Smaller countries have to import a lot of things that are expensive and it becomes a force keeping you down. Soon after independence, the Philippines’ government built a large steel mill on Mindanao to replace imports of steel. The story shows how hard that is to pull off. So slip on your smoking jacket, fill your pipe, take your first sip of your adult beverage, and sit back in your most comfortable chair. Welcome to todays offering from The Philatelist.
A while back I did a similar stamp from India, see https://the-philatelist.com/2019/11/21/india-1958-independant-india-will-be-great-building-on-the-success-of-people-like-j-n-tata/ . I complained about the pour printing not showing the steel mill to full effect. This stamp shows what is possible with more modern printing. You get a sense of what a massive operation the Iligan Steel Mill was.
Todays stamp is issue A214, a 10 Sentimos stamp issued by The Philippines on January 20th, 1970. It was a three stamp issue in various denominations showing off the Iligan Steel Mill. According to the Scott Catalog, the stamp is worth 80 cents unused.
The steel mill was constructed by the government in 1952 an part of their National Shipyards and Steel Corporation. It was at the time the largest steel mill in southeast Asia, which remember excludes China and Japan. Operations commenced but were not efficient and lost a great deal of money for the government. The government owned management company then applied to the USA Export/Import Bank for a 60 million dollar loan. This seems a strange thing to do as The Philippines was no longer a colony of the USA and the Export/Import banks job is to assist with American exports. The bank was not forthcoming with a loan but suggested instead that if the steel mill was in private hands the credit markets might be more open to it.
In 1962, the steel mill was sold for a small fraction of what it cost to a new firm controlled by the crony capitalist Jacinto family. For a time this succeeded in getting the mills losses off the governments books. Meanwhile the family used the steel mill as something to borrow against, not for investment in the mill but their lifestyle needs.
In 1974, the Jacintos having extracted what they could get out of the mill defaulted and the mill passed back to the government under a new government owned company, the National Steel Corporation. Losses continued and the government sold the mill off in the 1990s, with the Chinese owned Malaysian outfit, the Westmont Group, playing the part of the Jacintos. Apparently The Philippines had run out of domestic robber barons. The financial crisis in Asia in 1998 was the end for the Westmont Group and the Philippines had to nationalize the steel mill for the third time.
Hope for getting the losses off the books springs eternal and The Philippines again sold the steel mill to Ispat Industries of India in 2004. The financial crisis of 2008 was the end for the mill, as per usual, a great deal of money had been borrowed against it. Interestingly, the Singapore liquidators refused to take possession of the now closed steel mill as they would then be responsible for it. Ispat filed suit against their old bankers for not taking it, and the liabilities involved in owning it. This as greatly complicated the schemes of the local government and current potential robber baron SteelAsia. Closing it was the end. A new investor would have to put in a great deal of money to get it operating again. The point with all the prospective investors was to have some big shiny thing they could borrow against. Nobody believes making steel there could be profitable and the national government does not seem prepared to absorb the losses for the benefit of the workers or even the original import avoidance goal.
Well my drink is empty and I am ever more impressed by the private operators of steel mills around the world who keep them going year after year. This is quite an accomplishment when competing against others for whom losses don’t matter. Come again tomorrow for another story that can be learned from stamp collecting.