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Published on April 18, 2008

Pichaya Changsorn

The Nation

Who says the elephant cannot dance? Kan Trakulhoon, president of the Siam Cement Group (SCG), says the red elephant can now shake a leg.

The red elephant is the corporate logo of SCG, one of Thailand's oldest and largest industrial conglomerates. The company is undergoing its most challenging transformation in decades.

Under Kan's leadership, the manufacturing giant that once concentrated only on the domestic market plans to become a leader in Southeast Asia. Even more challenging is its goal of developing its own technology, even though it currently relies heavily on foreign technology.

The current oil-price crisis, which immediately hit SCG's balance sheet, has complicated matters. With its core businesses consisting of petrochemical, cement, building materials and paper manufacturing, SCG is quite sensitive to fluctuations in energy prices. Kan said cost management would be the major focus of SCG this year while at the same time staying on course to meet its longer-term goal.

"Certainly, as a manufacturer cost is important, and we must pay particular attention to energy costs. But on top of it, these goals are our future," Kan said. "If we remain a traditional manufacturer, I believe our competitiveness will erode. We must realise we're in the commodities businesses. With research and development (R&D), we can create higher-value products and services."

Investment in R&D has doubled in each of the past three or four years and is higher than the original target.

"Last year, we said we would spend Bt1 billion on R&D in 2011. Now the target for 2012 is Bt1.6 billion," Kan said.

SCG set its R&D budget at Bt700 million this year, up from Bt300 million last year.

Each business unit has been tasked with drawing up a technology road map for the next 10-20 years that considers customer requirements and technology gaps it must fill.

"We must be quick to terminate products we cannot go further with [in terms of technology reliance]. The road map will also set a course on how to stop their production," Kan said.

Researchers are not the only ones whose careers are receiving a boost. SCG's marketing and sales personnel have been offered more challenging tasks. The marketing head, for example, has been upgraded to Jor 3 (third management level) - the same level as the managing-director position in some subsidiaries.

Kan said it was a challenge to mix the manufacturing culture, which focused on discipline and punctuality, with the innovation culture. He said the change would come gradually.

"It won't rap. The elephant has to dance majestically," he said with a grin.