The Siam Cement Public Company Limited History

Company Perspectives:

The Siam Cement Group is committed to the belief that business must be conducted ethically. The management team and employees at all levels have continuously and faithfully upheld our four guiding principles in doing business: The Group believes that all those who are involved with our business must be treated with integrity. Whether they are our customers, shareholders, employees, or business associates, they must be treated fairly when doing business or when they associate with us. The Group highly values our staff and considers them the most important of all assets. We recruit capable people, extensively train them, and retain them through a system of strong support and generous rewards. The Group intention is to operate the business governed by its duties and responsibilities to the nation and its society. The Group will perform admirably as a good citizen by both serving its social and communal responsibilities in all areas where the Group is located.

Key Dates:

1913:

King Rama VI sponsors founding of Siam Cement in order to reduce the country's reliance on imported cement.

1915:

Production begins with a capacity of 20,000 tons.

1938:

The company begins producing roofing tiles in its first extension beyond cement.

1948:

The company builds Thailand's first steel plant and begins producing iron and steel.

1952:

The CPAC concrete products group is created.

1962:

The company forms a distribution operation, the Construction Materials Marketing Company, later renamed Siam Cement Trading.

1976:

The company invests in Siam Kraft Co., in its first diversification effort.

1983:

A license to produce high-density polyethylene marks company's first entry into the petrochemicals market.

1990:

The first of a series of reorganizations, into four core businesses, is implemented.

1998:

The company announces plans to sell off noncore holdings.

2001:

After sell-off fails, the company is restructured into six core businesses and two holding companies.

2003:

Siam Cement creates a new Building Products division.

Company History:

One of Thailand's largest companies, The Siam Cement Public Company Limited is a diversified conglomerate with operations focused around five strategic business units: Cement; Building Products; Distribution; Paper; and Petrochemicals. The company's paper operations are grouped under the holding Siam Pulp and Paper Plc, and focused on production of industrial paper, packaging products, and printing- and writing-grade paper. Under Siam Cement Industry, the holding company for the group's cement division, Siam Cement is one of the ASEAN region's leading producers of cement and concrete products under the Elephant, Tiger, CPAC, and other brand and trade names. The company's Cementhai Chemicals Co. holding encompasses its production of petrochemical products, which include polyethylene resins, olefins and polyolefins, polystrene and other chemicals. Siam Cement's building products division, grouped under Cementhai Building Products, is Thailand's leading maker of construction materials and building products, and includes the company's ceramic tile, sanitary fittings, roofing materials, concrete end-products, gypsum board, insulation products, and door production. Last, the group's Distribution division is responsible for the company's national and international trade and distribution operations, as well as logistics and warehouse services. In addition to these operations, the company has a list of diversified operations--ranging from CRT display production to tire manufacturing and steel production--slated for divestment since the late 1990s. Siam Cement is led by Chumpol Na Lamlieng, president and managing director. The Thai royal family owns more than 35 percent of the publicly listed company.

Royal Origins in the Early 20th Century

Despite a modernization effort backed by Siam's royal family in the mid-19th century, the kingdom remained heavily reliant on foreign imports at the beginning of the 20th century. The ascension of ruler King Rama VI in 1910 marked the start of a new period of industrialization in the country. Under the king's influence, a new company for the production of cement was set up in 1913, called Siam Cement. Leadership of the company was given to Norwegian native Oscar Schultz (the company was not to have a Thai-born head until 1974), but the royal family remained a primary shareholder.

Construction began on a plant in Bansue, with production starting in 1915. Early cement production was based on naturally formed marl (calcium carbonate) deposits. By the end of the decade, Siam Cement's annual production had topped 25,000 tons. By then, too, it also had begun supplying the export market, shipping cement to Singapore and Malaysia. The discovery of new marl deposits in Ban Mo enabled the company to step up production. In 1922, Siam Cement installed a second cement kiln, boosting its production capacity to 35,000 tons. A third kiln, added in 1928, pushed the company's total production capacity to nearly 110,000 by the end of the decade.

Siam Cement began its first diversification efforts in the late 1930s. At first, the company built this expansion effort around its core cement product, launching a roofing tile manufacturing operation, Siam Fiber-Cement Company. In 1942, however, Siam Cement entered a new field of operations, building a test facility for producing steel. That plant was damaged during Allied bombing raids in 1944, along with part of the company's Bangsue cement factory.

Postwar Expansion

Siam Cement rebuilt after the war, restoring the Bansue facility. In 1948, the company inaugurated a new cement site as well, in Tha Luang, adding some 130,000 tons of annual production volume. That year, also, the company completed its steel plant, becoming the first in Thailand to begin manufacturing steel and iron. Two years later, Siam Cement began production of steel bars as well. That activity enabled the company to establish a new division, the Iron and Steel Department, which began producing components needed for the company's machinery needs.

Siam Cement then extended its cement operations with the formation in 1952 of Concrete Products and Aggregate Co., or CPAC, which began producing its own range of concrete products. CPAC also opened a pre-stressed concrete facility that year. Meanwhile, Siam Cement neared completion of a new refractory brick facility, which began production in 1953.

Siam Cement continued to add to its production capacity, adding more than 600,000 tons of annual capacity by the beginning of the 1960s. The company stepped up its production effort over the next decade, particularly with the addition of a new plant in Thung Song, the company's first to use a lower-cost dry production method. That plant, which began production in 1966, added nearly 500,000 tons to the group's overall capacity.

As CPAC continued to add products, such as reinforced concrete pipes starting in 1961, Siam Cement created a new, dedicated distribution division to handle trading of its growing number of products. That subsidiary, called Construction Materials Marketing Company, began trading in 1962. Siam Fiber-Cement also expanded during the decade, adding asbestos cement pipe production in 1966, Glasolit translucent sheets in 1968, and asbestos cement sheet in 1969. During this time, Siam Cement launched production of white cement as well.

By the end of the 1960s, Siam Cement had added more than 1,000,000 tons of production capacity with the installation of several new kilns at its Bangsue and Tha Luang sites. An addition 570,000 tons of capacity came on line in 1971 at a new site in Kaeng Khoi.

Siam Cement's expansion led to a restructuring of its operations in 1972. Siam Cement Co. Ltd. now became a holding company, placing its manufacturing companies under a new Siam Cement Group structure. At this time the company adopted its symbol, a White Elephant. By then, the company had shed most of its steel operations, spun off in 1966 as Siam Iron and Steel.

Diversified Conglomerate in the 1980s

The appointment of Boonma Wongswan as general manager in 1974 marked the first time a Thai native took the leadership of Siam Cement. Wongswan was replaced in 1976 by Sommai Hoontrakool. The importance of Siam Cement in Thailand's economy was underscored by the fact that both Wongswan and Hoontrakool later became Finance Ministers in the Thai government.

The new management marked the beginning of a massive diversification program that saw Siam Cement grow into the country's leading conglomerate by the end of the 1980s. One of the company's first moves beyond its core cement and building materials market was the purchase of a stake in Siam Kraft Co. Ltd. in 1976. The company reinforced its position in that market in 1979 with the purchase of a stake in Siam Kraft Paper Company, as well as Thai Containers Ltd. These investments formed the beginnings of what was to become a core company division.

Siam Cement stepped up its diversification effort in the late 1970s. In 1978, the company began to target a series of overseas investments and joint ventures with foreign partners, forming a new subsidiary, SCG Corporation, for this purpose. SCG immediately went into business with the Prosperity Steamship Company of Hong Kong, creating Siam Prosperity Shipping. Meanwhile, Siam Cement itself formed a joint venture with Japan's Kubota that year in order to produce diesel engines for the Thai farm machinery market. At the same time, the company's international trade business had grown beyond its original construction materials market, prompting a change of name to Siam Cement Trading (SCT).

Siam Cement continued to invest in its cement business despite its increasingly diversified interests. In 1981, for example, the company debuted a new 1.6 million ton cement kiln at its Tha Luang plant. The company shut down its aging Bangsue plant that year; the new kiln in Tha Luang also allowed the company to shut down its four oldest kilns at that plant as well. These moves marked the company's further shift into the dry production process.

Yet diversification remained the order of the day for the company. In 1982, it took over the Firestone's Thai tire production operation, which was renamed Siam Tyre Company. That year, Siam Fiber Cement launched production of gypsum board, as well as other materials for the construction industry. The following year marked the start of another important area, the petrochemicals market, as Siam Cement entered the market for polyethylene production.

By the late 1980s, Siam Cement had entered a bewildering variety of new businesses, ranging from CRT tube manufacturing, to polystyrene packaging, to car engine manufacturing, and ceramic floor tile production. The company's SCT subsidiary also had become a major distributor of computers to the Thai market.

Restructuring in the 1990s

Chumpol Na Lamlieng became president of the Siam Cement group and launched the company on a reorganization drive that grouped its widely diversified holdings under four primary business units: Cement; Construction Materials; Machinery and Electrical Products; and Paper and Packaging. Siam Cement's diversified investments continued, however, leading the company to restructure again into eight divisions, including new units for its ceramics, tire and auto accessories, and petrochemicals businesses. The company also embarked on an upgrade program for its cement operations, boosting its total capacity to some 16 million tons in the early 1990s, placing it in a strong position not only in the fast-growing Thai construction market, but throughout the booming Asian Pacific region. By the middle of the decade, the company's production neared 20 million tons.

Siam Cement's position as Thailand's largest conglomerate made it vulnerable to the increasingly volatile economic conditions in the Far East. The sudden collapse of Thailand's economy in 1996--precipitating a regionwide economic crisis--hit Siam Cement hard, as its sales and share price dropped sharply and its heavy foreign debt, sparked by the devaluation of the Thai baht, soared.

Yet Siam Cement was to win praise for the transparency with which it faced its own economic crisis. The company called in a team of international consultants to help it perform a new and more drastic restructuring of its operations. The company now narrowed its strategic targets to only those business areas in which it could achieve regional leadership, namely, Cement, Petrochemicals, and Pulp and Paper. The company then began a sell-off program of its newly noncore operations, paying down its debt with the proceeds.

Siam Cement's restructuring hit a snag, however, when it found itself unable to find buyers, or at least suitable prices, for a number of the businesses it sought to sell. In 2001, therefore, the company restructured yet again, now grouping its operations into six primary divisions, Petrochemicals, Paper & Packaging, Cement, Construction Materials, Ceramic, and Distribution, and two holding companies for its other businesses and investments, Cementhai Holding and Cementhai Property. By 2003, the company had whittled its range of core business divisions down to five, creating a new Building Products division for its construction materials and ceramics products.

By then, Siam Cement's restructuring effort had successfully restored the company to the growth track, with revenues rising to B 130 billion ($3 billion) by the end of 2002. The company's petrochemicals unit had seen especially impressive gains, and by then accounted for 38 percent of the group's total sales. Paper & Packaging was also one of the primary growth areas for the company, accounting for 21 percent of sales. Yet the uncertain economic climate led the company to reduce its expansion efforts, at least for the short term. The company's business materials remained an exception, however, as the company announced in April 2003 its intention to spend up to B 850 million to meet the growing demand in that market. More flexible and focused, Siam Cement planned to lead Thailand's businesses into the 21st century.

Principal Subsidiaries: City Pack Co., Ltd.; Nippon Hi-Pack (Thailand) Co., Ltd.; Siam Cellulose Co., Ltd.; Siamkraft Industry Co., Ltd.; Thai Containers Chonburi (1995) Co., Ltd.; Thai Containers Industry Co., Ltd.; Thai Containers Ltd.; Thai Containers Ratchaburi (1989) Co., Ltd.; Thai Containers Songkhla (1994) Co., Ltd.; Thai Containers V&S Co., Ltd.; Thai Kraft Paper Industry Co., Ltd.; Thai Paper Co., Ltd.; Thai Union Paper Industry Co., Ltd.; Thai Union Paper Public Company Limited; The Siam Pulp and Paper Public Company Limited; Cementhai Chemicals Co., Ltd.; Map Ta Phut Tank Terminal Co., Ltd.; Rayong Olefins Co., Ltd.; Rayong Pipeline Co., Ltd.; Thai Polyethylene (1993) Co., Ltd.; Thai Polyethylene Co., Ltd.; Thai Polypropylene (1994) Co., Ltd.; Thai Polypropylene Co., Ltd.; Siam Cement Industry Co., Ltd.; The Concrete Products and Aggregate Co., Ltd.; The Siam Cement (Kaeng Khoi) Co., Ltd.; The Siam Cement (Lampang) Co., Ltd.; The Siam Cement (Ta Luang) Co., Ltd.; The Siam Cement (Thung Song) Co., Ltd.; The Siam White Cement Co., Ltd.; Beijing Cementhai Ceramic Co., Ltd.; Cementhai Building Products Co., Ltd.; Cementhai Gypsum Co., Ltd.; PT. Surya Siam Keramik; Saraburirat Co., Ltd.; Siam Fiberglass Co., Ltd.; Thai Ceramic Co., Ltd.; Thai Ceramic Roof Tile Co., Ltd.; The CPAC Concrete Industry Co., Ltd.; The CPAC Concrete Products Co., Ltd.; The CPAC Roof Tile Co., Ltd.; The CPAC Roof Tile Industry Co., Ltd.; The Siam CPAC Block Co., Ltd.; The Siam CPAC Block Industry Co., Ltd.; The Siam Fibre-Cement Co., Ltd.; The Siam Moulding Plaster Co., Ltd.; The Siam Nawaphan Co., Ltd.; The Sosuco Group Industries Co., Ltd.; Tip Fibre-Cement Co., Ltd.; Cementhai Distribution Co., Ltd.; Cementhai Logistics Co., Ltd.; Cementhai Sales and Marketing Co., Ltd.; SCT Co., Ltd.; Aisin Takaoka Foundry Bangpakong Co., Ltd.; CRT Display Technology Co., Ltd.; Michelin Siam Co., Ltd.; Michelin Siam Marketing and Sales Co., Ltd.; Musashi Auto Parts Co., Ltd.; Siam Asahi Technoglass Co., Ltd.; Siam AT Industry Co., Ltd.; Siam Furukawa Co., Ltd.; Siam Lemmerz Co., Ltd.; Siam NGK Technocera Co., Ltd.; Siam Toyota Manufacturing Co., Ltd.; Siam Tyre Industry Co., Ltd.; Siam Tyre Industry Phra Pradaeng Co., Ltd.; Siam Yamato Steel Co., Ltd.; Thai CRT Co., Ltd.; Thai Electron Gun Co., Ltd.; Thai Engineering Products Co., Ltd.; Thai Tokai Carbon Product Co., Ltd.; Thai Tyre Mould Co., Ltd.; The Deves Insurance Public Company Limited; The Nawaloha Industry Co., Ltd.; The Siam Industrial Wire Co., Ltd.; The Siam Kubota Industry Co., Ltd.; The Siam Nawaloha Foundry Co., Ltd.; The Siam Steel Cord Co., Ltd.; The Siam United Steel (1995) Co., Ltd.; Toyota Motor Thailand Co., Ltd.

Principal Divisions: Paper; Petrochemical; Cement; Building Products; Distribution; Ceramics.

Principal Competitors: IFI; India Cements Ltd.; Lafarge S.A.; Holcim Ltd.; Ishikawajima-Harima Heavy Industries Company Ltd.; CRH Plc; Taiheiyo Cement Corporation.

Further Reading:

• Barnes, William, "Cost-Cutting Aids Siam Cement," Financial Times, February 15, 2000, p. 22.
• ------, "Restructured Siam Cement Posts 92% Rise," Financial Times, January 30, 2003, p. 29.
• ------, "Secretive Giant Finds That Stripping Is an Asset," Financial Times, April 27, 1999, p. 30.
• Fein, Mark, "All Units Perform Solidly for Thai Cement Firm," Knight Ridder/Tribune Business News, May 12, 2003.
• "Siam Cement Keeps Up the Fighting Spirit," Business Day (Thailand), December 21, 1998.
• Treerapongpichit, Busrin, "Thai Cement Giant to Battle Foreign Rivals," Knight Ridder/Tribune Business News, November 19, 2001.

Source: International Directory of Company Histories, Vol. 56. St. James Press, 2004.