From Near Extinction, Brazilian Steelmaker Rebounds to Best Year : Industry: The company is hoping to assume world-leader status in a turnaround that began after privatization in 1993.

VOLTA REDONDA, Brazil — On the brink of closing only five years ago, Companhia Siderurgica Nacional, Latin America’s largest steelmaker and Brazil’s biggest private company, is striving for world-leader status.

“It’s not enough to compete, we have to be the most competitive,” said CSN President Sylvio Coutinho.

Coutinho, who runs the company dressed in worker overalls, boasted that 1994 was the best year in the company’s 44-year history. Production hit capacity of 4.6 million metric tons and earnings for 1994 are expected to total $100 million on sales of $2.3 billion.

Investors agree with Coutinho’s rosy outlook. While the stock has tumbled during the Mexican peso crisis, compounded by rumors that troubled bank Banespa may dump its CSN shares, analysts point to big potential for growth in steel consumption in Brazil, which is below the international average. They also say CSN’s plans for an offering of American Depositary Receipts on the New York Stock Exchange later this year is a positive sign.

“Look at its cash flow and profitability, and CSN is by far the best long-term option among Brazil’s steelmakers,” said a Rio analyst. “It’s the success story of privatization.”

Even local union leaders agree that the 1993 privatization--vigorously opposed even by the local bishop--was the key to CSN’s turnaround from a company unable to pay its workers to an exporter of high-quality steel products to 60 countries.

Since its takeover by a group of Brazilian banks, companies, pension funds and workers, costs have been cut from $298 per ton to $212, while productivity has virtually doubled to 320 tons per worker per year.

By 1998, when CSN will have completed a $1.1-billion investment program ($250 million will be invested in 1995), annual output will total 5.1 million tons, rising to 6 million in 2002, according to company estimates.

Such advances have been helped by improved motivation of staff, company officials say.

The 15,000 workers who remain of the 24,000 of four years ago hold 11.5% of the company’s shares. All around the company plant, billboards urge workers to “Be the best in the world at what you do.” Also displayed are Japanese concepts of discipline and order translated into Portuguese.

Meanwhile, revenue has been boosted by focusing on high-added-value products such as tin plate for canning and galvanized steel for Brazil’s booming automobile industry. Autos this year account for 40% of CSN’s production, up from 33% in 1994.

“It’s not increased output we strive for, it’s increased quality,” said Coutinho.

Still, the company is only 70% of the way toward becoming a world-leading steelmaker, Coutinho said.

In an attempt to further cut costs and improve its irregular energy supply, CSN will take part in the privatization of Rio de Janeiro’s state power utility, expected this year.

CSN will also invest $200 million in a new, 250-megawatt plant fired entirely by CSN’s waste gases, and is participating as a minority partner in two major hydroelectric projects.

To cut transport costs, CSN will join with steelmakers and other nearby firms to take part in the privatization of nearby Sepetiba port and a section of the national railway network.

Exports, which until recently accounted for 40% of CSN’s output, are likely to be around 25% during 1995 as a result of the strong Brazilian currency and increased internal demand, Coutinho said.