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SCG reveals one-year plan to weather Covid-19 storm

Jul 29. 2020
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By The Nation

Siam Cement Group (SCG) has created a "Plan for the Best" roadmap for its three business segments to adapt during the Covid-19 crisis, while forging ahead with its Vietnam petrochemical plant project.

Over the years, SCG has overcome business setbacks ranging from the 1997 Asian financial crisis, which saw SCG restructure, to 2009’s Map Ta Phut environmental crisis which put the brakes on 20 investment projects for one year.

However, Roongrote Rangsiyopash, President and CEO of SCG, said the global Covid-19 outbreak is different and more severe than the 1997 financial crisis, when Thai exports still grew to meet demand outside Asia. SCG was nevertheless heavily affected as business was diversified, resulting in huge investments and liabilities as the company narrowed its focus to three business groups – cement and construction products, chemicals, and packaging.

Next came the so-called Hamburger Crisis of 2007-08, which hit the United States and Europe but had a softer impact on Thailand through reduced investment flows. Meanwhile the impact of Thailand’s 2011 flood crisis on SCG was minimal as offices were temporarily relocated before things quickly returned to normal.

Roongrote said the Covid-19 crisis had no precedent in his lifetime, noting you had to go back a century to the Spanish flu pandemic for a comparable event.

As Covid-19 spread quickly from China to Asean countries and beyond, many Thai businesses began struggling for survival amid a climate of public fear. Businesses related to entertainment, tourism and travel have been especially hard hit.

SCG boosts crisis management

SCG is considered lucky because its main business is not in a sector that has been severely affected, like airlines, hotels or entertainment. The company also has experience coping with previous crises, including the 2011 floods when SCG relocated its headquarters, arranged for employees to work from home, and launched a Business Continuity Management Unit (BCM) to enhance teamwork.

Now, SCG has invited virus experts to lecture staff on disease prevention, while arranging for 90 per cent of its employees to work from home.

‘Digital’ survival

SCG uses digital systems to monitor and run most of its global business, meaning staff can work outside the office to manage e-mail billing and e-documents via blockchain systems to guarantee security.

Meanwhile, transferring meetings online via Zoom has helped staff to work more efficiently and solve a greater range of issues.

4X management speed

According to Roongrote, crisis management must adapt by speeding up decision-making and working processes. SCG managers have now switched from their normal monthly meetings to meetings once a week, which has made the work process four times faster. The acceleration is needed in order to solve problems quickly, even if there are fewer customers during the virus crisis. Meanwhile, SCG’s construction projects with the government sector are still continuing and its packaging business is operating as usual.

2021

Vaccine production that will end the virus crisis is expected to begin next year, but SCG has plans to cover two scenarios.

1. Prepare for the worst: The Covid-19 crisis drags on until the end of 2021 when a vaccine is finally delivered. Meanwhile, Thai cases increase beyond 100,000 and an Italy-like lockdown prohibits people from leaving the house so that economic activities, including construction, come to a halt.

In this scenario, SCG will employ a business management strategy to weather the storm until the end of 2021.

"In the period from February-April, staff were told not to look ahead and focus only on sustaining the business with the same goal – to get this boat through the storm and patch any holes to survive," said Roongrote.

2. Plan for the best: Encourage each SCG business group to develop products to meet demand caused by the virus crisis. The packaging business should increase deliveries and use more packaging that is sealed and safe from contamination. The construction materials business must think of new products – such as a touchless toilet with sensor system and batteries that only need to be changed once a year. Chemical Business must find new channels for the “new normal” market.

Vietnam petro project goes ahead as planned

With no new domestic cases for many weeks, the outbreak in Thailand has died down, bringing a brighter picture for business plans and investment.

The virus crisis prompted SCG to cut its investment budget of Bt70-80 billion by 20 per cent and pause some projects, but those figures will be revised when the outbreak has been further controlled.

However, SCG is proceeding as planned with investment to construct a petrochemical plant in Vietnam, where Covid-19 is under control and the economy is expected to recover quickly since it is not heavily reliant on tourism and has a population of almost 100 million.

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