The Siam Cement Public Company Limited

1910–1974

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 began its first diversification efforts in the late 1930s.

1952–1976

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.

1976–1982

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.

1996–2003

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.