Pakistan Steel – Beginnings of a Turmoil?

Columnist M ZAFAR examines the problems of one of Pakistan’s leading heavy industries.

On the last day of January 2002 the pot boiled over at Pakistan Steel. A  few days earlier the management had terminated the pick and drop facility to employees living in Thatta and North Karachi. In a spontaneous show of anger and disapproval PSM employees blocked the approach road to the works that forced everybody to take notice. The demonstration lasted well into the night and was called off at three o’clock in the morning at the persuasion of district authorities who promised to moderate a subsequent meeting between employees and management for working out an agreement on controversial issues. Six days later the parties met for negotiations with the district authorities in attendance. An agreement was reached and announced. Visibly upset at the scale and depth of disenchantment of the employees PSM management went into fits of raving and ranting much like an embarrassed Station House Officer used to sending ‘ALL Well’ signals. Instead of putting the episode behind and rolling on, the management retracted from the agreement the next day. Through a terse handout it notified  ‘self-serving elements’ that management equated the industrial  action of 31 January with ‘terrorism’ and would proceed accordingly.

Through another notice, officers were admonished for their pro-worker attitude and simultaneously informed of the extension of the date of VRF  scheme by another month. Notices of various kinds were served to 27 officers. PSM also applied for and received a prohibitory order from Karachi Bench of the National Industrial Relations Commission. Law enforcement agencies were also informed.

PSM management desired to have the Unions leaders booked as terrorists. The police and the district authorities who were witness to the action and the subsequent agreement counselled restraint and wished the management to get down from the high horse and resolve the problems that  actually exist. Nazim of Karachi City government said that much in a public statement. The effect of advice was, however, not visible. A non-issue seems to have brought employees and management to the brink of  a show down. Or is there something more than what meets the eye? Actually crisis at PSM has been brewing for quite some time and is deeper than is perceived. The higher management has no direction and no plans for a strategic turnaround, operational systems are suspect, schedule of maintenance is dangerously stalemated, safety is a question mark, human resources are pauperized and workforce is demoralised. These  are issues that require massive intellectual and technical inputs and are clearly beyond an essentially tactical leadership.

The credibility of current management was damaged beyond recall on 6th June 2001. The disaster called for leadership based on integrity and courage that could face the truth and restore confidence in management and machines. In the event a theatre of the absurd followed. People could and did look through the sham. Employees’ confidence in the whole environment was shaken. PSM’s ever-increasing hunger for retrenchment is enigmatic. Voluntary Retirement Facility should have ended in September 2000 by when the objectives had been all but achieved. But the scheme has been kept alive  through new leases of life. Why? Is it to be used as a mechanism to buy out the departure of conscientious and hence troublesome elements? This is the common perception anyway.

Manpower has already been reduced to dangerous levels well below the DPR  limit. Majority of craftsmen painstakingly trained over a period of 20 years have been sent away. Untrained daily wage workers now regularly stand in for experts in the trade. In the 6th June accident the casualties included four untrained daily wage workers. Doesn’t this fact alone make nonsense of the argument that only ‘surplus to the need’ workers have been laid off? What about reserve of manpower? Today PSM does not have reserves for emergencies.

Maintenance of plant seems to be left to the elements, as the outfit responsible for it is reportedly busy in constructing cricket pitch of international standards? Capital repairs programme is woefully lagging — only about 35-40% of the planned work seems to have been completed. Situation at the Blast Furnace, Hot Strip Mill, Coke Oven and Oxygen plant is critical. Why this delay? ‘Due to international situation’ wrote the PSM Public Relations Manager recently.

Production came down to around 70%. Some explained it as intentional because with sales having plummeted production to capacity would only increase the costs. Granted then why essential decisions on adjusting product prices were not taken immediately after announcement of budget? PSM waited for a miracle for six months. When finally it reacted by a marginal reduction in prices a huge gap was already evident in the revenues.

Pakistan Steel blames Ministry of Industries and Production for having recommended the regime relating to steel tariff. Be that as it may, informed leadership at Pakistan Steel would have known that there was no  basis for them to hope for continued tariff protection. WTO aside, tariff cover is justified for job protection. Pakistan Steel that had already shed 7,000 employees and was prepared to fire another 1,500 had no  case. From the point of view of policy makers tariff protection would amount to supporting inefficiencies at Pakistan Steel at the cost of steel user industries where it would translate into huge job losses. According to a press report the Minister of Production  has advised Pakistan Steel to  prepare itself  to compete with imports in an environment of reduced protection and warned that tariffs will be further reduced by 5% in the coming year. Whether in the background of massive  retrenchment, poor  safety record, bad repair and maintenance, mulish marketing policies and low morale of workforce the management has  capacity to cope, is an open question.

A great upsurge in the country’s economic activity seems to be around the corner and if Pakistan Steel claims its due share it can catch up with its so far thwarted programmes of modernisation and expansion. Reconstruction of Afghanistan is bound to generate huge opportunities for engineering industry. Pakistan Steel can and must play a pivotal role in this industrial resurgence.

For that purpose it has to set its own house in order and get out of its  current mode of thinking. At this time PSM cannot afford strife at the work place. For improved production, quality and reduction in costs labour has to be taken along and not ridden. PSM must plan better, reduce wastage, and improve quality and yield. They have to start thinking of market research and reorientation of production. Concurrently they have to take stock of their existing systems that have  failed so miserably to secure corporate goals.

Pakistan Steel is not an administrative or a financial problem. Its current crisis is moored in technical ineptitude and moral bankruptcy — areas that need to be addressed with competence and integrity.