"It's time that major steel-makers in Thailand considered mergers and acquisitions to enlarge their operations, not only for the sake of survival, but also to cope with tougher global competition, in which there are now only three or four major world players left," he said.

Sawasdi told the seminar "Thailand's Steel Industry Direction and the Industry's Challenges" that local steel-makers had to compete among themselves as well as with global players.

He said Thai steel-makers had focused only on their own companies instead of on the future of the industry and would eventually be forced to shut down, because of their low competitiveness.

In the past, Thailand's steel industry was protected by high import tariffs imposed by the government. However, these protective measures will be swept away under the trade-liberalisation agreements of the World Trade Organisation.

"The WTO's freer-flow policy on trade and investment will bring difficulties in Thailand, and the only way to survive will be to join hands with each other," he said. "It's time not only for Sahaviriya Steel, but also for NSM to change after creating their empires under tariff-protection measures."

He said the merger of the two companies would create the country's biggest steel manufacturer, producing 8 million tonnes per year, and this level of production would strengthen the country's bargaining power.

Until now, local steel manufacturers have reached individual capacities of 500,000 to 2 million tonnes per year, a level  that cannot compete with the global players. For instance, the merger of the Netherlands-based Mittal Steel Group and Luxembourg-based Arcelor had created the world's largest steel-maker. The synergies achieved have also reduced its production and management costs.

Office of Industrial Economics secretary-general Atchaka Brimble said the government had encouraged steel producers to concentrate more on high-quality output and commit funds to R&D.

Watcharapong  

Thongrung

The Nation