Abstract Dissecting the steel industry to produce steel, the traditional industrial sector that once supported the rapid development of the new China economy is facing a major change that has not been seen for many years. In the context of the supply-side reform, the backward production capacity of steel ushered in the largest capacity in history, and the accompanying...
Anatomy of the steel industry to capacity Steel, the traditional industrial sector that once supported the rapid development of the new China economy, is facing a major change that has not been seen for many years.
In the context of the supply-side reform, the backward production capacity of steel ushered in the largest capacity in the history, accompanied by a comprehensive transformation of personnel resettlement, asset restructuring, institutional reconstruction and even local economic restructuring.
In the eyes of the industry, the production capacity is not to go to steel. The steel industry should take advantage of this reform opportunity to reshape the value chain of the steel industry with the reduction as the core and comprehensively enhance its competitiveness. Through the sample of steel companies such as WISCO, it is possible to dissect the key points of the structural endogenous transformation of the entire industry from capacity reduction, personnel optimization, regional layout to technological innovation.
A supply-side reform that breaks through the structural dilemma
After passing the Wuhan Yangtze River Bridge, all the way to the south will enter the Qingshan District of Wuhan. At first glance, there are red houses with red walls and red tiles.
Here is the famous Red Steel City.
In 1954, the state approved the establishment of Wuhan Iron and Steel Company. More than 50,000 workers and more than 70,000 family members from more than 10 provinces in China gathered in Wuhan, and built 16 neighborhoods and 500,000 square meters of WISCO staff living areas along the river. Because the exterior walls of the houses are mostly red, they are named. Red Steel City."
At that time, there were martial arts signs printed on the school hospitals and small bottles of soda. Every family in the city had several relatives working in WISCO.
Now, more than half a century has passed, some of the stairs in the old town are being demolished and rebuilt, replaced by a new construction of real estate and infrastructure projects - only the open space around the steel plant, dozens of high-rise residential buildings and commercial The office building has begun to take shape.
At the same time, Qingshan District, which was developed with WISCO as the center, is gradually shifting its development focus to the service industry. In the future, the “Tenli River Beach†will be built along the Yangtze River, making it the fifth Binjiang Business District in Wuhan. In the first quarter of this year, housing prices in Qingshan District rose by nearly 30%, making it the fastest-growing area in the Wuhan property market.
Behind the above series of changes is the difficult transformation of WISCO and its established steel companies. On May 23, Premier Li Keqiang inspected WISCO and proposed to make WISCO turn over excess capacity into a national example, and instructed the State-owned Assets Supervision and Administration Commission and Hubei Province to give WISCO strong support for solving the difficulties and problems currently facing.
Previously, Hebei, Shandong, Henan, Guangdong, Yunnan and other provinces across the country have successively introduced specific targets for the reduction of excess capacity. Hebei Province proposed to withdraw 14.22 million tons of steelmaking capacity this year. Guangdong will achieve the provincial-level shutdown by the end of this year. The "zombie enterprise" basically cleared out and controlled the steel production capacity within 40 million tons.
Steel, the traditional industrial sector that once supported the rapid development of the new China economy, is facing a major change that has not been seen for many years.
Personnel diversion: bid farewell to the redundancy system of the old era
Born in a special era, the steel industry that once supported the rapid development of the new China economy, in the context of supply-side reform, the process of de-capacity must be accompanied by personnel resettlement. The transformation steel enterprises represented by Wuhan Iron and Steel, etc. are bidding farewell to the redundancy system of the old era. People in Steel City seem to have not had time to adapt to all the changes around them.
The 81-year-old Chen Laobo has been worried about a lot of things recently - her two daughters may have to be unemployed. The eldest daughter is a fast food food and beverage company under WISCO, and the youngest daughter is in Wugang Kindergarten.
The gradual decline in the efficiency of the entire industry is a tacit fact that everyone from the steel industry to the non-steel business is at risk. Even in the best-performing silicon steel sector in WISCO, a civilian staff still feels pressure. “The best time for the factory is zero years. The treatment was also very good. The benefits have deteriorated in recent years. Many new college students and graduate students They are all gone." She is worried that she will be retired within five years and will be internally retired by the age of 45.
In 2015, steel prices fell into historical lows and the whole industry fell into a loss. According to data from China Iron and Steel Association, the cumulative loss of the main business of the whole industry exceeded 100 billion yuan last year, a year-on-year increase of 24 times; plus the total profit of the year after investment income and other projects still lost 64.534 billion yuan, and the loss was more than half.
In the winter of the industry, in order to protect the business efficiency of the enterprise, WISCO began to carry out large-scale internal personnel optimization from last year. With the reorganization of the secondary industry and the introduction of a series of institutional restructurings such as professional managers, WISCO gradually realized the reduction of personnel and maximize the efficiency of input and output. At the end of 2014, WISCO Group had 94,596 employees. Up to now, the group has diverted more than 10,000 employees, and the company has reduced the number of employees by 6,000 to 7,000.
"In the context of de-capacity, everyone has reached a consensus that it is impossible for these 80,000 people to iron and steel, iron and steel, as long as 30,000, and there may be 40,000 to 50,000. Looking for another way out." Ma Guoqiang, chairman of WISCO Group, said bluntly in a talk show hosted by a news center of the State-owned Assets Supervision and Administration Commission.
The ultimate goal of personnel optimization is to achieve internal cost reduction and operational efficiency. “In the past, our per capita steel production was low, only 500 tons/person, which is twice the advanced level in the industry. One person is doing two things, which is why the company is determined to do manpower optimization. Xu Gangming, a securities affairs representative of Wuhan Iron and Steel Co., Ltd. (2.790, -0.02, -0.71%), told reporters that the future goal is to reach 1,000 tons of steel per capita, which is in line with the advanced level of the industry.
After this round of personnel optimization, WISCO currently employs approximately 22,000 people. According to the annual output of 15 million tons, the per capita steel production level has reached 700 tons / person. If the future output remains the same, to achieve the ultimate goal, it will need to be reduced by about 6,000 to 7,000 people.
In fact, the resettlement policies of the WISCO Group's stock companies were so generous that the other steel companies in the same group heard the sigh: "If we can have such a policy, the employees will leave early."
It is understood that in the joint-stock company, the first batch of employees who left the company was an external contractor. The next step was to retired some of the old employees who were retired and had a retiring age of five years. The company continued to pay four insurances and one gold, and paid about 2,300 yuan per month until the statutory retirement age. For retired employees, if they go out to work outside this time, the total salary is not even worse than that of the working staff.
Like WISCO, Angang Group Co., Ltd., known as the “elderly steel industry eldest sonâ€, is also under pressure from personnel diversion and institutional reform. At the end of last year, Angang Group issued the "Opinions on Implementing Anshan Iron and Steel Group's Work of Optimizing Human Resources Optimization" (hereinafter referred to as "Opinions"), proposing that the total employment will be reduced from 160,000 to 100,000 by 2018, among which the main business of steel control At 20,000 people. By controlling the total amount of labor, it effectively controls labor costs and improves input and output efficiency.
Tang Fuping, chairman of Angang Group, said that the current labor productivity of Angang Group is significantly different from that of advanced enterprises. It is necessary to unswervingly control the total amount of labor, optimize the structure, and smooth the channel objectives proposed by the "Opinions" to maximize the value of human resources. .
The group also optimizes the staff structure layer by layer. Pangang Group Co., Ltd., an arm of Angang, proposed to continue to divert 15,000 people on the basis of a reduction of 9,000 people last year. In the first two months of this year, the proportion of employees in the steelmaking plant of Angang Steel Co., Ltd. reached 7.49%.
In fact, low labor productivity and insufficient operational efficiency are common problems of the first established steel groups. When contributing to the steel industry at the beginning of the founding of New China, they also bear the historical burden of special national conditions and the background of the times. This is the main background for the current traditional steel enterprises to concentrate on personnel diversion.
According to Yin Weimin, Minister of Human Resources and Social Security, at the press conference on February 29 this year, according to preliminary statistics, “de-capacity†will involve the diversion of about 500,000 employees in the steel industry. According to incomplete statistics of public reports and information, the number of employees who have been diverted by several large state-owned steel companies nationwide has been less than 50,000. By 2018, Angang will have to reduce from 160,000 to 100,000, WISCO will have to reduce the number of employees by about 40,000, and Hegang, which has 120,000 employees, plans to control the main steel industry to less than 50,000, non-steel industry. It will consume 50,000 people. Overall, the task of diversion and resettlement of employees is still arduous.
Productive capacity: restructuring of capital from domestic to overseas
Resolving excess capacity is by no means a simple physical reduction, but also involves product structure upgrades and capacity adjustments. In addition to domestic capacity transfer, the blueprint for regional restructuring of steel production capacity will be extended to the global solution of excess capacity is not a simple physical reduction, but also involves a comprehensive reform of product structure upgrade, production area adjustment and industrial capital layout.
On May 23, Premier Li Keqiang pointed out when investigating WISCO that enterprises, especially central enterprises, must control general production capacity and not engage in homogenization competition. WISCO has to do what others can't do, so that we can deepen our main business and have core competitiveness.
From the perspective of product structure, WISCO has been adjusting to the middle and high end in recent years. "The principle of the company in recent years is that every penny invested will not expand production capacity and build new production lines, but will invest in structural optimization and product upgrading." Xu Shuming said, "After so many years of structural adjustment, WISCO Some of the products are in the middle and high end, like some unprofitable bar products, which have been stopped two years ago."
Last year, WISCO has restricted some of its production capacity, including bar, rolled sheet and high-line. At the end of the year, it shut down the No. 3 converter of No. 2 Steelmaking Plant of the Steelmaking Plant. This year, WISCO Group plans to take the initiative to withdraw 4.42 million tons of steelmaking capacity and 3.19 million tons of ironmaking capacity.
According to the 2015 annual report, WISCO plans to shut down one 1536-m3 blast furnace and one 90-ton converter during the year. The bar production line for the subsequent rolling process will be shut down, and the plate production line will be reduced in concentration.
With the gradual withdrawal of backward production capacity, the advanced production capacity of WISCO in the early years is beginning to be released. On March 15 this year, the first production of high-end cold-rolled sheet was successfully rolled out in the 2.17 million-ton cold-rolling production workshop of the first production of the WISCO Fangchenggang project.
"From the supply-side structural reform, there is a very important adjustment in the structural adjustment of the steel industry proposed by the state is regional adjustment. Many of our original layouts are based on the original pattern of national economic development. According to the new competitive landscape And the industrial layout, it may be more suitable for the coastal area." This important layout mentioned by Ma Guoqiang in the interview is located in the Fangchenggang project in Guangxi.
From the south bank of the middle reaches of the Yangtze River to the southwestern coast of Guangxi, the steel production of the Qingshan headquarters will gradually decrease or the capacity of 10 million tons of capacity will be transferred to Guangxi.
In addition to domestic capacity shifts, the blueprint for regional restructuring of steel production capacity will be expanded globally.
The Guofa No. 6 document issued by the State Council in February this year, "Opinions of the State Council on Resolving the Excessive Capacity of the Iron and Steel Industry to Realize the Development of the Depletion", proposed to carry out international capacity cooperation and transfer production capacity, and encourage qualified enterprises to combine the "Belt and Road" construction through international development. The production capacity will transfer part of the production capacity to achieve mutual benefit and win-win.
Hegang Group is the forerunner of “going out†of domestic production capacity. On April 18, 2016, Hegang Group and Serbia formally signed an agreement, and the group's industrial chain extended to the hinterland of Europe.
“In the next step, Hegang will build the Smeder Revo Steel Plant into the most competitive green and sustainable development in Europe in two to three years through means of asset restructuring, market integration and product structure adjustment. Li Guiyang, vice chairman of Hebei Iron and Steel Group, said at an industry forum in May this year, "There is still a loss of more than 100 million US dollars a year, and we will strive for full profit next year."
At present, the steel mill has an annual capacity of 2.2 million tons of steel production.
For the layout of the global industrial chain, the thinking of Hegang is very clear. Relying on the previously acquired holdings of Deco and South Africa's PMC, Hegang will build two main bases of “International Market Development†and “South African Industrial Developmentâ€. Li Guiyang said, "By 2020, the operating income of overseas business will reach 20 billion US dollars / year, accounting for more than 30% of the total revenue of the group." According to the crude steel output in 2015, Hegang has become the world's second largest steel group. .
Behind Hegang's efforts to build a world-class steel company is a flaw in the simplification of China's steel industry. Chen Derong, general manager of Baosteel Group Co., Ltd. once pointed out: "Today, China's steel industry has occupied half of the world's size, but there is no real multinational company in the industry. This is in stark contrast with foreign mainstream steel companies for multinational companies or global companies. Compared."
In his view, "the way China's steel industry participates in global competition today is still the original product output, and the capital is highly concentrated in the local. For this reason, the structural optimization and transformation and upgrading of China's steel industry must be the global capital of China's steel industry. Layout adjustment to enhance the ability to operate globally."
Innovation Drive: Transformation and Upgrade Opens Growth Space
In fact, there is no backward industry or sunset industry, and more importantly, it depends on how you do it. No matter which industry, quality and innovation are always scarce on the market, there is a jargon that there is no sunset industry, only sunset products. "The domestic steel industry has overcapacity on the one hand; on the other hand, because the product quality is not too hard, high-end steel still needs a large amount of imports." Li Keqiang's comments in the May survey were the crux of the industry. No matter which industry, quality and innovation are always scarce on the market.
Under the pressure of cold winter, the steel industry in the past impression of “big and old†has also begun to focus on the “small and beautiful†high-end market, and Nangang Group is one of them.
The reporter was informed by the Nangang Group that the group has begun to explore the industry's most advanced concept of “Industry 4.0†in recent years, introducing intelligent manufacturing on traditional strong board.
"We are not rushing to do smart manufacturing, blindly investing a lot of money, but it can't affect the growth of corporate value. This is very dangerous." Huang Yixin, chairman of Nangang Group, told reporters in an exclusive interview with the logic of enterprise innovation. After more than a year of experimentation, we found that it can create differentiated value."
Differentiation is one of the most mentioned words by Huang Yixin. He pointed out that the current overcapacity is due to the fact that the "Steel's Eleventh Five-Year" and "Twelfth Five-Year Plan" have been wrong in the past, and the industrial orientation has been driven in one direction, resulting in a very serious competition for product homogenization. So Nangang To avoid entering the planning trap, the '13th Five-Year Plan' must make its own differentiated plan."
In 2014, Nangang began piloting intelligentization in production scheduling and logistics distribution. It is understood that the amount of cruise ship materials using the shipboard intelligent custom distribution service can be reduced by 20% per boat and the efficiency is increased by one third. Last year, Nangang tested a total of 400,000 tons and formed the prototype of “Industry 4.0â€. The next step is to expand smart manufacturing to the entire industrial chain including production.
In addition to the full process intelligent custom distribution of the sheet, Nangang's product planning also includes the rising star product of Special Steel.
Ten years ago, the plate was a printing machine for Nangang, and the steel was profitable. Nangang's strategic positioning is also to build the world's plate quality base. However, Huang Yixin realized that relying on a single product alone and two points of support, he chose to take the road of special steel.
"Now it seems that the special steel road is right." Huang Yixin was looking at the trend of overseas high-end manufacturing industry shifting to China in recent years. The auto industry in the automotive, mechanical engineering, special equipment and other industries will form an important support for the development of special steel.
During the “Twelfth Five-Year Plan†period, Nangang spent a lot of money to build a special steel production line, forming a multi-product with high-grade wide-width special steel plates such as special pipeline steel, high-grade ship and marine engineering steel, and steel storage tank steel plate. system. Today, special steel products account for half of the company's annual production, and will become a new profit growth point in the future.
Throughout the steel industry, special steel products representing high quality and new technology have grown against the trend during the “freezing period†of last year's industry. According to statistics from the China Iron and Steel Association, 8 of the top 20 companies in the industry's profit rankings in 2015 were special steel companies, the first of which was CITIC Pacific Special Steel Group.
The performance of high-quality special steel enterprises confirms Huang Yixin's statement. "No matter how to transform and upgrade, how to adjust the structure, manufacturing, especially high-end manufacturing, is the foundation of a nation's survival and a fundamental manifestation of comprehensive national strength. In fact, there is no backward industry or It’s the sunset industry, and more importantly, it depends on how you do it.â€
Reform breakout: decoding the decapitation prisoner's dilemma
Going to capacity is not going to steel, and reducing development is not without development. The steel industry should take advantage of this reform opportunity to reshape the value chain of the steel industry with reduction as the core, and comprehensively enhance competitiveness. Since last year, the steel industry has fallen into a kind of “de-capacity anxietyâ€. In the first quarter of this year, a series of steel enterprises resumed production under the madness of steel prices. A number of large and small steel mills represented by Jianlong Iron and Steel (formerly Haixin Iron and Steel) reignited the blast furnace and gradually pushed production capacity and inventory to a high level. Among them, the average daily output of crude steel in April was 2.314 million tons, a record high. For a time, the road to steel production capacity was even more difficult and long.
From the point of view of marketization and production capacity, the consensus reached by many industry insiders interviewed by the reporter is that enterprises can only achieve capacity reduction if they are really losing money for a long time. Some insiders pointed out that according to experience, it is possible for steel enterprises to shut down the blast furnace under the condition of a loss of 200 to 300 yuan for two to three months of continuous steel. The warming market in the first half of the year has somewhat delayed the process of enterprises actively eliminating production capacity and exiting the market.
In fact, behind the resistance of steel to capacity, it reflects the economically famous "Prisoner's Dilemma" theory: although almost all steel companies understand that only by going to production capacity can save the industry, but many times companies want others to cut production first. It is the one that sticks to the last. This reflects that the best choice for the individual is sometimes not the best choice for the group.
Under this circumstance, the government's leading capacity reduction and improvement of the exit mechanism have become the key to resolving excess capacity, which involves many problems such as personnel resettlement and debt restructuring. Since the beginning of the year, a number of documents and supporting policies have been issued at the national level, and provinces have also actively reported to the capacity planning, but the actual effect remains to be seen.
"Although the government and enterprises have great determination to de-capacity, the exit mechanism and the government's bottoming policy have not yet been put in place, and it will take some time from the issuance and implementation of the documents," said Li Xinchuang, president of the Metallurgical Industry Planning and Research Institute.
On May 10th, the Ministry of Finance issued the "Administrative Measures for Special Funds for Structural Adjustment of Industrial Enterprises", and set up a special fund for the central special award of 100 billion yuan to support the efforts of local and central enterprises to resolve the excess capacity of the steel and coal industries. According to the Ministry of Finance on May 19th, the 2016 special fund for structural adjustment of industrial enterprises has been allocated a total of 27.643 billion yuan.
At present, the exit route of capacity combining the government and the market has been initially clarified. Li Xinchuang said that the first is to clean up backward production capacity according to the law, and eliminate a batch of non-compliant production capacity through environmental protection standards; secondly, on the basis of voluntary enterprise, long-term loss of zombie enterprises gradually withdraw.
What needs to be clear is that “going to capacity is not going to steel, and reducing development is not without development.†He believes that the steel industry should take advantage of this reform opportunity to reshape the value chain of the steel industry with reduction as the core and comprehensively improve Competitiveness.
In the view of Wu Libo, executive deputy director of the Center for Energy Economics and Strategic Research at Fudan University, the Chinese-style overcapacity has similarities with the United States.
"From a macroeconomic point of view, there are three similarities in the reasons for overcapacity in China and the United States. First, China, like the United States at the time, is a huge creditor country, while the debtor countries are in a downturn. Second, the entity brought by stock market volatility Economic growth is slow. The third is the decline in exports, the slowdown in economic growth of major trading partners, and the decline in import demand, which has led to a slowdown in China’s export demand.†Wu Libo pointed out that the biggest difference between China and the US overcapacity is that “China’s overcapacity There are quite a number of structural factors, which is why China’s supply-side reforms emphasize structurality."
Focusing on structural issues, Wu Libo proposed a reform plan for the supply side of the overall economy: first, to effectively resolve the excess capacity brought about by shrinking external demand and insufficient domestic demand; second, to increase income by reducing the cost of corporate taxation; The output efficiency of a large number of infrastructures that have been stimulated by stimulus policies; the fourth is to guide the effective investment of social capital spillovers after the financial market bubble bursts, improve asset efficiency, and enable investors to bear real investment costs, economic costs, and corresponding social costs.
Obviously, this is not a simple "destruction" of capacity, but a "protracted war" in the supply-side reform to break through the plight of the prisoners and to break through the structural flaws.
China's steel industry has a long way to go to capacity...
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