Seismic

President BBM mentioned the proliferation of substandard steel but offered to policy solution to the problem. The matter, he says, will be investigated.

Several plants using obsolete induction furnace (IF) technology were built over the past few years. The President starts counting from 2018, seeming to suggest that the entry of these obsolete plants was attributable to the Duterte administration.

The more compelling contest should be Beijing’s decision to ban plants using IF technology. These plants are blamed for the heavy air pollution that enveloped China then. Many of the plants dismantled because of this policy found their way here. Today, about 40 IF plants have been transplanted from China to the Philippines.

There is another reason besides proximity that explains why the obsolete plants were relocated here. The steel industries in most of our neighbors in the region have come under the control of Chinese steel giants. These giants would not tolerate competition from substandard steel produced by banned technology.

Only the Philippines stands outside the realm of Chinese steel giants. Filipino steel manufacturers resisted offers from Chinese corporations to buy in or enter into joint ventures. Currently, some Filipino manufacturers use some of the most advanced steelmaking technologies in the world.

It could also be that some influential persons in the Duterte administration helped facilitate the entry of the banned IF plants from China. But available evidence point to toleration rather than policy encouragement of these plants.

There is speculation that the ban on IF plants in China represented the triumph of one faction of the Chinese ruling elite over the others. The triumphant faction has invested in more modern steelmaking plants. The losing faction, invested in obsolete IF technology, found ways to transfer the banned plants elsewhere. These transfers, by the way, also opened an avenue for laundering money.

The involvement of politically influential political factions in China should explain why the raids recently conducted by Philippine authorities on some of the IF plants precipitated something of a diplomatic incident. The Chinese embassy protested the treatment of their nationals found in the raided plants.

There is enough reason for some of our security officials, such as Defense Secretary Gilbert Teodoro, to closely scrutinize the IF plants. Some of them were found to be using hazardous (including radioactive) raw materials imported from China. The substandard steel they manufacture pose a hazard to public safety. The building that crumbled in Angeles City, for instance, used steel procured from an IF plant in Magalang.

The proliferation of substandard steel manufacturing cuts into the viability of Filipino steelmakers. Using obsolete technology banned at the source, availing of possibly cheaper financing, the possible involvement of money laundering activities and often using lower quality scrap metal, they are able to carve a share of the domestic market.

When corruption in our public works projects was at its peak, we cannot discount the symbiosis between corrupt contractors and suppliers of substandard steel manufacturers. Corrupt contractors care very little about the quality of their projects. They are in it for the illicit profit even if the inferior projects bring misery to Filipino communities. As we saw in the last flooding episode.

The solution to the proliferation of substandard steel products is available if the President cares to seriously address the matter. Experts at the DTI have long recommended a policy requiring steel products – especially reinforcement bars – to meet “seismic” standards. This will require the steel products to have the tensile strength to withstand a seismic event.

The DTI, for reasons only they know, have not acted on the policy recommendation. Imaginably, our trade and industry bureaucrats are under great pressure from interest groups whose businesses might be hurt by a policy aimed at improving safety standards for our people.

According to metallurgists, the steel produced by the IF plants will fail to meet “seismic” standards. There is no way the obsolete technology could meet the tensile strength requirements necessary to prevent buildings from collapsing and bridges from falling. Hundreds of millions, possibly billions, in hurried investments in importing old steel technology from China would be lost.

Our regulators, however, face literally life and death policy choices. If public safety is not the principal consideration, then we may simply allow substandard steel products to grab market share. But if our people’s safety is the first concern, then our regulators must enforce a “seismic” grade requirement.

When the General Santos area was struck by an earthquake recently, several public school buildings collapsed. These are single-level structures, not even high-rises. It is a stroke of fortune that young students were not present when the classrooms collapsed.

We expect quakes to happen. We live in the western Pacific rim of fire. Every precaution needs to be taken to protect our people from inferior steel products.

Beyond promising more investigations, President BBM should instruct the DTI to adopt the higher grade requirement for steel products sold in our market. Public safety requires it.

Part of the crusade against corruption in our public works should be an honest examination of the materials used to build vital projects. In the last flooding episode, a bridge in Tarlac collapsed. Several dikes surrendered to the onslaught of water.

It is not so easy to examine flood control projects for the quality of materials used to engineer them. The corrupt syndicates do not care much about engineering quality.