The reconstruction of metallurgical construction "national team"



After the outbreak of the international financial crisis in 2008, the market shrank seriously, China's steel industry fell into the dilemma of overcapacity, and the level of corporate profitability continued to decline.

Affected by the downturn in the steel industry and blind mergers and acquisitions in previous years, MCC Group fell into a heavy burden and the bottom of the decline in benefits. Data show that in 2012, the loss of MCC Group as high as 7.36 billion yuan, is the central enterprises in the "big loss", in addition, interest-bearing liabilities of more than 170 billion yuan, entertainment accounts and inventories up to more than 210 billion yuan, a number of banks to stop credit, the capital chain is on the verge of breaking, the survival and development of enterprises are facing a severe test.

The same team, from 1948 to the "cradle of China's steel industry" - the construction of Angang, to the construction of Wisco in 1955, Baotou in 1957, Pangang in 1965, Baosteel in 1978, MCC has witnessed the development of China's steel industry from scratch, from small to large. It has made important contributions to the development of China's iron and steel industry, and is a well-deserved metallurgical construction "national team".

China Metallurgical Group in trouble where to go? Metallurgical construction "national team" how to rebuild competitiveness?

With the "9·5" meeting in 2012 as a turning point, under the leadership of the newly appointed General manager of MCC Guo Wenqing (chairman of MCC since September 2013), MCC aimed at the breakthrough of the transformation and upgrading of the steel industry, and opened a new journey of "returning to the main industry" and reshaping the metallurgical construction "national team".

Since 2016, with the deepening of supply-side structural reform, the steel industry has begun to recover, and in 2018, the economic benefits of China's steel industry have reached the best level in history. The process of reshaping the metallurgical construction "national team" of MCC has achieved the same frequency resonance with the supply-side structural reform of the steel industry, and has made important contributions to solving steel overcapacity and transformation and upgrading, at the same time, MCC has also regained a new life in the test and embarked on the road of high-tech and high-quality development.

Return to one's main occupation

Zhanjiang Iron and steel project

Iron and steel industry is one of the basic industries of the country, with typical cyclical development industry characteristics. Throughout the development process of modern world steel industry, the development state of growth and adjustment resonance, prosperity and low tide alternately. As a company born for China's steel industry, MCC also has to face the impact, risks and challenges brought by cyclical fluctuations in the steel industry.

In the first 10 years of the 21st century, with the rapid development of China's iron and steel industry, the scale of MCC Group has also grown rapidly, and ranks among the world's top 500.

The rapidly growing MCC Group, too optimistic about the market situation and its own ability, in the case of incomplete professional and organization, has entered the paper, cold rolling, mining, smelting and other business fields, many design and construction enterprises are "the whole people" to engage in real estate, so that the operation and financial risks of enterprises are highly concentrated.

After the outbreak of the international financial crisis in 2008, the market shrank severely and China's steel production capacity was severely excess, which dealt a heavy blow to MCC. From 2011 to 2013, MCC Group was listed as a debt risk special supervision enterprise by SASAC for three consecutive years, and its business performance assessment was rated D for two consecutive years.

The crisis and lessons in front of it prompted MCC Group to rethink its pain and begin to rethink its future.

After the rapid development in the past few years, MCC Group has formed a pattern of "one industry dominant" in metallurgy. "MCC was born because of the steel industry, and has made great contributions to the development of China's steel industry, but at the same time, its dependence on metallurgical business is also relatively large." Even as the global steel market slumped in 2012, the metallurgical business still accounted for nearly half of the company's revenue. The cyclical fluctuations in the steel industry have also had a huge impact on the development of MCC." MCC Group chief engineer Xiao Peng to "state assets report" reporter said.

Affected by factors such as maket contraction, overcapacity and rising raw material costs, China's steel enterprises have experienced a comprehensive decline in benefits, operating difficulties, and new investment in steel has fallen off a cliff. For enterprises such as MCC Group, which mainly provides specialized services for steel enterprises, the pressure can be imagined.

"How to transform the enterprise, after the transformation, whether the steel business should be the main business, in 2012, MCC is also facing a strategic choice of what road to take in the future." Xiao Peng said.

On September 5, 2012, at the meeting of the head of MCC Group and China MCC Enterprises, Guo Wenqing, who had just assumed the post of vice chairman and general manager of MCC Group for two months, delivered a speech of more than 15,000 words.

Guo Wenqing pointed out that metallurgical engineering is the "home skill" of MCC people, and it is the national responsibility and mission of MCC. Enterprises should not and cannot abandon it, otherwise MCC will not be called MCC, and the advantages and characteristics of MCC will no longer exist.

Guo Wenqing stressed that in terms of transformation and development, the extension and diversification of the industrial chain have a reasonable "enterprise boundary" and "combat radius", relying on the comparative advantages of the traditional metallurgical industry to extend outward moderately, and its starting point and foothold are to enhance core capabilities, improve good quality, and rebuild and develop new advantages.

This speech cleared the fog of thought that puzzled and constrained the development of MCC, and answered the major question of what direction MCC should move in. Under the guidance of the new direction, MCC Group divested and reorganized the non-main business and non-advantageous business that affected the development of the enterprise, so that the resources were more concentrated in the core business, and embarked on the development road of returning to the main business. This meeting also became a turning point in the development of MCC Group, known as the "9·5" meeting.

Xiao Peng told reporters that the "9·5" meeting solved two major problems in development. The first is the question of direction. We should return to the main business, focus on the main business, and do a good job in metallurgical business. The second is the issue of transformation. It is necessary to seize the opportunity of future development, shift from the priority of output to the development of high quality, high level and high technology, and give play to the unique advantages of MCC.

"Metallurgical steel business is the mission given by the state to MCC Group, and it must not be given up. At the same time, MCC also recognized that the metallurgical market demand has undergone profound changes, not that the market does not exist. Therefore, as long as they can lead the market development and always occupy the commanding heights of technological innovation, companies will never be lost in this field." Xiao Peng said.

Line up the troops

The direction has been clear, and the next test is the execution ability of MCC Group, and the wisdom of resource allocation and combination of the group.

After years of development, MCC has accumulated corresponding advantages in the whole industry chain of metallurgical construction, with a national survey and design institute, a national engineering design institute, a large construction enterprise, and a leading steel structure manufacturer in China. In addition, MCC also has its own equipment manufacturing enterprises, which can provide core equipment for steel enterprises.

Under the changes in market demand, MCC Group continues to deepen reform and innovation to reshape the competitiveness of the metallurgical construction "national team".

The first thing to promote change is to build the basic formation and core strength of the metallurgical construction "national team".

On August 5, 2013, MCC held a seminar for the leaders of MCC Group and China MCC Enterprises, and elevated "Focusing on the main business of MCC and building a Better MCC" to the general guideline for the future development of MCC. Under the guidance of this policy, MCC Group re-allocated the resources of the sub-enterprises of scientific research, investigation and design, clarified the specialty areas of the sub-enterprises to focus on, and the positions in the field of metallurgical engineering.

On January 9, 2014, at the 2014 Work Conference of MCC and MCC, Guo Wenqing put forward new requirements for MCC to stand at the high-end of the international level and the height of the entire metallurgical industry, in view of the serious excess of steel production capacity in China and the urgent need for transformation and upgrading. With the leading core technology, continuous innovation and innovation ability, and irreplaceable advantages in the integration of the whole industrial chain of metallurgy, we assume the national responsibility to lead China's metallurgical construction to a higher level and to the center of the world stage. Under the guidance of this goal, MCC retains and matches high-quality resources in accordance with the "world first" standard, consolidating and strengthening MCC's leading position in the field of metallurgical engineering.

After 2015, MCC Group has successively deployed from the top-level design, action manual, assessment system and other aspects, according to the 8 major parts of iron and steel metallurgy and 19 business units, the first and second echelons of design enterprises have been defined, and the corresponding construction sub-enterprises have formed the basic formation and core team of the metallurgical construction "national team".

After the formation of the basic formation and the core team, there is still internal competition among the sub-enterprises. Through the establishment of an assessment system, MCC dynamically adjusts the setting of the first echelon of the metallurgical construction "National team" and the pairing relationship of each construction sub-enterprise, so that the construction of the "national team" is full of passion and vitality. "The first tier is not just an honor, but more of a responsibility. When a company is in this position, it has to take responsibility." Xiao Peng said.

Since 2016, with the deepening of supply-side structural reform, the steel industry has begun to recover, and the development model has also shifted from the pursuit of scale growth in the past to the pursuit of green and intelligent. In response to the new situation, on July 25, 2017, at the MCC Group and China MCC half-year experience exchange meeting, Guo Wenqing proposed to focus on the main business again, and the national team of metallurgical construction needs to be top and top again.

Guo Wenqing stressed that MCC should pay close attention to green low-carbon, energy saving and environmental protection, intelligent and information technology improvement and technological innovation, provide high-quality operation services for iron and steel enterprises, and build a new core competitiveness. Thus, MCC Group determined the program of high-tech and high-quality development, and promoted the enterprise to a new process of connotative development.

Increased influence and control

With the "9·5" in 2012 as a turning point, MCC Group opened a new chapter of development, and the strategy of "metallurgical construction" national team gradually landed, constantly seized the technical commanding heights of the steel industry, and further improved the influence and control of enterprises.

Intelligent environmental protection material farm is a typical example. In the past, the traditional raw material storage yard of iron and steel enterprises not only occupies a large amount of land, but also has serious dust pollution, poor working environment, low work efficiency, and no small loss of raw materials in the process of transportation and storage. Through targeted research, MCC Group proposed a green and intelligent combination of intelligent environmental protection raw material field solutions, once launched in the domestic and foreign markets have been a large number of applications, won the market's high recognition and praise. The new intelligent environmental protection raw material field technology reduces the dust pollution of the environment by more than 90%, the land use efficiency is increased by 40%, the material loss is reduced by more than 80%, the field equipment is unmanned operation, the working environment is greatly improved, and the work efficiency is greatly improved.

Intelligent environmental protection material yard technology is not only rapidly applied and promoted in the domestic market, but also attracted extensive attention from international steel enterprises. Xiao Peng told reporters that the technology has been applied in steel projects with global influence in many overseas markets such as Brazil, India, Vietnam and Malaysia.

In addition to the relevant technical achievements, MCC Group has created a number of high-quality projects, fully highlighting the competitiveness of the metallurgical construction "national team".

Zhanjiang Iron and Steel is a national major construction project in accordance with the policy requirements of the development of the national iron and steel industry, and combined with Baosteel to restructure Guangsteel and Shaosteel. In just three years, MCC has dedicated this world-class 10 million tons of low-carbon sheet steel plant to the world. Since the project started in May 2012, MCC has sent eight survey and design units and six construction units with advanced technologies in various professional fields to participate in the "Zhanjiang Battle", providing strong technical support and high-quality construction services for the design and construction of Baosteel Zhanjiang Steel project. It was rated as "the demonstration project of China's modern industry" by the Ministry of Industry and Information Technology.

Since the "Belt and Road" Initiative was proposed in 2013, MCC has also actively gone global to accelerate its international competitiveness. On May 29, 2017, at 18:58 local time in Vietnam, with the successful ignition of the No. 1 blast furnace, the first super large blast furnace general contract project undertaken by MCC in foreign countries - Vietnam Ha Tinh Steel project was successfully put into operation. It is understood that through the overall design and systematic organization, the project has driven 3.35 billion US dollars of exports of China's service outsourcing industry, including high-quality equipment and steel structure exports reflecting China's advanced manufacturing capabilities of about 2.45 billion US dollars, which is an important practice in implementing international high-quality production capacity and equipment cooperation.

At 16:16 on June 6, 2018, the No. 1 blast furnace of Kuantan United Iron and Steel Project in Malaysia, designed and constructed by MCC Group, was successfully ignited, and the iron was successfully discharged at 8:36 am on the 7th, entering the trial production stage. The project has adopted a series of international leading energy saving and environmental protection technologies such as environmentally friendly raw material farm, compact "one-pot" hot metal transportation, energy efficient recycling, metallurgical solid waste recycling, and water efficient recycling, and has become a green and efficient steel demonstration enterprise in Southeast Asia.

At present, MCC has metallurgical construction projects in 26 countries and regions around the world. Since 2012, MCC has driven a large number of steel products and complete sets of equipment to "go out" through EPC project contracting and international production capacity cooperation, reshaping the competitiveness of the metallurgical construction "national team", not only leading the transformation and upgrading of China's steel industry, but also further enhancing the international influence and control of China's steel industry.

High-quality development is the only way

In the process of reshaping the metallurgical construction of the "national team", MCC Group has also undergone a reborn change.

Xiao Peng told reporters that in 2012, MCC patents were about 7,000, by 2018, MCC patents were more than 20,000, and ranked fourth among central enterprises for four consecutive years, and won the China Patent Gold Medal for three consecutive years.

In 2018, MCC Coke-resistant Engineering Technology Co., Ltd. and other units under the MCC Group completed the "development and application of clean and efficient coking technology and equipment" and won the first prize of the National Science and Technology Progress Award, which is the first time that MCC Group led to win the first prize of National science and technology progress, filling the historical gap and becoming a new footnote to the technical strength of MCC Group.

In 2012, MCC employed about 160,000 people, more than half of whom were construction workers. In 2018, MCC had 98,000 employees, including 53,000 technical and managerial personnel. In six years, the structure and size of the staff have changed significantly.

"MCC's business model has changed. In the past, our innovative technology was mainly for our engineering service, but the characteristics of engineering construction service enterprises are to clear zero every year. Now we continue to promote the core technology productization and product industrialization, on the basis of traditional metallurgical engineering construction business, and continue to create new business growth points that can continue to create value for enterprises." Xiao Peng said.

On July 20, 2016, the results of the management performance assessment for the 2015 and 2013-2015 term of the central enterprise leaders were announced, and MCC was successfully promoted to the list of A-level enterprises in 2015, and won the title of "Outstanding Enterprise in Science and Technology Innovation" during the 2013-2015 term.

After the reorganization of MCC and China Minmetals in December 2015, the company still maintained a stable development trend. From 2016 to 2018, MCC, a listed company affiliated to MCC Group, showed a continuous growth trend in the accumulated new contract amount, operating income, total profit, net profit attributable to shareholders of listed companies and other indicators.