Saving Steel Mills

This is with reference to news that CEO of Pakistan Steel Mills Major General (retd) Muhammad Javed has requested the federal government to release another Rs five billion of the bailout package so the consistency in PSM’s production could be maintained.
He said the production capacity of the mills would be increased after the arrival of raw material till mid-November and would reach up to 45 percent in January 2013. This is daydreaming. Let us see the ground realities. The condition of steel mills has deteriorated to such an extent that it is causing loss of Rs 1 billion each month and productivity is around 20-30 percent.
The retired general should be congratulated for signing charter of demand of union that is going to put extra burden on sick unit of Rs 150 to 180 million per month. When the ship is sinking you reduce the weight not over load it.
These bailout packages are sheer waste of poor peoples’ money. Even if the angels are brought there will be no change at all, until and unless two major issues are attended. On the top of the list is the union interference to the extent that PSM has become hostage in their hands. Nothing can move without their permission. Secondly, it is the surplus manpower that is taking the toll of the mill. With present strength, around 17,000 with half of them doing nothing, have to be laid off.
All successive governments turned steel mill in to employment heaven and systematically destroyed this most important industrial unit of the country. To add to the injury this government regularised around 4,500 daily wagers in to permanent cadre putting extra burden on the mill only to please the union
At present salary of employees is around Rs 90 crores per month, add another 20 for the fuel that means over Rs one billion per month without giving any output. Even 45 percent production by 2013 as claimed by the general shall not make any difference.
If the government really wants to save this costly asset, three immediate steps have to be taken. First and foremost is to ban the union immediately for a period of four years; secondly, reduce the employee strength to 50 percent; and finally, appoint professionals to run this mill instead of showering these high profile posts to favourites. There is no other option to save this costly asset of Pakistan.
MUKHTAR AHMED
Karachi