Bernardo M. Villegas
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Gearing for the Steel Industry

          In the midst of the short-term crisis occasioned by COVID-19 (which will surely pass), those who always think and plan for the long-term progress of the Philippine economy have one news to celebrate:  the country’s biggest integrated steel mill is set to break ground some time this year.  Also symbolic of the triumph of China against the threat of COVID-19 through decisive leadership and advanced scientific and technical knowledge, the project is an undertaking of China’s Baowu Steel Corporation Ltd (China Baowu) and some local partners, among which are SteelAsia Corporation and the Simple Homes Development Corporation.  China Baowu, the  technical partner to operate the steel mill, currently ranks first in China and in the world as the largest steel producer measured by crude steel output, having recently surpassed Arcelor Mittal.   Although other potential sites are still being considered by the proponents, the steel factory will most likely be  located inside a 305-hectare property of Phividec Industrial Estate in Tagoloan, Misamis Oriental. The three-phase project will consist of a port, an integrated steel mill with a capacity of 10 million tons, an industrial park and other downstream industries.   The whole project is estimated to cost some US $ 4 billion, the expenditures of which can contribute further to the industrialisation of the whole CDO Metropolitan area, all the way to the Laguindingan airport.

         Because of its strategic location as the gateway to the  expanding Mindanao market from both Luzon and Visayas, as well as foreign countries, Cagayan de Oro is the logical place for an integrated steel mill.  More than ten  years ago, a research carried out by a group of industrial economists funded by the US Agency for International Development identified the three port cities that can take the place of Manila as an international hub.  In the island of Luzon, Batangas City was identified; in the Visayas, it was Iloilo City and in Mindanao, it was Cagayan de Oro.  That is why the Phividec Industrial Zone would be an ideal location for this major project that can finally jump start the industrialisation of the Philippines.  The steel industry was what completed  the so-called Industry 2.0 or the second phase of industrialisation in countries all over the world that developed  ahead of us.  I find it amusing that we keep on talking about being in Industry 4.0 (the digital age) even if our country had never really gone through Industry 2.0

   As a study commissioned by the Board of Investment as early as 2012 concluded, the Philippine Iron and Steel industry is a critical component in achieving inclusive economic growth and sustainable development.  The industry provides the necessary inputs for the construction of infrastructure, power generation and distribution, transportation facilities and vehicles, manufacturing machinery and equipment—all of which are vital for a nation’s long-term growth.  The outputs of the industry are utilised by both commercial and industrial enterprises, such as electronics, appliance manufacturing and shipbuilding, among others.  It has been a long-term vision of our Government that the industry should be able to supply 70 % of the tonnage of required apparent steel consumption.  To achieve this, the study of BOI recommended some specific measures as follows:  reduce the costs of importing raw materials and losses of revenue that are caused by unfair competition; reduce electricity costs; reduce logistics costs; encourage more investments in the industry; enlarge the pool of workers for the industry; make the sector more attractive for local and foreign investors through ISO accreditation; answer the need for a set of consistent and timely delivered industry data; complement the implementation efforts of the Bureau of Customs and Department of Trade and Industry provincial standards monitoring teams; and help companies upgrade their capacities continuously.

         Fortunately, the country’s flagship steel company, SteelAsia, with presence in Luzon, Visayas and Mindanao and producing more than two million metric tons of reinforcing steel bars or rebars annually (and diversifying soon into wire rods, steel beams, sheet piles and heavy angles) is addressing the most vital need for the appropriate human resources.  It would be tragic if all the planning to invest heavily in capital equipment in the integrated steel mill projects and the downstream industries will not be accompanied by a parallel increase in appropriate skilled workers.  We have already witnessed this tragic lack in the construction industry.  The ongoing Build, Build, Build program is being stymied by a glaring lack of carpenters, electricians, plumbers, welders and other skilled construction workers.  The industry is now scrambling to increase the supply of these construction workers through all sorts of quick-fix solutions.  Let us hope that the steel industry will be able to avoid the same lamentable situation by having a long-term plan to increase the skilled workers that the industry will need in the next decade or so.

         To address this need, SteelAsia has partnered with Germany’s Badische Stall-Engineering GMbH (BSE) for the design and curriculum development of its world-class training centre that will open during  the second quarter of 2020.  SteelAsia President and CEO Benjamin Yao said that the company engaged BSE to ensure that the training centre which will produce their future workers applies the best practices in the world.  To quote him, “We believe that we are in the best position to determine the type of skills that are needed for our operations.  With SteelAsia’s rapid growth, we have to ensure that we have the competent and skilled manpower required in our manufacturing plants.  And a training centre with the help of the best in the world—BSE—will allow us to achieve this goal…With this training centre located in southern Luzon (Batangas), we are not only addressing the company’s manpower needs but we also hope to provide skills training and employment opportunities to the unemployed near our plants, even if they are unskilled.”  SteelAsia has already sent several of its employees, including plants engineers and technicians for two weeks to the BSW Anlalgenbau and Ausbildung GmbH (BAG) Training Centre in Kehl, Germany for them to get a first-hand experience of training centre programs, processes and facilities.

         SteelAsia is leaving no stone unturned to make sure that their training program will be world class.  Yao said that SteelAsia has reached out to other established technical and vocation education and training (TVET) institutions such as DualTech and Toyota Motor Philippines School of Technology, to obtain even more of the best practices and expert knowledge in running a learning centre.  DualTech, in whose board I have the honour to serve, has produced over the last 30 years more than 10,000 electro-mechanical skilled workers that have been employed in hundreds of factories, especially in the CALABARZON region.  SteelAsia has also made it a point to consult government agencies like the Technical Education and Skills Development Authority (TESDA) and the Department of Trade (DTI) for the operational requirements and curriculum enrichment of the training centre.  With SfeelAsia’s foresight to produce an adequate supply of skilled workers for the steel industry, we can be sure that our  long-awaited entry into Industry 2.0 will not be frustrated by a lack of the appropriate human resources and at the same time enable many of our youth to be gainfully employed in the “King of Manufacturing,” the steel industry.

In fact, SteelAsia is so committed to the Philippine steel industry that it is already negotiating with HBIS, the second largest steel company in China, for another integrated steel plant that will produce “flats.”   For comments, my email address is