VSC-POSCO Steel tempers local trade
VSC-POSCO Steel tempers local trade
VSC-POSCO Steel Corporation, the joint venture between Vietnam’s state-run steel group Vietnam Steel Corporation and South Korean steel producer Posco, is looking to further strengthen its 20 years of investments in Vietnam, which is now being touted as an attractive manufacturing hub.
VSC-POSCO Steel Corporation (VPS) was established in January 1994 as a joint venture, in which Vietnam Steel Corporation and Posco are the main shareholders. The collaboration, considered an indication of the potential that Posco saw in the Vietnamese steel industry, enabled Vietnam Steel Corporation to access modern production technology from South Korea in order to create high quality competitively-priced products.
In 1995, the $56 million plant in the northern port city of Haiphong started commercial operation, with the capacity of 240,000 tonnes per year. From then on, output and revenue have been on a steady track of growth, from 13,000 tonnes and VND47.9 billion ($2.2 million) in 1995, to 3.5 million tonnes and VND2 trillion ($94 million) in 2014. Its products meet the strict quality standards that apply in many countries, including Japan and the US.
General director of VPS, Lee Jong Taek, pointed out the track record of his company whose “products have been used in the construction of many big projects throughout the country, such as the Nomura industrial park, the Pha Lai thermal power plant, the Uong Bi thermal power plant, the Yaly hydropower plant, the Hanoi Daewoo Hotel, the Trang Tien Plaza, the My Dinh stadium, the National Convention Centre, the Keangnam Hanoi Landmark Tower, and the Thanh Tri bridge,”
According to Pham Thanh Lam, deputy general director of the company, in recent years, steel producers have been facing difficulties, such as an inactive real estate sector, the surplus in supply in some types of steel products causing steel producers to undercut one another, and the government’s tightened public investment. Competition is expected to become even fiercer in the future, because Vietnam has to decrease its import tariffs on many products, including steel, as per commitments in new free trade agreements, as well as the ASEAN Economic Community’s establishment at the end of this year.
Because of such pressures, steel producers have to find ways to raise their products’ competitiveness to ensure profit. For VPS, the path forward is to reduce production costs through technical innovations. The company is also trying to expand its sales network to raise retail sales, while increasing direct sales to real estate projects. Using its South Korean lineage to its advantage, VPS has pushed sales into South Korean projects. In 2013, the amount of product sold to South Korean-invested projects in Vietnam totalled 42.5 tonnes, up 222 per cent on year. Thanks to these efforts, VPS has succeeded in maintaining a satisfactory performance. The highest inventory was reported at 7.9 per cent in 2008. In 2011, the inventory was only 4 per cent, and in 2014, this figure was just 2 per cent.
Besides their bottom line, the company also pays attention to its social responsibility. VPS has contributed to many charities and organisations that serve orphans and the disabled, as well as providing healthcare. The firm has also helped build schools and granted scholarships to students in Haiphong.
Due to its contribution to the development of the locality, the company was awarded a medal by the government in a ceremony to celebrate its 20th anniversary. In 2015, the company has increased its investment in technology and human resource training, aiming for growth in both revenue and profit.
