The fall of the industrial giant

ILIGAN CITY — While everyone sought their fortunes in the big cities, the Francisco family had taken the reverse route and left Metro Manila to venture deep south where life was then easier and where your money went a long way. And why not? Iligan City was then the ‘Industrial city of the South" and Cesar P. Francisco had nothing to lose being a mere line helper in the tin canning facility of the National Steel Corp. in Pasig, Metro Manila.

Little did Cesar know that he would one day be a pawn in the shifting fortunes of global trade realities.

A few visits to the plant in Iligan had convinced Cesar that Iligan was an ideal place to raise a family. "I noticed that life is easier here, the environment cleaner," he said in his Tagalog. "Besides, I found out that good schools in Iligan are way cheaper than comparable schools in Manila."

With wife Vivian and four young kids in tow, Francisco hied off to join NSC Iligan in 1993, riding on the crest of the boom years that steel was helping build. NSC’s gray uniform became the emblem of stability and the passport to credit lines.

Work at the Iligan plant was so financially rewarding that Cesar found himself working beyond required hours. Now, his kids were enrolled in the best school in Iligan. His efforts were not wasted because up till now, his children – Czarina, 19; Jerico Rey, 15; Keith, 13; and Veronica Shayne, 11 – have been consistent honor students.

Good Times No More

But the good times ended abruptly late in 1999.

Fast forward to the present – Francisco now drives a jeepney-type vehicle shuttling children, mostly not his own, to school and back. As a second job, he drives for a family who is into the meat business. His wife Vivian now endures the heat and the rain outside La Salle, cooking and selling various food stuff to school children by the sidewalk.

Yes, the Franciscos are surviving, but definitely not the life of comfort they envisioned when they made the giant leap to move to Iligan.

But they are not alone in this hardship. Hundreds, even thousands, of Iliganons have gone the way of the Franciscos.

What Happened?

Francisco’s employer, the National Steel Corp. – which had around 4,000 regular employees in its heyday – went bankrupt and shut down its operation in November 1999. Other industries that relied heavily on the NSC followed suit, sending Iligan’s economy into turmoil.

The Mindanao Steel Corp., whose employees mostly come from Iligan, in the neighboring municipality of Lugait in Misamis Oriental closed shop.

The Mindanao Portland Cement Corp., too, shut down operations while the other cement plants in the area retrenched workers as they were being battered by low-priced imports from neighboring countries. The Refractories Corp. of the Philippines, manufacturer of industrial bricks for NSC’s furnaces and the cement plants’ kilns, reduced working days to four a week. Operation of the Maria Cristina Chemical Industries became erratic, forcing its employees to early retirement and hiring them only on contractual basis.

Even schools at that time were affected, with enrolment in the private educational institutions dwindling while those in public schools drastically increasing.

A few other companies servicing the NSC, as well as smaller business firms in the downstream industry, were forced to close shop, too.

Francisco was lucky to have filed for early retirement when there was still money available to pay those who lost their jobs. But of the remaining 1,800 regular workers at the time of the plant’s closure, 1,200 never did get their separation fees.

The NSC Fiasco

According to city councilor Orlando Maglinao, who was part of NSC’s top management when he served as senior manager of the company’s training and development center, "all the ingredients for NSC to collapse" were there. "It was a combination of a menu for failure," he added.

For Maglinao, NSC’s woes started with its privatization in 1995 when it was bought by the Wing Tiek Holdings Bhd. of Malaysia, then later sold to another Malaysian company, the Hottick Investments Ltd. For one, he said the Malaysians were not steel makers, but traders.

Then came the Asian financial crisis in the late 1990s and the peso depreciated to unprecedented levels. With many of NSC’s loans and supply of raw materials paid in dollars, the steel company just could not cope with servicing its debts.

Simplicio Villarta Jr., president of the National Steel Labor Union (Naslu), said mismanagement by the Malaysian owners was also to blame. He pointed out, for instance, that management purchased raw materials at unusually high prices. Inventory was also way more than required.

Trade liberalization and the cheap steel imports was also among the major factors that contributed to NSC’s demise, according to Naslu officials. "Competition was so stiff because of the dumping of cheap steel products from such countries as Russia and Korea," they said.

In fact, NSC was not the only victim in the dumping of cheap imports to the country. The cement industry also raised a howl when imported cement from Taiwan, Indonesia and other countries flooded the market supposedly through illegal means, eating up a large percentage of the local manufacturers’ sales. The two cement plants in Iligan – Iligan Cement Corp. and the Mindanao Portland Cement Corp. – as well as the Alsons Cement Corp. in neighboring Lugait, Misamis Oriental, felt the blow.

MPCC later shut down operations, along with a few other cement plants all over the country, displacing nearly 4,000 workers nationwide. The government finally listened to the cement industry and imposed a tariff on imported cement.

Domino Effect

The nightmare after NSC’s closure can be seen in Iligan’s revenues, according to data gathered from the Tax Revenue Assessment and Collection System of the City Treasurer’s Office.

In 1998, when the NSC and the other plants were fully operational, local revenues totalled P258 million. It still rose to P280.5 million in 1999 despite NSC’s closure in the last quarter. But a year later, revenues drastically dropped to P208.1 million, or over P72 million disappearing from the city’s coffers.

Unemployment rose drastically. According to the National Statistics Office here in Iligan, from an unemployment figure of 14,000 in 1997, it rose to 18,000 by the year 2000. This coincides with the number of workers who lost their jobs with NSC’s shutdown, including those in the allied industries. The figure rose further to 21,000 a year later as the fallout reached the other industries.

The shock was evident, too, at the Steel Town, the housing project for NSC employees at Barangay Sta. Elena with more than 600 units. About a year after the collapse, touring the village at night was depressing – many of the houses were unlit, like a ghost town, simply because their former owners had left town. Many of those houses have been sold since, and the community is alive again, but no longer the NSC neighborhood that it used to be.