Although during 3 years, TNK suffered from the extremely tough period and step to a year with the severely fourth outbreak of Covid 19, TNK has tremendous growth in 2021.
We had a nice discussion with Mr. Ho Minh Quang – Chairman of The Board of Nam Kim Steel JSC (TNK) to understand deeper about the “storm” passing strategy.
During 3 years, TNK underwent an extremely difficult period before going up tremendously in 2021, can you share your feelings about this aspect?
Mr. Ho Minh Quang: I suppose that It’s 2 polar opposite emotions, however in this period, I believe that we will pass all temporary difficulty. It’s the stage which we did look at ourselves and decided to reconstruct many fronts of activities thoroughly. Enterprise has to force itself the best discipline after the rapidly increasing stage as well as when the hard market happened. We reconstructed, redistributed, set up the particular objectives corresponding to each timeline, and of course accepted a few certain losses.
The pandemic occurring in the past 2 years confounded all forecasts, the global supply chain was interrupted, many firms and industries have been suffering from the difficult situation but fortunately, the steel industry still has benefits on the global scope, even upstream and downstream. Actually, at the first stage, we had to struggle to adapt. If we did not have a good adaption or have the preparation, we would not seize the opportunity to recover in the last period. Particularly, in a hard situation, we kept concentrating our resources and cost into R&D, leveling up the quality to meet the strictest standards from Europe, the United States, and Australia. In terms of management, we reorganized departments based on the optimization of current resources and expropriated the new worth human resource.
The next step is standardization of operational processes and successful implementation of the ERP from SAP – Germany. This point changes fundamentally the management system to be more standardized. Activities from raw materials, production, quality management, sales, and finance are predictable and highly planned. This system really helps us operate smoothly during the pandemic, the interactions were mostly indirect from a distance, but the factory was still operating at almost full capacity.
These are seemingly simple things, but it is a process of persistent and consistent efforts that helped us increase productivity, reduce costs and utilize the market opportunity quickly.
Can you tell us how the Covid-19 pandemic impacts the steel market in the general and coated steel industry in particular?
We must determine our state of mind of living with the pandemic in the long term. Vaccine is a solution, however, besides complying with government’s policies, firms need to build their own solution, which is appropriate with the real situation, and allows them to continue business activities in safe.
The global steel market has witnessed huge changes over the past few years, starting with protectism, and trade wars during President Trump’s period. Some countries prioritized the development of new technology industries and restructuring others, including steel. The pandemic has created a serious disruption in the global supply chain in many industries, steel is not an exception, this lead to an imbalance in Supply and Demand in many regions such as Europe or America, where the vaccine programs were pioneered at an early stage of the pandemic, and the economics recovered rapidly. Therefore, this event is an opportunity for Vietnam’s steel manufacturing with huge investment in recent years.
You believe that export still has great chances. Can you tell me more about the domestic market?
It must be said that in the past 5 years, with the investment to expand the scale of enterprises in the industry and also new entrants, the capacity of the industry has been getting larger, becoming redundant compared to the needs; hence, this makes domestic market competition become fiercer. Therefore, export is still a large market share with many segments that large domestic galvanizing enterprises are targeting.
For Ton Nam Kim, this does not mean that we take the domestic market lightly. Over the years, we have always maintained about 50% of capacity for the domestic market. We also develop high-strength, super-thick galvanized sheet products up to Z600, high-grade alu-zinc coating AZ250 products with a durability of up to 50 years, and suitable for constructions in corrosive environments. high wear. In the future, we will continue to develop different product lines for the domestic market
Nevertheless, the impact of the epidemic in Vietnam now is very heavy, domestic demand has not recovered yet, the proportion of exports, indeed, will be higher, even, the proportion of this channel accounted for more than 80% of sales volume in this third quarter. In order to achieve this, we had an early forecast when the disease showed signs of spreading in the South of Vietnam to prepare appropriate materials for the export market. Nam Kim proactively implemented “3 on the spot” very early, when there are mandatory local regulations. We also improve the welfare regime so that employees can stay at the factory to organize safe production and so far there have been no cases of infection.
The story of galvanized steel enterprises in the past quarters is export, what can you share?
The export market always changes over time, it is sometimes difficult or favorable. For example, Europe or North America is our focus in this quarter or this year, but next quarter, next year, the Asian market will recover when the epidemic is well controlled. And the risk factors of trade and protectionist policies are always present. But over the years, Vietnamese corrugated iron enterprises have gotten used to and adapted to these changes.
Our international sales team is experienced with trade remedies, and we also receive active support from state management agencies, especially the Ministry of Industry and Trade. Moreover, in the integration trend, Vietnam has joined many trade agreements with many countries and regions, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), The European Union Vietnam Free Trade Agreement (EVFTA),… will help limit barriers in export activities.
As I said above, besides the domestic market, Ton Nam Kim aims to have a larger and broader international market share. Especially in recent times, the Chinese Government has adjusted the policy for their national steel industry, which is to control output, cancel the tax refund subsidy for almost all steel products exported in the past time, including coated steel products. This may motivate investment activities to increase the scale of Vietnam’s coated steel coils enterprises in the coming time to export.
And will Ton Nam Kim follow this trend?
It must be said that the European and American markets with strict quality requirements have pushed us to continuously improve to target higher product segments in the past time. We are confident enough to participate in the global high-quality galvanized steel market share. We are currently promoting the investment project to expand phase 1 to increase capacity to 1.6 million tons by 2023. In this expansion project, we focus on technology factors to target the high-end market.
Although there are concerns about the steel industry’s decline when completing the project, with the trend of restructuring the steel industry in some countries, we believe that the demand from the international market for galvanized steel products of high quality from Vietnam is still increasing.
What is your business philosophy?
I simply think that our products are related to the roof, to the building. And that is also the heritage, the lifelong passion of users, so we have to create a product of real quality that corresponds to the cost they spend. Our first color galvanizing lines were supplied by Posco E&C Korea. After that, when scaling up, I always choose technology from famous providers like German SMS. Even in the past difficult period, when restructuring operations, we still decided to raise the quality standards of all Zinc, Galvalume, Painted color, and steel pipe products for the domestic market. Although the cost of the product is higher, we still do not change the price of the product. We do not take advantage of technology to create products with low-quality standards to create competitive prices but bring deficient value to customers. We understand that, in fact, no matter how modern the technology is invested, if we keep thinking about creating products with competitive prices based on low-quality standards, our products cannot be of good quality no matter where they are in any segment.
Thank you, Sir!
According to Thanh Nien newspaper on October 11th, 2021.
Find more information on the newspaper page: Tôn Nam Kim vững vàng vượt ‘bão’ (thanhnien.vn)