Empire of steel

By , Staff writer of The Christian Science Monitor

When Shim Chang Sup joined Pohang Iron and Steel Company in 1973, he was seeking the challenge of ``creating something new out of nothing.'' At that time, ``the first blast furnace was just completed. We were literally building the steel industry in Korea for the first time,'' he says.

Just 11 years later, Yang Jong Su entered the company out of college. Then the attraction was different. Jobs were harder to find, he said, ``so I looked for stability, the chance for promotion, and good pay.''

In that short span of time, South Korea has gone from its fledgling first steps to becoming one of the world's major industrial nations. Since Mr. Shim started work in Pohang, the countryhad become the seventh-largest steel producer in the world.

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Since 1984, POSCO, as the company is called, has become the world's second-largest steelmaker. POSCO's steel is sold around the world.

Third-world nations study POSCO as a model for their own industrialization. Even neighboring communist China wants POSCO to help it build a modern steel industry.

All this holds a certain irony for the men who built POSCO. When they started back in the 1960s, they were told that South Korea was too poor and too lacking in resources to be able to profitably create and manage a capital-intensive industry like steel. When Korea was divided after World War II, the factories and mineral resources for industrialization were almost all in what became communist North Korea.

But the military-led government was determined to build an industrial base. ``Our understanding was that without steel, there would be no machinery, there would be no ships, no cars, no construction at all, and no electronics industry,'' recalled Park Tae Jin, a former general who was called on in 1968 to head POSCO.

The early efforts of private industry, at government urging, met with failure when foreign companies rebuffed their search for technology and investment. The government took on the task, forming a consortium with foreign firms and requesting financing from the World Bank. In 1969 the World Bank, as Mr. Park put it, ``said Korea was not capable of having an integrated steel mill.''

Park then sought help from Japan. It supplied technology, loans, and aid - reparations for 40 years of colonial rule. ``Some Japanese leaders ... thought without economic development, there would be no peace in the Far East,'' Park said. ``As Japan had colonial experience in this country, they rightly assessed the capacity of the Korean nation.''

Of course, Park said, ``they would not have imagined that Korean steel industry would have developed to such an extent. Their original intent was that Korea would follow Japan from a far distance.''

Park gets much of the credit for his single-minded leadership of POSCO. Although the government retains a large portion of company shares (half its holdings have recently been sold to private investors), Park has run POSCO virtually as a private firm.

The company bears the mark of his tough but paternalistic management. Near the mills is well-kept company housing, surrounded by neatly trimmed gardens. Wage levels are higher than the South Korean industrial average.

POSCO also has a reputation as a fierce opponent of trade unions. POSCO has no union, a fact the company attributes to the satisfied needs of its workers. Mr. Shim, who manages the Pohang cold rolling mill, says of 230 people working for him, ``very few, like one or two, are having some thoughts about the union.''

Still, Shim admits to having had a ``little trouble'' during a nationwide strike wave last summer, but says those workers have now ``come around.'' Just in case, POSCO got itself classified as a defense industry, a status that restricts the rights of unions.

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