China Steel's Success Story

Chrissie Lu

July 1982

中文

China Steel products being loaded onto a ship for export.

In only 10 years, the China Steel Corp, located in the southern Taiwan port city of Kaohsiung, has become an international standard producer of steel, and exports to 41 countries, including Japan, Korea, Malaysia and Indonesia. Recently, the company completed an ambitious expansion project.

Three people have played an important part in the company's success story. The first chairman of China Steel, Ma Chi-chuang, who is now secretary general of the Presidential Office, insisted on using private enterprise management techniques even though China Steel is a government-owned company. He also implanted the spirit of teamwork which has become China Steel's hallmark.

The current Minister of Economic Affairs, Chao Yao-tung, spent 10 years as head of China Steel. From the beginning, Chao emphasized the cultivation of skilled workers. Rather than having one company build the entire complex, Chao entrusted the work to several smaller firms. He then sent 600 staff members to these firms to make sure they understood all the workings of a steel mill. "People are most important of all" says Chao. "If we are short of money we can always work something out, but without skilled workers, we would be dependent on outsiders."

Chao describes China Steel as a cooperative effort between the older and younger generations. Apart from a few experienced people in top management positions, most employees are in their 20s. Chao encouraged young people to do their best, and in this atmosphere, enthusiasm for work became contagious.

Another incentive at CSC is the excellent working environment and conditions. Pay is good, and there are many opportunities for overseas training. The welfare system is of high quality. There are four restaurants as well as a clinic, library and numerous sports facilities. Chao's concern for the staff is shown by the attention he has paid to minor details.

Although Chao ensured that workers' welfare was adequately taken care of, he was strict in dealing with anyone who violated regulations. The China Steel lunch break starts at noon and no one would dare to be caught in the canteen before then. Over the past 10 years, some 160 employees have been dismissed for serious violations. China Steel's enviable efficiency was in large measure due to Chao "running a tight ship."

On Dec. 16, 1977, a construction project at China Steel was completed two weeks ahead of schedule. A U.S. consultant predicted that it would be at least three years before the project would begin to make a profit. But within six months the mill was producing high earnings, and now has accumulated profits of more than NT$6.2 billion (US$151 million). During 1979 and 1980, China Steel's profit growth rate was the best in the world for an enterprise of its kind.

Because of his success in running China Steel, Chao Yao-tung was appointed Minister of Economic Affairs late last year. The company's new chairman, Liu Cheng-shih, worked under Chao for many years, and has a similar management philosophy. Because teamwork is so highly valued, the new appointment did not lead to many other changes. One benefit of the strong team spirit at China Steel is a low staff turnover. This is usually considered a healthy sign, but Liu is concerned that the average age of employees has risen to 29 from 25. He is always encouraging China Steel workers to maintain a youthful attitude in learning new things and maintaining enthusiasm for hard work.

An economist by training, Liu emphasizes keeping a low overhead, but he is fully aware of the value of research and development. The R & D department at China Steel was established 10 years ago and is staffed by four Ph.D.s, 49 M.Sc.s, and 30 other graduates. In an effort to reduce energy costs, they quickly decided that coal was the most economical fuel.

Despite China's Steel's solid organization, it ceased to make a profit in July this year. This, however, was mainly because the second storage facilities started up, calling for a subsidy of NT$960 million. The company is planning to return to profitable operations as soon as possible.

Despite China Steel's wide acclaim the management is always searching for ways to improve this "model of national development". Says chairman Liu: "China Steel's success today is built on a foundation of continuous improvement. At China Steel, good is not good enough!"

[Picture Caption]

1. China Steel products being loaded onto a ship for export. 2. Working continuously on three shifts, China Steel employees are busy 24 hours-a day. Seen at night, the blast furnace is most spectacular. 3. Inside the China Steel complex, seen at right are the singles' dormitories.

1. Molten metal flows like a river in the first step of steel production. Left inset: cutting lengths of red-hot metal. Right inset: the computerized control room. 2. China Steel has always emphasized research and development. Here an employee is seen concentrating on an experiment. 3. Welding a machine.

1. The Western restaurant at China Steel is comfortable and inexpensive. 2. The CSC kindergarten takes care of employees' children. 3. The well-stocked library. 4. The company store is as convenient as a supermarket. 5. China Steel constructed these apartments employees can purchase at low interest rates. 6. Liu Tseng-shih, chairman of China Steel, believes in setting a personal example. 7. General manager Fu Tsu-han is optimistic about the future of China Steel.

Working continuously on three shifts, China Steel employees are busy 24 hours-a day. Seen at night, the blast furnace is most spectacular.

Inside the China Steel complex, seen at right are the singles' dormitories.

Molten metal flows like a river in the first step of steel production. Left inset: cutting lengths of red-hot metal. Right inset: the computerized control room.