Research On The Causes And Countermeasures Of Excess Capacity Of Hengyang Steel Pipe Group

With the rapid development of China's national economy,excess capacity has become one major issue in China's economy in recent years.Being one fund,technology,energy and labor intensive industry,the seamless steel pipe industry is an important branch of China's iron and steel industry and one pillar of national economy.At present,it is also facing serious excess capacity.It is primarily shows at the following,i.e.1)In the whole industry in recent years,a large number of idle capacity are existed in seamless steel tube and pipe enterprises;2)Each major steel tube and pipe manufactures suffer difficult operation,especially that almost the complete industry suffers loss in 2015 with loss coverage continuing to expand,even partially shut down or collapse.Being ranked the fifth in the world and China's second major professional seamless steel tube and pipe manufacturer,Hengyang Steel Pipe Group(hereinafter abbreviated as the "Hengyang Steel")is facing major challenges in production and operation with depressed industrial background.With the depressed global economy and China's economy into the "new normal",it is expected that for China's seamless steel tube and pipe enterprises will face a very difficult situation for quite a long period of time in the future.Research on excess production capacity has been a focus of academic industry.Primarily through the summary of the existing theoretical research results and combining with the actual situation of Hengyang Steel,this paper carries out detailed research on excess capacity of Hengyang Steel from two aspects,i.e.theoretical and practical.It points out major features,including low utilization rate of company capacity,structural problems,etc..Further,according to the relevant theory and practical cases,it indicates close relationship between the causes for over-capacity in Hengyang Steel and in-place product structure adjustment during operation process and the product structure homogeneity.Also,the irrational investment and disorderly competition are the relevant causes.It further devastates under the influence of the life cyclic development in external industry,decline of market demand,and the non-market factors under the current political and economic system in China.For Hengyang Steel,it is the current major issue to solve that how to cope with the current difficulties and maintain long-term competitiveness of enterprise.This paper thinks that the enterprise shall adhere to the following principles,i.e.1)promote de-capacity,shut down and eliminate backward production line and stick to reduction of cost and continually enhance the operational efficiency;and 2)It must continue to promote industrial upgrading and make adjustment to existing product structure so that the products are to be more compatible to the demands of market and customers and gradually shift to high-end products;3)At the same time,carry out upgrading and revolution on the management to realize innovation and upgrading in both marketing and business models.To achieve the expected effects by those measures,this paper also proposes advice and expectations at the macro level of government and industrial level.