Steel: A Step at a Time

STEEL A Step at a TimeUnlike many developing nations, which try to move from agrarianism to industrialization in one unrealistic leap, Taiwan’s carefully programmed econo my has progressed a step at a time.

The system has paid off. Since 1952, its gross national product has risen at an annual rate of 8.5%, while per cap ita income has climbed 4.4% a year.

Now the island economy is preparing for its most ambitious single undertaking. In six months, construction will begin on a steel-producing complex at an estimated cost of $250 million.

The plan exemplifies the long-range approach of the nation’s industrial developers. Mindful that steelmaking techniques are constantly changing and improving, the plant will be constructed in careful stages. First will come hot and cold rolling mills and a tinning operation, which will cost a total of $89.8 million and have an annual capacity of 555,000 tons. When these are completed in four years, work will begin on the next phase—an iron-reduction and steelmaking plant that will be operation al by 1976. The site for the complex will be the southern port of Kaohsiung into which will flow slab and billet for the first stage and, later, iron ore from Australia to produce the finished steel.

Packaged Mill. Before President Chiang Kai-shek gave the 11 project his support, businessmen and government officials spent 18 months studying a stack of reports from steel experts. Several factors argued with some persuasiveness against the effort. Among them: the proximity of Japan’s burgeoning steel mills and the relatively small demand for semi-finished steel on the island, now amounting to 500,000 tons a year.

But advocates of the plan pointed out that demand should double in a decade. More important, they predicted that steel production could trigger a new era of industrial growth. So far, Taiwan’s businessmen have concentrated on light manufacturing items such as electronic components and consumer goods; a steel plant could produce a heavy-machinery industry and give further impetus to the country’s infant shipbuilding efforts.

Responsible for Taiwan’s getting into the steel business is Minister of Economic Affairs K. T. Li, 58, who is quick to play down his role. “The market dictates everything,” says Li. “I dictate nothing.” But Li’s part in the island’s economic emergence is well known. Educated at Cambridge University, he interrupted his graduate physics studies in 1937 and returned to China to help in the war effort. Li became an industrial planner, ran an iron-and-steel works, then set up a shipyard in Shanghai before moving to Taiwan when the mainland fell to the Communists.

In tackling the steel-mill project, Li’s steady-as-you-go scheme was challenged by bureaucrats who wanted to rush the country into steel by buying a packaged mill promising production in three years. Li’s backers successfully argued that such a plant would cost more than its long-range worth. His next problem is to raise money for his own kind of plant. Plans call for three-fifths to come from private sources (foreign and domestic), two-fifths from the government. But this should not stop Li, who has a well-earned reputation for achieving success a step at a time.