“Total Trust in the Future of the Steel Industry”

2011 opened the new phase of SMC development strategy (2011 - 2015). Taking up opportunities and getting through challenges, SMC completed the year with a 4 percent sales growth over 2010. On the occasion of the New Year 2012, Vietnam Business Forum has an interview with Mr Nguyen Ngoc Anh, Chairman and General Director of SMC Investment Trading Joint Stock Company, on difficulties and challenges of the steel industry in the past year and SMC’s development strategy for the upcoming time. Anh Dao reports.

 

2011 was a really rough year for steel industry. Economic growth seriously slowed because of escalating inflation and tightened monetary policy. Notably, stiff competition among steelmakers forced selling prices to drop repeatedly. Towards the end of the year, more and more companies scaled down output to stop losses. The supply suddenly fell short and prices rebounded. The output fell 6-8 percent last year.

 

However, as SMC needed to import only 30 percent of input materials, it was thus less affected by exchange rate fluctuations.

 

Anticipating fluctuations from the start of the year, SMC was very flexible with new market developments. The company also expanded the output of steel sheets while construction steel production declined. The operation of two new SMC mills supplied good products to the steel engineering industry. Activeness enabled SMC to enjoy 4 percent growth (an increase of 25,000 tonnes) and achieve all targets while the steel industry slumped. Sales of mechanical steel rose 60,000 tonnes. Notably, the newly operated SMC mill is operating at two-thirds of designed capacity of 120,000 tonne a year.

 

I valued high coil products because this is a high-quality steel product used to manufacture important consumer goods like automobiles, motorcycles, office equipment, kitchen equipment and electronics devices. Manufacturing and electronics industries are forecast to leap in the coming time and the demand for steel coils and sheets will be very high. In mid-2011, we put the SMC mechanical steel mill in Phu My 1 Industrial Park in operation. This event marked a strong shift of SMC: From a steel trader into a general steel company. In the third quarter of 2011, SMC operated another coil plant in Quang Minh Industrial Park, Me Linh district, Hanoi to supply steel sheets for automobile and motorcycle assembly plants.

 

The marketplace is compared to a battlefield where rivalry is very fierce. The steel industry is no exception. A business leader has to confront difficulties and convey this determination to the entire company. He must be responsible and well-mannered. He must show strength and leadership to his subordinates. As often as not, when a company falls into trouble, the first things to be considered are to cut staff, wages, marketing expenses, power bills and office equipment.

 

For its part, the management of SMC deemed interest rates as the primary reason for the hike in costs. Hence, the company urged its employees to boost productivity to raise incomes. The reduction in office equipment or staff only saves a small amount of money, but changing work style can save much more.

 

In March 2011, SMC increased wages for employees by 18 percent. In tough times, a leader not only takes care of business but also pays attention to employee's lives.

 

Like previous years, SMC launched an emulation campaign to strengthen unity and connection among employees and member companies. The firm also organised sports and arts programmes for employees.

 

In 2011, SMC’s total turnover was estimated at VND9,100 billion and profit after tax was projected at VND77 - 78 billion. The company targets to reach total output of 580,000 tonnes, revenues of VND9,600 billion and profit after tax of VND80 billion in 2012. We will open the third steel mill in Hanoi in 2012, bringing our annual total production capacity to 600,000 tonnes.

 

We think that a company is actually successful when it shares its gains with the community. And, this is also our operating philosophy since our incorporation. We increase our funding for social development activities year after year. In 2011, SMC donated VND1.8 billion (US$90,000) to social development activities, including US$50,000 for tsunami victims in Japan. This move was highly appreciated by Japanese partners and they expressed their long-term cooperation with us.