formerly NSCs Product Quality

Engineer, CSM Quality Assurance, NSC then Team Leader, Human
Resource, NSC-Liquidator and presently GSPIs Asst Manager, Quality
Assurance: for her indefatigable patience in answering my numerous
questions and clarifications on NSCs Quality Assurance methods,
parameters monitoring, reporting, and other historical, yet nostalgic
footnotes.
273
Special Acknowledgement for former NSC personnel, continued
Engr. Jonathan Leo Jonath M. Roa, formerly NSCs Statistical Staff,

CSM Quality Assurance, NSC and presently GSPIs Supervisor, CRM
Quality Assurance: for searching various NSCs QA monthly reports,
production yield and customer complaints records from the QA minilibrary, and old PC desktop electronic files.
Engr. Dante L. Ricablanca, formerly NSCs Process Quality Engineer,

Rolling Mills and presently GSPIs Supervisor, Quality Assurance: for his
clarifications on QA processes and profound insights on process, quality
and supervision.
Engr. Reynaldo Rey P. Maleriado, formerly NSCs Mill-inCharge/Supervisor, ETL3 Quality Assurance and presently GSPIs Shiftin-Charge, Finishing Lines: for preparing a summarized yearly database
for ETL3 production parameters and several discussions on various ETL3
operational and quality aspects.
Engr. Henry Boyax G. Estipona, formerly NSCs Maintenance

Planner/Mill-in-Charge, ETL3 and presently GSPIs Shift Supervisor,
Utilities for providing additional data for ETL3 production parameters and
several discussions on various ETL3 operational and quality aspects.
Engr. Cristine Cris Cabrera-Manuel, formerly NSCs Researcher,

Applied Research & Technical Department: for providing me linkage to
his father, Engr. Esteban V. Cabrera, Jr., and additional information
regarding customer complaints.
Engr. Dionisio Dion A. Mabalot, Jr., formerly NSCs Production

Planner: for directing me where to find the old NSC production plans and
monthly reports before these were declared garbage; and for encouraging
me to finish my MBM course after a hiatus of ten years.
Engr. Aurelio Jun Alamin, formerly NSCs Staff Engineer, HSM

Quality Assurance,
and presently GSPIs Shift-in-Charge, HRM
Operations: for his persistent promise to summarize Hot Strip Mill 1 and 2
monthly production parameters for 1994 to 1999, but never did, and will
never will.
Ms. Ruth Maam Ruthing Mapayo, formerly NSCs Department

Secretary, HSM Quality Assurance, then Technical Secretary for NSCs
Resident Manager (Liquidator) and presently GSPIs Secretary,
Purchasing: for letting me forage old NSC historical files before they were
to be thrown to the dustbin or sold in bulk as waste paper for recycling.
274
Special Acknowledgement for former NSC personnel, continued
Ms. Winonnah Maam Winnie Lacida, NSCs Technical Secretary,

Office of the Executive Vice President, NSC and presently GSPIs
Secretary to the Managing Director/CEO: for letting me search some
missing data on raw material exports/imports at the NSC Resident
Managers file room.
Engr. Crescenciano Cres A. Sadernas, formerly NSCs Electrical

Maintenance Planner, PKL2, CSM Maintenance Planning and then
GSPIs Staff Engineer, Maintenance Planning Information, Cost and
Control Division: for background information on PKL2 operation and
maintenance concerns.
Engr. Tomas Thom J. Yniguez, formerly NSCs Electrical Engineer,

also Maintenance Planner, 5STCM CSM Maintenance Planning; and
GSPIs Maintenance Planner, CSM: for discussions on the circumstances
during the 5-STCM fire in 1998, as well as tidbits on maintenance plans
for CSM.
Dr. Virgilio Vargie Y. Abellana, formerly Chief Researcher, Applied

Research and Technology Development, NSC; and Consultant, Quality
Assurance, GSPI: for accepting the Advisorship during the Thesis
proposal phase; comments on the initial draft of this thesis; and offering
his personal documents and research papers on product development for
NSC.
Engrs. Alex L Macesar, Edmundo B. Badua, Sonny E. Orbe, and

Naldy B. Sarroza, Shift-in-Charge, Finishing Lines of NSC and GSPI: for
their inputs on production scenarios, events regarding rehabilitation of
NSC facilities, plus their understanding and patience due to my
unscheduled leave of absences.
Mr. Rico Ricsay E. Manginsay, Draftsman/Staff Assistant, CSM

Maintenance Planning, for both NSC and GSPI: for securing me copies of
old monthly reports of CSM Maintenance Performance, and
To the nameless others, occupying various NSC positions at the most

trying times of our lives, and those who wished to remain anonymous, for
their trips to the memory lanepersonal recollections of back then,
during NSC . . . stories, amusing quips and perplexing anecdotes; their
personal comments on the GSPI rehabilitation phase and managerial
styles, their quest for a labor union, and their respective lives in general
after NSC and concerns for the future under GSPI.
275
APPENDIX II
LIST OF ABBREVIATIONS
Abbreviation
ACCApparent Steel Consumption per Capita
ACFSApparent Consumption of Finished Steel
ADBAsian Development Bank
AISIAmerican Iron and Steel Institute
AMCAsset Management Corporation
ASEANAssociation of Southeast Asian Nations
CRCCold-rolled coil
CRUComposite Resources Unit
CSMCold Strip Mill
DBPDevelopment Bank of the Philippines
ETLElectrolytic Tinning Line
HRCHot-rolled coil
HSMHot Strip Mill
ISIAIron and Steel Industry Act of 1991
IISIInternational Iron and Steel Institute
FYEPFive-Year Expansion Programs
GOCCGovernment-Owned and Controlled Corporation
GDPGross Domestic Product
GSIIGlobal Steelworks Infrastructures, Incorporated
GSHLGlobal Steel Holdings Limited
GSPIGlobal Steelworks Philippines (AMC-SPV), Inc.
GIHLGlobal Infrastructure Holdings Limited
NDCNational Development Company
NSCBNational Statistical Coordination Board
NEDANational Economic Development Authority
NSO National Statistics Office
PISIPhilippine Iron and Steel Institute
PNBPhilippine National Bank
SF&FS Semi-finished and finished steel
SPVSpecial Purpose Vehicle
SEAISISoutheast Asia Iron and Steel Institute
SECSecurities and Exchange Commission
TPTinplate
TFSTin Free Steel
276
CURRICULUM VITAE
Name: Arturo Brondial del Ayre, R.E.E.

Date of Birth: 14 November 1963
Education:
o Mindanao State University Iligan Institute of Technology
Master in Business Management, 2005 2008
o Bicol University College of Engineering
Bachelor of Science in Electrical Engineering, 1985 1988
Outstanding Student of the University for Campus Journalism, 1988
o Philippine Military Academy
Academic Excellence Badge, 1982 - 1984
Teaching Experience:
Lecturer, St. Peters College, Engineering Department, 1995 2002
Professional Experience:
Shift-in-Charge, Finishing Lines, CRM, GSPI, 2006 to present
Analyst, Business Strategy, GSPI, 2004 2006
Team Leader, Technical Planning, NSC Liquidator, 2001 - 2004
Electrical Maintenance Planner, CSM, NSC, 1995 2000
Turn Supervisor/Shift-in-Charge, BAF, CDM, NSC, 1991 1995
Engineering Management Trainee, NSC, 1989 1991
277
Affiliations/Memberships:
Life Member, Institute of Integrated Electrical Engineers, (Phils) Inc.
Member, ISO9001:2000 Core Team, GSPI, 2007 to present
Adviser, TPM Jishu-Hozen teams, Finishing Lines, GSPI, 2005 to present
ISO 9000 Assessor, NSC Internal Quality Audit, Feb 1995 Dec 1999.
Adviser, D'Soakers and DReactors. Productivity Improvement Program
for Operating Lines (PIPOL). NSC. 1990 - 1994.
Team Leader, "Stress Relievers." Statistical Process Control Study on
Hardness Capability of BAF, NSC. Aug 1991-Feb 1992.
Pollution Control Officer, Cleaning Lines/BAF, NSC. 1994-1996.
Area Coordinator, National Steel Supervisors & Staff Union.1990 - 1993.
Area Coordinator, The NSC News. 1990 - 1997.
Member, Cold Mill Information Systems Task Force, NSC. 1993.
Community Liaison / Community Leader, Geocities Tokyo, 1996-1999
Editor-in-Chief, Geocities Tokyo E-zine, 1996 present.
Collegiate Extra-curricular Activities:
Delegate, First IIEE National Quiz Show, Manila. Sept 18, 1987.
Editor-in-Chief, The Bicol Universitarian, Bicol University. 1987 - 88.
Vice Chairman, University Student Council, Bicol University. 1987 88
Associate Editor, The Gearcast, BU College of Engineering. 1986 88
278
CERTIFICATE OF AUTHENTIC AUTHORSHIP
I hereby declare that this submission is my own work and, to the best of
my knowledge, it contains no materials previously published or written by another
person, nor material which, to a substantial extent has been accepted for the
award of any other degree or diploma at MSU-IIT or any other educational
institution, except where due acknowledgement is made in the manuscript. Any
contribution made to the research by others, with whom I have worked at MSUIIT or elsewhere, is explicitly acknowledged in the manuscript.
I also declare that the intellectual content of this manuscript is the product
of my own work, except to the extent that assistance from others in the projects
design and conception or in style, presentation and linguistic expression is
acknowledged.
Arturo B. del Ayre, R.E.E.

An Evaluation of Flat Carbon Steel Production of National Steel Corporation (NSC) From Its Privatization in 1995 To Its Liquidation in 1999 and Its Implications To The Country's Steel Industry

Enviado por

Dados do documento

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

An Evaluation of Flat Carbon Steel Production of National Steel Corporation (NSC) From Its Privatization in 1995 To Its Liquidation in 1999 and Its Implications To The Country's Steel Industry

Enviado por

Direitos autorais:

Formatos disponíveis

i

AN EVALUATION OF FLAT CARBON STEEL PRODUCTION

ARTURO B. del AYRE, R.E.E.

Flat carbon steel production in the privatized National Steel Corporation

Arturo B. del Ayre, R.E.E.

Background of the Study ..................................................................... 2

REVIEW OF RELATED LITERATURE

The Philippine Industry and Manufacturing ....................................... 22

Subject and Scope of the Study ........................................................ 33

PRESENTATION, INTERPRETATION AND ANALYSES

NSC Flat Carbon Steel Production, 1995 - 1999............................... 44

SUMMARY, CONCLUSION AND RECOMMENDATIONS

Summary of Findings....................................................................... 134

CERTIFICATE OF AUTHENTIC AUTHORSHIP

Steel Value Chain...................................................................................... 2

Snapshot of History from NSC to GSPI..................................................... 3

Flat Carbon Steel Production Process Flow.............................................. 4

Theoretical Model of Independent Variables affecting NSC Flat

NSC Monthly HRC and CRC Production, 1995 -1999 ............................ 46

NSC Quarterly Flats (CRC) Production, 1995 2000 ............................. 47

Globalization of the Steel Market............................................................. 50

Emergence of Steel Companies with over 40 mtpy Capacity.................. 52

Comparative HRC Flats Production, 1991-2004 ..................................... 62

ASEAN Hot Rolled Flats Production, 1991-2004 .................................... 64

World, ASEAN vs. NSC Crude Production, 1991-2004........................... 66

Evolution of steel specific consumption per unit of GDP, 1950-2005...... 68

World Flat Carbon Steel Supply vs. Demand .......................................... 69

World vs. ASEAN Apparent Finished Steel Consumption, 1991-2004.... 70

ASEAN Apparent Finished Steel Consumption, 1991-2004.................... 72

World, ASEAN vs. Philippines Apparent Consumption of Finished

Apparent Steel Consumption per Capita, in kg ....................................... 76

Philippines Steel Intensity, 1985-2004 .................................................... 77

Exports as a Percentage of Global Finished Steel Production................ 78

ASEAN Imports of Semi- and Finished Steel, 1991-2004 ....................... 81

ASEAN Exports of Semi- and Finished Steel, 1991-2004....................... 82

Exports as a Percentage of ASEAN Steel Production............................. 83

Philippines Steel Trade vs. NSC Production, 1991-2004 ........................ 84

Philippines Steel Imports per Type, 1991-2004....................................... 86

NSC Raw Material Imports, 1991-2004................................................... 87

Slabs Fitted Regression Line Plot ........................................................... 89

HRC Fitted Regression Line Plot............................................................. 91

Flat Carbon Steel Monthly Index Prices, 1994-2000 ............................... 93

Scatter Plot with Regression Line of NSCs CRC Production vs.

NSC Plant Availability and Utilization Computation............................... 108

Pickling Lines Production Rate MT/EOH (1995-1999) ......................... 110

NSC CRC Material Yield vs. Production, 1995-1999 ............................ 112

NSC CRC Prime Yield vs. Production, 1995-1999................................ 114

Yearly Trend of NSC Customer Complaints, 1988-1999....................... 116

NSC's % Customer Acceptance, 1995-1999......................................... 120

Monthly Trend of NSC Customer Complaints, 1995-1999 .................... 121

NSC Process Flow ................................................................................ 199

Economic and Steel Industry Time Line ................................................ 203

Transactions for NSCs Stake (1995-1998)........................................... 204

Statistical Summary for NSC CRC Production, 1995-1999................... 205

Statistical Summary for NSC HRC Production, 1995-1999................... 206

Philippine Steel Scenario in 1995.......................................................... 240

Philippine Steel Scenario in 2000.......................................................... 241

NSC Production vs Mill Utilization, 1995-1999 ...................................... 256

NSC Functional Table of Organization (1993)....................................... 262

NSC Functional Table of Organization (2000)....................................... 263

NSCs CSM Function Table of Organization (2000).............................. 264

NSC Liquidator Functional Table of Organization (2004)...................... 265

GSPI Functional Table of Organization (2007)...................................... 266