The Entrepreneur Of The Year Philippines 2019 has concluded its search for the country’s most successful and inspiring entrepreneurs. Entrepreneur Of The Year Philippines is a program of the SGV Foundation, Inc. with the participation of co-presenters Department of Trade and Industry, the Philippine Business for Social Progress, and the Philippine Stock Exchange. In the next few weeks, BusinessWorld will feature each of the finalists for the Entrepreneur Of The Year Philippines 2019.
Benjamin Yao
Chairman, President and CEO
SteelAsia Manufacturing Corp.
BENJAMIN YAO has always dreamed of rebuilding the Philippine steel industry. He continues to build towards this dream through his work in SteelAsia Manufacturing Corp. (SteelAsia), the Philippines’ flagship steel firm and among the largest rebar manufacturers in Asia.
When his father started SteelAsia in 1965, Mr. Yao recalls working for him seven days a week, while at the same time attending night school at the University of Santo Tomas.
The Philippine steel industry back in the early days hardly contributed to the country’s economic development, burdening the construction and property development sector with its high cost of production. The steel factories’ machines then were obsolete and inefficient but Mr. Yao was determined to modernize them. He believed that long-term sustainability was possible only with sound business fundamentals such as technology-based cost efficiencies.
Determined to catch up with the rest of the world, Mr. Yao went to Singapore in 1996 to talk with the Singaporean government and partnered with The National Steel of Singapore. Soon after, he built the country’s first modern rebar mill in Bulacan. This was a sizable investment that involved making significant changes in the business. “It wasn’t simple because that was in the early 90s, when the state-of-the-art equipment was more than 10 times bigger than what we currently used and had space for,” Mr. Yao explains.
Right after building the mill, the region was hit by the Asian crisis of 1997. SteelAsia then struggled to survive and dealt with multiple banks given that its loans were denominated in US dollars. While other companies ran away from their creditors, Mr. Yao declared that he would honor all the company’s debts, to the extent of liquidating his own personal assets. “Basically, it was survival mode,” he recalled, “Working capital was a major requirement for our continuity.”
He then came up with the idea of offering a cost-plus-tolling arrangement with major property development companies. Tolling is an arrangement in which a company processes raw materials or semi-finished goods for another company at a fixed rate, basically providing the production service for a fee. This arrangement, while having very slim margins, allowed SteelAsia to operate at full capacity. The strategy paid off and the tolling arrangement was welcomed by major developers. By ensuring full utilization, Mr. Yao was not only able to keep SteelAsia operational, he was able to slowly raise the funds to pay off the company’s debts.
Seeing the opportunity to further scale up operations, Mr. Yao decided to operate mills in Batangas, Cebu, Misamis Oriental and Davao. “That was part of our regionalization plan to lower costs for customers,” he states.
This resulted in lower freight costs and faster response times. Mr. Yao said that, because of regionalization, SteelAsia is able to apply a uniform price for all customers, whether they are in Luzon, the Visayas or Mindanao, assuring them that the firm can supply the best products at a fair cost.
Mr. Yao describes SteelAsia as being disruptive. Through expansions and upgrades, SteelAsia continues to pioneer new technologies in the Philippines, bringing in the latest equipment from Japan and Europe. These have helped the company push down the cost of rebar through productivity, efficiencies and scale. As one of the largest rebar producers globally, SteelAsia claims to be the world’s single largest buyer of billets (the material input for manufacturing steel bars). SteelAsia’s growth has reshaped strategies of billet manufacturers and traders globally. “In the steel industry, you have to be more entrepreneurial,” he says, “You have to make the decision not just for today but for the future. You have to be bullish on the Philippines and have faith in our country.”
Recently, SteelAsia made the country’s first steel bar export, consisting of a P300-million shipment to Canada.
Mr. Yao claims that SteelAsia’s business model has built-in corporate social responsibility because of indirect employment it generates for the communities where the company’s mills operate. Including businesses supporting operations and downstream linkages, an estimated 15,000 new jobs have been created. SteelAsia also gives back to the community and environment through their foundation that plans CSR activities with sustainability in mind.
Mr. Yao knows that his vision of building a Philippine steel industry similar to those of other countries is still far from being realized. He is envious that neighbors like Thailand, Vietnam, Indonesia and Malaysia are able to produce all steel requirements locally. In the Philippines, apart from reinforcing bars, or rebars, most steel products are imported, including those needed for infrastructure and industrialization. “It’s a very basic thing. If our neighboring countries can do it, why can’t we do the same?” Mr. Yao said. “There’s a market already and it’s just about making it happen.”
Since steel is a basic infrastructure need, Mr. Yao envisions a steel industry that will lead to manufacturing resurgence in the Philippines. As part of his aim to elevate the steel industry and reduce dependence on imports, SteelAsia broke ground for a steel beam plant in Lemery, Batangas and a wire rod facility in Candelaria, Quezon. Materials for both products are currently 100% imported. Similarly, new projects are under way to manufacture H beams, sheet piles and channels — steel goods which the Mr. Yao said are imported. The company is likewise now pioneering reinforcing mesh line that will cut construction time and costs, particularly for road infrastructure. He is also working on a new joint venture with China’s HBIS Group to bring in the Philippines’ first blast furnace.
These projects bring the country closer to Mr. Yao’s vision of building a robust Philippine steel industry. “It’s a never-ending process. The Philippines is still behind and catching up,” he said. “We need to have the humility and openness to learn and adapt from others who may be more advanced than us. We don’t have to reinvent the wheel.”
The official airline of the Entrepreneur of the Year Philippines 2019 is Philippine Airlines. Media sponsors are BusinessWorld and the ABS-CBN News Channel. Banquet sponsors are Global Ferronickel Holdings, Inc., Jollibee Foods Corp. and Uratex.
The winners of the Entrepreneur Of The Year Philippines 2019 will be announced on 15 October 2019 in an awards banquet at the Makati Shangri-La Hotel. The Entrepreneur Of The Year Philippines will represent the country in the World Entrepreneur Of The Year 2020 in Monte Carlo, Monaco in June 2020. The Entrepreneur Of The Year program is produced globally by Ernst & Young.
