VSC - POSCO Steel Corp: Successful with New Premium Products

After 15 years, VSC - POSCO Steel Corp (VPS) has produced and sold more than 2.7 million tonnes of steel, accounting for 11 percent of the country’s market share. In spite of numerous challenges and difficulties arising from economic recession, VPS still managed to assert its leadership on the Vietnamese steel industry thanks to premium steel products.

Mr Nguyen Thanh Dong, Deputy General Director of VPS, said: In recent years, VPS has continuously upgraded and improved its equipment and machinery systems to expand production capacity and boost productivity. Specifically, the company renovated furnaces to turn out 6-metre steel billets instead of 5-metre products previously, replaced 60-tonne scales with 100-tonne ones, build warehouses equipped with tray cranes to keep products better. Therefore, VPS has successfully manufactured a variety of new high-quality products like 5.5mm and 6.5 mm steel coils, D36 and D40 steel bars.

 

Besides, the company actively searches for new markets and customers to secure sustainable development. Steel products, made by Vietnamese and Koreans, have reached every corner in Vietnam and have been used by many key projects like Chinfon Hai Phong cement plant, Nomura Haiphong industrial zone, Phong Hai Thermal Power Plant, Pha Lai Thermal Power Plant, Uong Bi Thermal Power Plant, Yaly Hydropower Plant, Thanh Tri Bridge, Ham Rong Bridge, Nhat Le Bridge, National Highway 1A, National Road 5, National Road 10, National Road 18, Ho Chi Minh Road, Nam Chuong Duong Intersection, My Dinh Stadium, Hanoi National Convention Centre , Japanese Embassy; Keangnam Hanoi Tower, Hanoi Plaza Hotel, Danang International Airport’s terminals, and many other national key projects.

 

Thus, incomes and living standards of employees have been significantly improving in the past years. They are provided all employment policies for its employees like social insurance, health insurance, workplace accident insurance and vacations amongst others. The company always pays high attention to labour safety to avoid serious accidents. The company has not suffered any fire or explosion since its inception.

 

Each year, it spends more than US$1 billion on charitable activities. It maintains financial supports for Hoa Phuong Orphanage in Hai Phong. VSP also contributed to building Quan Toan Primary School, Sunny Medical Centre and Nguyen Duc Canh Memorial, financed poultry flu research and prevention fund, disadvantaged children fund in Hai Phong, and granted scholarships to students.

 

In early 2008, the world economy slumped while steel material market was complexly volatile, sending many companies to dilemma.

 

The first difficulty came after China increased the export tariff on steel ingots from 15 percent to 25 percent on January 1, 2008 and limited export of metal materials. These actions stirred up the world steel market.

 

In late first quarter and early second quarter of 2008, steel billet price on East Asia market hovered at US$880 - 900 per tonne and even mounted to over US$1,000 per tonne, an increase of US$250-300 from the start of the year. As the domestic steel industry is heavily relied on foreign materials, it was strongly affected by external factors. The wildest volatility fell on the first half of 2008, especially in the first quarter, as steel billet price soared to nearly US$1,200 per tonne at Vietnam ports. Steel prices also climbed VND3-4 million per tonne compared with late 2007.

 

In July 2008, material prices unprecedentedly plunged. In October 2008, scrap steel in Southeast Asia was offered at below US$200 per tonne and steel billet price is under US$300 per tonne at Vietnam ports. In Vietnam, the Government tightened credit policies to rein in inflation, reduced public investments and delayed unnecessary projects, causing a sharp drop in steel demand. The price of construction steel sank VND3-7 million in the third and fourth quarters of 2008.

 

Confronting these difficulties, the company’s leaders quickly adopted proper policies and solutions to overcome. The company encouraged all staffs to contribute their ideas to renovate production processes to boost up productivity and product quality. As a result, the company could make most use of materials while maintaining the ISO 9001 - 2000 quality management system, and currently ISO 9001 - 2008.

 

The company also exercised thrift, cut costs to reduce cost prices to enhance competitiveness and applied flexible sales policies. For that reason, the company was not affected much by the global economic recession. In 2008, VPS turned out more than 235,000 tonnes, a sharp rise from 174,000 tonnes in 2007. The revenue climbed from VND1,850 billion in 2007 but soared to over VND3,000 billion in 2008. In 2009, although the output dropped, profit still reached nearly VND70 billion.

 

Mr Nguyen Thanh Dong said: To stand firmly in the integration process, VPS always spares no effort to provide premium products for customers. We attach much importance to controlling product quality while striving to cut costs to enhance the product competitiveness. We also invest in renovating and expanding production lines, technologies, machines and equipment to scale up output, boost productivity, enhance quality and uplift competitiveness.

With its achievements in the past five years, VPS has been granted many awards and titles like the Third-class Labour Medal by the State President; the Vietnam Industrial Goods Gold Cup (2000); diplomas of merits from the Haiphong City’s People’s Committee (2001, 2004, 2008), the Ministry of Industry and Trade (2002), the Vietnam Steel Corporation (2003, 2007, 2008), the Ministry of Finance (2006), the Prime Minister (2008), the Ministry of Industry and Trade (2009); the Vietnam Gold Quality Award (2005) by the Ministry Science and Technology, VNR500 Certificate - an accreditation for one of 500 biggest cities in Vietnam in 2009.