SCG100Years Eng

SCG’s headquarters at Bangsue, Bangkok.

SCG’s cement plant in Lampang became the model which proved that industry could coexist harmoniously with both surrounding nature and local communities.

Everyone at SCG believes that operational excellence is a key factor in SCG’s success today. Besides this

commitment to our own work, throughout the past 100 years SCG has also been dedicated to improving the

quality of life of the community, benefitting society as a whole and taking care of the environment.

“SCG People” place a special emphasis on the satisfaction of customers, communities and all stakeholders.

Therefore, we are constantly developing our own capabilities in order to be ready for the next challenge,

and we are always open to different and new ideas. “SCG People” are also constantly aware that the

company must grow in a sustainable manner alongside society. This social conscience is integrated into

our working processes, and is used to mobilize the organization in the name of progress for society.

Throughout the past century, SCG has developed the experience, knowledge and ability to work in accordance

with sustainable development guidelines. Our enduring creativity has allowed us to create products and

services that make our customers happy. We are also committed to developing our organization to be a

sustainable business leader in ASEAN and a role model in sustainable development in the world arena.

During this important moment in our history, we are proud to share, through this book, the stories and dedication

of “SCG People,” which have been passed down through time. This book captures the spirit of “SCG People,”

all of whom, over several generations, have helped to create a better quality of life, respond to the various

needs of all stakeholders, and develop our business practices for the greater good of the ASEAN region.

Lastly, I hope that readers will be inspired by SCG’s experiences and be able to use the lessons we have

learned to develop their own organizations toward sustainability. When individual organizations become

stronger and can work together to advance society, everyone may enjoy a better quality of life. Such

cooperation can help inspire our ASEAN region toward a bright future.

SCG was founded in 1913 through an initiative of His Majesty King Vajiravudh (Rama VI). At that time,

Thailand, following the example set by other civilized nations, was developing its own infrastructure and

becoming more self-reliant. SCG’s mission thus extended beyond the practice of business to the larger goal

of showing the world that Thais had both the knowledge and ability to conduct a large-scale industry. SCG

reflected Thailand’s progress and demonstrated its ability to apply modern technology to further develop

the country. As a result, the company became a source of pride for Thais.

Over the past 100 years, SCG has developed alongside Thailand, overcoming obstacles and crises. SCG

has also helped lift the Thai people’s quality of life through the concept of sustainable development, which

aims to create balance between economic, social, and environmental concerns through strong corporate

governance. SCG has also become a model that other organizations may look to follow.

This book presents the history and work of SCG during different periods of time, and it explains how the

company has evolved to keep pace with changes in Thailand and the world. It features the determination

of “SCG People” to apply their talents to ensure the organization’s success, and it shows how SCG is

prepared to grow further and become a sustainable business leader in the ASEAN region through a special

emphasis on innovation. The lessons SCG has learned and the goals it has set may be interesting to other

individuals and organizations as well.

On the occasion of SCG’s 100th anniversary this year, I am thankful to those who have supported SCG in the

past and the present. I hope that we will continue to receive support for our mission to create a prosperous

and sustainable future for Thailand, the ASEAN region and the world.

FOREWORD

Kan TrakulhoonPresident and CEO

Chirayu Isarangkun Na AyuthayaChairman of the Board of Directors

SCGSCG, one of ASEAN’s leading conglomerates, has followed the concepts

of sustainable development and good corporate governance for 100 years.

Established through an initiative of His Majesty King Vajiravudh (Rama VI) in 1913,

the company was founded in order to support the development of Thailand’s

national infrastructure. In the subsequent ten decades of operations, the company

saw its business significantly expand and diversify. Today, SCG comprises three

business units: SCG Chemicals, SCG Paper and SCG Cement-Building Materials.

Through these business units, SCG has continuously developed its capacity to

innovate value-added products and services, and to create working processes and

business models that respond to every stakeholder’s needs. Additionally, SCG is

committed to promoting sustainable progress in every community where it operates.

As part of this dedication to the concepts of sustainable development, SCG

has, since 1998, participated in the Dow Jones Sustainability Indexes (DJSI),

which use the investment assessment company known as Robeco Sustainable

Asset Management to track the business performance of leading sustainability-

driven companies worldwide, creating benchmarks to assure investors that those

companies listed in the DJSI will generate strong and sustainable revenues. Since

2008, SCG has earned a Gold Class rank for five consecutive years and, since

2011, has been ranked as a Sector Leader in the Building Materials and Fixtures

Sector for two consecutive years.

TABLE OF CONTENTS

Introduction

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Appendices

Before the Birth of SCG

The Beginning of Sustainability

The Development of Sustainability

People: The Key to Sustainability

Sustainable Society, Sustainable Happiness

Toward a Sustainable Future

12

20

42

74

104

138

156

A eucalyptus forest. Eucalyptus treesare the major raw material used in the production of paper.

INTRODUCTION

BEFORE THE BIRTH OF SCG

CHAPTER 1THE BEGINNING OF SUSTAINABILITY

CHAPTER 2

THE DEVELOPMENT OF SUSTAINABILITY

CHAPTER 3

PEOPLE: THE KEY TO SUSTAINABILITY

CHAPTER 4SUSTAINABLE SOCIETY, SUSTAINABLE HAPPINESS

CHAPTER 5

TOWARDA SUSTAINABLE FUTURE

At the turn of the 20th century, social and economic

conditions prompted Thailand to update

its national infrastructure. His Majesty King

Vajiravudh (Rama VI) initiated the establishment

of a cement plant so that the kingdom could

pursue a development program that would not

depend on foreign imports.

SCG was founded on 8 December 1913. Over the

following decades, the company overcame hardships,

but also enjoyed many successes and memorable

moments which demonstrated that SCG was becoming

an integral part of the Thai economy and emerging

industrial sector, as well as an important part of Thai

society as a whole.

In 1972, the company was restructured as The

Siam Cement Group, joining all of its subsidiaries

into one conglomerate. There were many notable

developments, including expansion through joint

ventures and new investment, the financial crisis of

the late-1990s, and the application of the Sufficiency

Economy philosophy, which made SCG more resilient.

“SCG People” come from a variety of backgrounds

and are the key to the success of the organization.

The driving force that makes SCG a leader in many

fields, “SCG People” are committed to the long-

standing Four Core Values, are dedicated to being

talented as well as ethical people, and believe in

being innovative and open to new challenges.

SCG believes its business should be conducted

with strong social and environmental awareness.

To this end, its policies and strategies, in all areas

of its business, follow the concept of sustainable

development. Leading by example and supporting

many outreach programs and other activities, SCG is

fully committed to being a good corporate citizen.

SCG aims to be a sustainable business leader

in the ASEAN region by 2015. SCG has focused

on becoming a company that continuously

develops innovations that respond to the needs

of the consumer and add value to society and the

environment for all stakeholders, ensuring balance

and sustainable growth into the next century.

13BEFORE THE BIRTH OF SCG

BEFORE THE BIRTH OF SCG

Above: Houses along Ong-ang Canal in Bangkok. Opposite page: A painting showing transportation along the Chao Phraya River in 1913, with the Grand Palace in the background.

SCG, one of the Kingdom of Thailand’s most well-regarded and famous companies and a

leading conglomerate in ASEAN, has played an important role in Thai society throughout its

long history, acting as an industry leader in many fields, and always striving to raise local

business standards with its forward-looking vision. In addition, a large and long-standing

organization such as SCG naturally has a rich history of relationships with its community,

making the company an important link between business and society in general, a role it takes

very seriously.

Indeed, almost all Thais are familiar with the company’s original name “Siam Cement,” one of the

oldest and most established brand names in the country. In 1972, to join its many businesses

under one umbrella, Siam Cement became “The Siam Cement Group.” Then, in recent times,

the company adopted the acronym and title “SCG,” a more appropriate name for its advance

into the global marketplace.

Today, SCG has reached a significant milestone: 100 years of continuous operations and growth.

It certainly has been a fascinating journey for the White Elephant logo. SCG’s operations have

consistently expanded through the decades until the present day. As of 2013, SCG boasts a

variety of products and has offices around the world. More than 40,000 employees from a wide

range of ethnic and cultural backgrounds are helping drive SCG forward.

To appreciate how and why a cement company became such a successful and significant

enterprise in Thailand, one needs to understand the situation in the country and Southeast

Asia prior to the firm’s establishment. From the middle of the 19th century through the early 20th

century, Western imperial powers had gradually expanded their economic and political power,

and extended their colonial ambitions to the Southeast Asian region. These colonial ambitions

were fueled by the industrial revolution in Europe and the demand for raw materials, and were

15BEFORE THE BIRTH OF SCG14 OF INNOVATIONS FOR SUSTAINABILITY

A watercolor painting showing activity along the Chao Phraya River during the reign of His Majesty King Mongkut.

An automobile parade in 1908, held, in part, to herald the country’s progress.

also driven by a desire to expand commerce and trade. Resource-rich countries in the region

were gradually colonized by the European nations under the pretense of being “inferior” or

“weaker.” One by one, the countries of Southeast Asia fell to colonial forces. In 1819, Britain

occupied Singapore and then Malacca (now Malaysia) three years later, followed by Burma in

1852. France then occupied Vietnam and Laos in 1884 and 1893 respectively. By the turn of

the 20th century, Thailand found itself flanked on either side by the two mighty Western powers.

Seen from one perspective, Thailand was a buffer state between the two, but that status

appeared tenuous. With hostilities increasing toward the end of the 19th century, Thailand was,

like many countries around the world, forced to adapt itself to the new circumstances or risk

losing its sovereignty altogether.

Indeed, over the course of the 19th century, Thailand’s successive kings had gradually come

to the conclusion that the West would form the biggest threat to Thailand’s independence,

and so they had begun to negotiate with the Europeans. An absolute monarchy at that time,

Thailand had long enjoyed strong leadership from its kings. First, Thailand tried to agree to a

Treaty of Amity and Economic Relations with Britain during the reign of King Buddha Lert La

Nabhalai (Rama II), but the effort was not successful. During the reign of King Nangklao (Rama

III), negotiations moved forward, but not to Britain’s complete satisfaction, because Thailand

refused to abolish the “royal warehouse system,” which guaranteed a royal monopoly on trade.

The turning point came during the reign of His Majesty King Mongkut (Rama IV) when Sir John

Bowring arrived in 1855 to negotiate and sign the Treaty of Amity and Economic Relations,

later known as the Bowring Treaty. In order to provide checks and balances and create a level

playing field, Thailand then signed treaties featuring similar terms with many Western countries,

including France, the United States, Portugal and the Netherlands. The Bowring Treaty forced

Thailand to open the country. The import tax was capped at a maximum of 3 percent and export

taxes were fixed for each product. In addition, the “royal warehouse system” was abolished,

freeing the flow of Western investment and trade.

Bangkok became a center for commerce in the region and also an important trading hub for

Westerners. The city’s population increased from 10,000 in 1855 to 365,000 by 1914, partly

due to large influxes of Chinese labor. Charoen Krung Road, or “New Road” as it was called

by foreigners, was constructed. A tram business was built and operated by the Danish, and

a private railway serving the Bangkok-Paknam route was established with the cooperation of

British and Danish merchants. The economy overall benefitted greatly.

Gradually, Bangkok, which had been dominated by boats selling goods in floating markets

along its canals and main river, became a Western-style city, with an increasing number of

horse carriages and cars in circulation. It transformed from the “Venice of the East” with canals

forming its main arteries to a city increasingly served by roads. Commercial centers followed,

such as in the Sampeng, Yaowarat and Bangrak districts of the city. New residential properties

and neighborhoods were constructed, and many rows of shophouses were built along the new

streets, resulting in a rapid expansion of Bangkok’s utilities and transportation networks.

This modernization of Bangkok was made possible by the vision and many reforms implemented

by His Majesty King Chulalongkorn (Rama V), who ruled from 1865 to 1910. His Majesty

King Chulalongkorn established the Ministry of Finance as well as the Privy Purse in 1890 to

implement his ideas and make investments in such diverse businesses as land development,

commercial building construction, rice mills, saw mills and tram companies, as well as new

areas such as banking (for example, through the founding of Siam Commercial Bank Limited,

the first Thai-owned bank).


His Majesty King Vajiravudh, who initiated the founding of The Siam Cement Company Limited in order to make Thailand more self-sufficient.

Flags featuring a white elephant, the symbol of the nation at the time, are flown along Bamrung Muang Road toward the Giant Swing in Bangkok.

A key aspect of the Privy Purse’s mission was to create stable economic conditions for the

country so that the economy would be accepted by and generate investment by Thai, Chinese

and foreign partners. By establishing such enterprises, His Majesty King Chulalongkorn also

ensured the country’s independence and prosperity at a time when the threat of drastic foreign

intervention into its affairs was growing. A modern and open Thailand could win the respect of

Westerners and thus help the country avoid colonization, the king believed. And he was right.

Only Thailand avoided the fate of its neighbors and was never colonized.

His Majesty King Vajiravudh (Rama VI), who acceded to the throne in 1910, continued to build

on the legacy of his father, His Majesty King Chulalongkorn. His initiative to establish The Siam

Cement Company Limited was inspired by his desire to see Thailand become self-sufficient.

By producing its own cement, Thailand could replace imported cement from abroad, create a

new revenue stream and avoid reliance on foreign trade. But why establish a cement company

rather than any other number of possible industrial concerns? Cement was an essential

material for constructing residential and commercial buildings, government offices and roads,

and demand for this material was therefore virtually guaranteed. Naturally, when Siam Cement

was established it was organized in such a way that Thais would be the majority shareholders;

indeed, there was a requirement that three quarters of the capital must belong to Thais. This

initial founding group was well aware of the potential problems that might result if foreigners

dominated the shareholdings.

Thus by the time of its founding, the company was already instilled with a sense of responsibility

toward a larger public mission. But what about the century that followed? There were many ups

and downs, but this sense of responsibility to the country and the public always remained.


Under Construction: Developing Thailand The late 19th century and early 20th century was a golden period of development in Thailand that saw massive infrastructure projects undertaken and the founding

of many key governmental institutions. The landscape of Bangkok was transformed: shophouses lined new commercial areas, new roads were paved, bridges

were built and previously foreign aesthetics of Western architectural styles gave the city a new look. New infrastructure included public electricity and water

systems, and communication networks like telegraph and postal services. It was within this context that the country’s first cement plant was founded.

An early commercial building built with imported cement at the corner of New Road (Charoen Krung Road) and Mahachai Road.

Top left: Hualamphong railway station in Bangkok. Top right: Local and foreign officers who laid the foundation for Thailand’s waterworks system.

Bottom left: A train conductor waiting for passengers. Bottom middle: Construction of Rama VI Bridge, the first bridge which could be crossed by trains. Bottom right: Postmen transfer mail to the Central Post Office.

The Beginning of Sustainability

SCG was founded on 8 December 1913. Over the following decades, the company overcame hardships, but also enjoyed many successes and memorable moments which demonstrated that SCG was becoming an integral part of the Thai economy and emerging industrial sector, as well as an important part of Thai society as a whole.

An early aerial view of SCG’s Bangsue plant demonstrates its convenient location between the two key transport hubs of that time, the railway and the river.

22 OF INNOVATIONS FOR SUSTAINABILITY

(1913 – 1931)Establishment and Growth

}In the spirit of transparency,

the minutes of this meeting were recorded, and to this day SCG

employees have been able to study them in detail.

~

On 14 June 1913, Chao Phya Yomaraj (Pan Sukhum), one of His

Majesty King Vajiravudh’s most trusted advisors, led the very first

meeting of the founding group of The Siam Cement Company Limited.

The historic gathering, which took place at the offices of The Siam

Observer newspaper, marked the beginning of the realization of King

Vajiravudh’s initiative to establish a cement plant in Thailand.

In the spirit of transparency, the minutes of this meeting were recorded,

and to this day SCG employees have been able to study them in detail.

This transparency is a symbol of and testament to the company’s

original aim of being accountable to the public and its stakeholders.

In modern parlance, such practices are examples of strong corporate

governance. SCG was thus a true pioneer in Thailand in this regard.

Later in 1913, on 8 December, the company was officially registered

as a limited company under the name The Siam Cement Company

Limited, with authorized share capital of one million baht. This day is

celebrated as the company’s anniversary every year.

In addition to Chao Phya Yomaraj, there were several other co-

founders: Phya Arthakara Prasiddhi (Tilkee Gunatilaka); Phya Singhol

Sagara (Frank Gunatilaka, later Chao Phya Singhol Sagara); Phra

Boribun Raja Sombat (Mom Rajawongse Moon Darakara, later Chao

Phya Sribibadhana); Phra Montri Pochanakich (Thienhee Sarasin,

later Phya Sarasin Svamibhakdi); Luang Svasti Wiengchai (Sawasdi

Sukhum, later Phya Sukhum Naya Vinit); E.G. Gollo, an Italian national;

and Commander W.L. Grut, a Danish national.

As one of the co-founders, E.G. Gollo assumed an especially important

role. Gollo was assigned to visit and observe cement plant operations

The Many Contributions of Chao Phya Yomaraj

The intelligent and talented Chao Phya Yomaraj (Pan Sukhum) was given the opportunity to accompany four young children of His Majesty King Chulalongkorn to Britain in order to teach them Thai. During this period, Chao Phya Yomaraj became fluent in English and was appointed by His Majesty King Chulalongkorn to be the attaché of the Siamese Embassy in London and later the charge d’affaires in the embassy in the United States. On his return in 1894, Chao Phya Yomaraj entered the civil service, taking up the position of secretary to the Minister of the Interior. He was also appointed by His Majesty King Chulalongkorn to be the first lieutenant governor of Nakhon Si Thammarat province. Later, he became Minister of Public Works and also Minister of the Interior. He supervised the construction of important throne halls such as the Ambara Mansion and the Ananta Samakhom Throne Hall. He was also responsible for construction projects related to the metropolitan waterworks and electricity departments. In this capacity, he facilitated the construction of many roads and bridges in Bangkok.For his many unique contributions to the kingdom, His Majesty King Vajiravudh bestowed on him the honorary title Chao Phya Yomaraj and the surname Sukhum, the first surname in the country.

Tithong Road, a busy thoroughfare in Bangkok, is lined with shophouses. Commercial development expanded rapidly in the early 20th century.

Makawan Rangsan Bridge with Ananta Samakhom Throne Hall in the background, two of many projects in Bangkok in which E.G. Gollo was involved.

24 25THE BEGINNING OF SUSTAINABILITYOF INNOVATIONS FOR SUSTAINABILITY

in Denmark, and also to take raw materials from Thailand with him for

testing. An engineer, Gollo had previously made his name in Thailand

by helping to design and construct some of Bangkok’s most beautiful

landmarks – many of which involved cement – including Ananta

Samakhom Throne Hall, Ambara Mansion and Makhawan Rangsan

Bridge. They remain notable landmarks to this day. Gollo was charged

with overseeing the technical aspects of the founding of Thailand’s

first cement plant, while Commander W.L. Grut, who had experience

in the electricity industry in Thailand, took care of negotiations with

foreign parties for fuel and machinery procurement and advised on

management issues.

Before it could start operations, The Siam Cement Co., Ltd. (or SCG

as it is known today) had to purchase its machinery from abroad, so

it called on manufacturers from Britain, Germany and Denmark to

submit competing bids. The bid was won by one of the most popular

and respected manufacturing technology companies at that time, F.L.

Smidth & Co. in Denmark. The company also had another advantage

over its competitors. During an increasingly volatile political situation,

Denmark was politically neutral, unlike Britain and Germany. Although

it was owned by Thais, SCG was well aware that to be successful it

would require expertise from abroad in the areas of both management

and production. Therefore, Danish investors were invited to invest in

25 percent of the company, and the first general manager was Oscar

Schultz, also from Denmark. This special relationship between SCG

and Denmark continued for many decades. Indeed, the company had

Danish general managers for more than 60 years.

When World War I broke out unexpectedly in 1914, the company

immediately faced a challenge. So far-reaching was the impact of the

war that even the construction of SCG’s cement plant, located far away

on another continent, was affected. Machinery ordered from a German

manufacturer was held in port in Antwerp, Belgium.

Eager to push forward, the company immediately decided to order

another set of machinery from Denmark, but then the unexpected

happened. The first set of equipment was subsequently shipped from

the port of Hamburg, Germany, and the plant ended up with two sets

of identical machinery. While the situation led to higher expenditures,

this chain of events also had its benefits. For example, when equipment

later became damaged, it was easily replaced.

The location of the plant was another matter of great importance and

several factors had to be carefully considered. It was essential that raw

materials could be transported efficiently from their source to the plant,

and that the finished products could then reach their markets quickly.

Initially, a piece of land was chosen along the major Bangkok river, the

Chao Phraya, on the capital side, north of Kaewfa Chulamani Temple.

However, this land was later deemed to be too far away from a railway

line, so the company decided to exchange this plot for one belonging to

Chao Phya Woraphong Bibadhana (Mom Rajawongse Yen Israsena).

It was located between Prem Prachakon Canal and the railway line in

the Bangkok district of Bangsue. This new location, spanning an area of

148 rai (approximately 59 acres), also became the site of the company’s

headquarters.

Another vital aspect of the start-up period involved the sourcing of the

key raw material in cement, which is known as marl. The company

originally decided it would excavate marl from Chong Kae subdistrict,

Banmi district, in Lop Buri province, and transport it 170 kilometers by

Top: A shareholding document states the shares of Commander W.L. Grut.Middle: An article from The Bangkok Times newspaper announces the commencement of cement production in Thailand in order to replace the country’s reliance on imported cement. Bottom: A newspaper classified ad lists a job opening with the company.

Oscar Schultz, general manager (seated 3rd from left), Erik Thune, accountant (seated 2nd from left), and the employees of The Siam Cement Co., Ltd. in 1923.


train to the plant in Bangkok. In 1921, after conducting many surveys,

another usable source of marl, 70 kilometers closer to Bangkok, was

discovered in Ban Mo district in Saraburi province. In those years,

Thailand’s transportation network was still nascent and even 70 kilometers

represented a significant distance. The new location would increase

efficiencies, saving the company both time and money on transportation.

SCG was not an instant success however. At the time, the public

believed that products produced overseas must be of better quality than

those produced domestically, so the company had to offer its cement

at a cheaper rate in order to attract business. History then intervened

to help the company. Import shortages caused by World War I and

its aftermath forced more people to try the company’s products. While

supply from the West was sharply curtailed, demand in the country

remained robust. When customers discovered that the quality of the

local product matched that of imported products, SCG’s products soon

became more popular on the market, which also allowed Thailand to

save revenues in terms of foreign exchange.

Through its modern production technology, personnel and management,

SCG helped advance Thai industry as a whole. Indeed, SCG was the first

company in the country to be a genuinely heavy industrial concern. At that

time, most domestic industries were light industries, such as rice mills,

sawmills and sugar factories. These lacked sophisticated management

structures and relied largely on simple production technology.

SCG constantly sought to increase the quality of its raw materials in

order to reduce costs and also improve the quality of its products.

To increase production, it also decided to adopt the most up-to-date

technology. In the year 1922, for example, a second cement kiln was

F.L. Smidth & Co. was established in 1882 in Copenhagen, Denmark. Initially the company provided engineering consultancy services and specialized in steam engines. Later, it developed technology and became a major manufacturer of cement machinery, expanding its market from Scandinavia to Central Europe, Russia, the United Kingdom and the United States. It had a market share of more than 40 percent. The company built its international reputation in the cement industry by innovating a way to produce sand cement (a cement containing fine sand) at a low price.

The first contract signed between The Siam Cement Co., Ltd. and F.L. Smidth & Co. specified a machinery price of 12,400 pounds sterling for a production capacity of 470 barrels per day, together with an arrangement to provide four supervisory members of staff: an installation engineer, chemical engineer, kiln expert and in-factory installation and assembly officer. The contract also specified that the manufacturing machinery had to use the best quality materials and the most accurate processes and mechanisms, suitable for first-class work.

The Loyal Partner: F.L. Smidth & Co.

Bangsue plant was the center of cement production and distribution throughout Thailand.

Bangsue plant, the country’s most advanced cement plant at the time. By 1922, capacity had reached 62,000 tons per year.


installed at the Bangsue site, increasing annual production capacity by

35,000 tons. This was soon followed by a third kiln in 1929, which raised

production capacity by an additional 46,000 tons per year.

The company also produced cement for use in both government and

private construction projects, which were sprouting up all over the capital

and country. Bangkok, in particular, was seeing a rapid expansion of its

infrastructure, with new roads inspiring the development of new housing

and shophouses, all of which brought about higher demand for cement.

Another key factor in SCG’s early success was its knowledgeable and

experienced personnel. The company’s general manager was a strong

and disciplined leader, and the foreign team and talented Thais whom

he led were seen as being some of the hardest-working and brightest

staff in Thailand. It wasn’t easy in that era to find expert engineers,

chemists and accountants, but SCG was successful in attracting new

recruits and developing its human resources.

Memorial Bridge was officially opened in 1932 by His Majesty King Prajadhipok. Construction began in 1928.

Chinatown (known as “Yaowarat” in Thai), the commercial and residential area of Thailand’s Chinese community, was one of the early areas that saw rapid urban development in Bangkok.

Oscar Schultz, the first general manager of the company, began working for F.L. Smidth & Co. of Denmark after graduating in Engineering from a technical college in Copenhagen. Schultz was based in the New York office of F.L. Smidth & Co. before moving to Thailand. Employees in the Bangsue plant called Schultz the “Tiger Boss” because of his approach to work, which was serious and strict, but also sincere.

The “Tiger Boss” appreciated employees who worked hard and were determined. Anyone who avoided work would be reprimanded. However, if he liked someone’s work, he would always reward them, creating a system based on merit within the company. At the same time, he was not an autocratic boss. Schultz was able to approach his close subordinates to talk with them, and resolve any situation or misunderstanding. As a result of his management style, the “Tiger Boss” was very much loved and respected by the employees.

Tiger Boss” Oscar Schultz

31THE BEGINNING OF SUSTAINABILITY30 OF INNOVATIONS FOR SUSTAINABILITY

(1932 – 1944)A Challenging Period

}Despite political uncertainty at the national level in the 1930s and the

spread of World War II in the 1940s, the company continued

to prosper. ~

Passersby and traffic outside the Bangsue plant in Bangkok.

Above: His Majesty King Prajadhipok bestows a draft version of the constitution to a representative of the government on 27 June 1932. Left: Democracy Monument, which was built by the People’s Party government, was officially opened on 24 June 1939.

In the decade following the 1929 American stock market crash, the

world economy was in crisis. Not only did the crash drastically reduce

consumption and curtail trade, but the Great Depression also inspired,

in part, major changes within Thailand. With Thailand’s own economy

struggling, on 24 June 1932, a group of military men and civilians, who

were educated abroad, led a revolution that replaced the system of

absolute monarchy with a constitutional monarchy.

This change also had consequences for SCG. The Crown Property

Department (previously the Privy Purse), which was the company’s major

shareholder, would no longer be in charge of managing the country’s

economic policy. By 1937, the Department became the Crown Property

Bureau under the control of the Ministry of Finance. Important officials from

the People’s Party were sent to SCG to act as chairman and members of

the Board of Directors. A new era of management had begun.

This shake-up, however, did not prevent the company from seeing its

business grow. Indeed, it benefitted the company to have Thais assume

more responsibility within the organization, a trend which accelerated

in the following decades. When Phya Manava Raja Sevi joined the

Board of Directors (1936–1964), Thai directors outnumbered foreigners

for the first time. Phya Manava Raja Sevi then assumed the position of

Chairman of the Board of Directors for 22 years. With a predominantly

Thai board, the company’s direction changed to be more in line with

the government’s nationalist economic policies.

Indeed, despite political uncertainty at the national level in the 1930s

and the spread of World War II in the 1940s, the company continued

to prosper. While these decades were frequently trying, the company

was able to overcome many obstacles and expand its business. In


Tha Luang plant in Ban Mo district in Saraburi province. SCG’s second cement plant was opened in order to meet soaring demand. Top: A survey conducted by General Manager C.F. Jespersen before the building of the Tha Luang plant. Bottom: The public visits The Siam Fibre-Cement Co., Ltd., considered SCG’s first subsidiary.

1938, it established The Siam Fibre-Cement Co. Ltd., considered the

first subsidiary within SCG. Located on the same premises as the

Bangsue plant, this new company produced building materials which

used cement as a constituent, promoted wider usage of cement, and

competed with imported building materials.

As transportation networks also expanded substantially, demand for

cement increased in provincial areas. Realizing it needed to keep pace,

SCG began to make plans for a new plant north of Bangkok in Saraburi

province, just 10 kilometers from the marl pit there. The Tha Luang plant

was a particularly important national project because it was planned

as the country’s first “industrial town” with other industrial concerns

set to share a large tract of land that would also feature government

offices, shops and schools. Its construction, however, faced many

obstacles. The government’s transfer of the land to be used for the

enterprise was challenged, and delivery of machinery from Europe was

delayed because of World War II. The Tha Luang plant, however, was

completed and began production in 1948.

In 1942, in accordance with the government’s nationalist economic plan,

which emphasized creating new national enterprises, the company

entered the iron and steel industry. Although the steel industry requires

high technological know-how as well as complex production processes,

SCG was able to successfully explore iron ore mines and engage in

iron smelting, ultimately achieving high quality and standards. By 1966,

this subsidiary was spun off to become The Siam Iron and Steel Co., Ltd.


(1945 – 1971)Continuous Growth

}Realizing that new projects around the country would increase demand

for cement, the government also proactively supported the expansion

of the cement industry.~

Bangsue train station. The railroad was the major transport method to reach upcountry provinces.

After the war, the triumphant United States played an important role in

restarting the world economy, regulating trade and finance in free trade

countries, and promoting and supporting economic development in the

private sector of underdeveloped and developing nations.

During this post-war period, the company grew even further, leaping

forward. After the Tha Luang cement plant was completed, the first kiln

started operations in 1948, the second in 1953, and the third one in 1957,

dramatically increasing SCG’s production capacity. The company was

also honored by a visit from His Majesty King Bhumibol Adulyadej (Rama

IX) and Her Majesty Queen Sirikit in 1958, at which the Danish General

Manager Jespersen prepared Danish cuisine for Their Majesties.

On 28 October 1952, SCG established The Concrete Products and

Aggregate Co., Ltd. (CPAC), with its plant located by the Chao Phraya

River in the Bangson area of Bangkok. Using modern technology,

CPAC was responsible for producing goods for concrete construction

and materials for prestressed concrete work. Opposite this plant, a

ready-mixed concrete plant was built in 1963.

Realizing that new projects around the country would increase demand

for cement, beginning in 1956 the government proactively supported

the expansion of the cement industry. Then, when Field Marshal Sarit

Thanarat succeeded Field Marshal Phibun Songkram as prime minister,

the handover of power marked the end of Phibun’s nationalist economic

policies and led to even deeper cooperation between the United States

and Thailand. The new government helped to bring in a free enterprise

economic system, in which the leading role was played by the private

sector. Many new rules were written and old ones discontinued, and

new institutions were created to open the country to foreign investment. In 1963, a ceremony was held to install the royal garuda in front of Building 1, the first office building at Bangsue. The royal garuda is bestowed by the monarch to honor a company’s service.

37THE BEGINNING OF SUSTAINABILITY36 OF INNOVATIONS FOR SUSTAINABILITY

Left: His Majesty King Bhumibol Adulyadej and Her Majesty Queen Sirikit at the company’s 50th anniversary celebration at the Bangsue plant on 14 February 1964. Right: A reception dinner at SCG’s Bangsue headquarters was organized for His Majesty King Bhumibol Adulyadej and Her Majesty Queen Sirikit. The pavilion in the background was specially built for this occasion.

Their Majesties’ Inspirational Visit

Held on 14 February 1964, the celebrations of the 50th anniversary of The Siam Cement Co., Ltd. and the 25th anniversary of The Siam Fibre-Cement Co., Ltd., were dignified by the presence of His Majesty King Bhumibol Adulyadej and Her Majesty Queen Sirikit. On this occasion, His Majesty gave a memorable speech to all SCG staff, with one part of the address as follows: “The company has served the country well by eliminating the necessity of importing foreign construction materials. In the field of management, it has proven that large-scale enterprises can be set up and run successfully in Thailand. It has set a good example and is concrete evidence that we are capable of doing anything that we set our minds to. We should not be discouraged by the common saying that Thailand can never establish anything and

cannot compete with Westerners, or that if we were to establish something, it will be a waste of time because it is more convenient for us to buy from abroad than do it ourselves, that it might make a loss or might become insolvent or might die. None of this is true. If we are serious about doing it, we can be successful.”

This important milestone was a source of tremendous pride. Everyone at SCG felt they were part of an organization which took on challenges and achieved the unexpected without fear of resistance or failure. Having 50 years of success behind it, SCG believed it could be a model for other companies in Thailand and also a symbol of the self-reliance of the Thai people.

His Majesty King Bhumibol Adulyadej and Her Majesty Queen Sirikit visit the Tha Luang plant in 1958.

The changes resulted in the rapid growth of the industrial sector.

During this time, in 1962, The Construction Materials Marketing Co.,

Ltd. was established to merge the distribution of the company’s three

main products: cement, tiles and building materials. This move helped to

reduce costs and increase the efficiency of its distribution channels.

During this period, the government also set up the National Economic

Development Board. It took responsibility for drafting an economic

development plan which focused on investment in infrastructure, such

as roads, dams and airports, a program that resulted in significant

growth for the construction industry. These years presented important

opportunities for SCG. Also in the 1960s, Thailand joined the Vietnam

War and received further assistance from the United States, which

focused on helping Thailand modernize its road network, among other

infrastructure projects. This agenda further increased demand for

cement. An immense amount of American capital flowed into the Thai

economy. The road network in Thailand grew rapidly from a total of

3,385 kilometers in 1940 to 10,401 kilometers by 1970.

Bangkok was also transformed in the 1960s. The government filled

in many canals to build roads. Many offices, factories, hotels and

government buildings were constructed. The expansion of residential

areas in Bangkok and the adjacent Thonburi area doubled every three

years. The entire economy began to shift from the agricultural sector

toward the industrial sector.

All these factors drove increased demand for cement usage in what

became the true golden era of the expansion of SCG during the 20th

century. Kilns 5 and 6 were installed at Bangsue to meet increased

demand in 1964 and 1967 respectively. Meanwhile, in 1970, Kiln 3


Thung Song plant in Thung Song district, Nakhon Si Thammarat province, in southern Thailand, helped meet new demand emerging in the south of Thailand. The two major distribution systems: (top) bags of cement are loaded onto a boat on a canal by the Chao Phraya River; (bottom) trucks take the product from the Bangsue plant to destinations around the country.

was adapted to produce white cement instead of gray cement with

a capacity of 21,600 tons per year. Demand for cement in the south

of Thailand led to another plant being built in Thung Song district,

Nakhon Si Thammarat province in 1966. The company also increased

production capacity at its Tha Luang plant to more than one million tons

annually by 1968.

In 1971, another plant was established in Kaeng Khoi district, Saraburi

province. It was the most advanced cement plant in Asia at that time,

with an annual production capacity of 570,000 tons during its start-up

phase, before being increased to 1,670,000 tons by 1975. In 1970,

production of concrete products was also ramped up. The company

built four factories: one in Nonthaburi province, which produced

ready-mixed concrete products, two factories in Khon Kaen province

that produced steel reinforced concrete electric poles and pipes

respectively, and another plant in Lampang that also made steel

reinforced concrete pipes.

The roof tile business was also successful and growing. The Siam

Fibre-Cement Co., Ltd. increased production capacity and expanded

its product lines by establishing further factories aimed at promoting

a more diverse range of cement products, including Roman tiles and

corrugated tiles. These new products would compete against imported

building materials.

Over the 60 years that had passed from the establishment of SCG,

the performance of the company and of companies in the group had

improved in every regard. In addition to seeing its output increase,

its product lines expand, and operations become more efficient, the

company was creating a legacy of credibility with various financial


At a building materials trade fair, various products which were produced to respond to the needs of consumers at the time were put on display. In front of Building 1 at the headquarters in Bangsue, high-quality roof tiles are set for delivery.

institutions both within the country and abroad. This success led to the

acceptance of Thai business organizations at an international level and

thus helped the country develop as a whole. SCG showed that Thais

could operate to international standards in all areas of business.

The company’s borrowing of more than 18 million US dollars from the

International Finance Corporation, or IFC, was evidence of this trust.

The sum was considered a large capital injection at the time. However,

the company did not have to rely on a guarantee from any external

financial institution because other companies within the group were

able to provide a guarantee and secure international confidence. As a

result, SCG was able to access new sources of capital for its business

expansion over the ensuing decades.

In 1972, there was a significant change to the management structure

of the company. Previously, each company in the group had

operated independently with its own Board of Directors overseeing

the management of the business, setting policies and specifying

its objectives. However, SCG’s Board of Directors believed that

management should be centralized in order to create continuity,

efficiency and communication between the various business units.

In order to allow all the businesses to operate in line with each other

and so that all companies could establish long-term plans together,

all companies were brought under one corporate umbrella. This would

also help to make negotiations for capital loans easier and more

credible and to provide synergy to compete in world markets. For this

reason, all the company’s subsidiaries were brought together under a

name now familiar to all Thais: The Siam Cement Group.

The Development of Sustainability

In 1972, the company was restructured as The Siam Cement Group, joining all of its subsidiaries into one conglomerate. There were many notable developments, including expansion through joint ventures and new investment, the financial crisis of the late-1990s, and the application of the Sufficiency Economy philosophy, which made SCG more resilient.

SCG’s headquarters at Bangsue, Bangkok.


(1972 – 1981)The New Management Style

}SCG is one of only a few

organizations of its size and scope to reach the 100-year milestone.

~

The front entrance of The Siam Fibre-Cement Co., Ltd. in Bangsue, Bangkok. The company helped SCG expand into the production of new cement-based products.

The last Danish president Viggo Fred Hemmingsen (far left), with SCG employees.

Boonma Wongswan completed a B.Sc. in Economics with First Class Honours at the London School of Economics, England. He worked as a civil servant for the Ministry of Finance before becoming its permanent secretary and then minister in 1973.

Boonma joined SCG in 1966 as director of The Siam Iron and Steel Co., Ltd. and The Siam Industrial Co., Ltd. He was vice chairman of The Siam Cement Trading Co., Ltd. then became general manager of The Siam Cement Co., Ltd. in 1972. Boonma’s tenure as general manager was unsettled by domestic events such as the 14 October 1973 student uprising which led to the overthrow of the government of the time. Boonma temporarily left his position as general manager of SCG to become the Minister of Finance in the new government. In addition, the subsequent Thai government, which was struggling to rein in inflation, announced cement price controls, which meant SCG was unable to expand its production capacity. In 1975, for the first time, SCG shareholders were not paid a dividend. However, Boonma not only helped SCG overcome these obstacles, but also found new opportunities to create growth for the company with new alternative business enterprises.

Boonma Wongswan, the First Thai General Manager

SCG is one of only a few organizations of its size and scope to reach

the 100-year milestone. After completing a structural reorganization

to become “The Siam Cement Group,” SCG soon reached another

milestone. In September 1972, Boonma Wongswan was chosen from

the Board of Directors to succeed Viggo Fred Hemmingsen as general

manager, marking the first time that a Thai had assumed this position.

One month following his appointment, however, Thailand underwent a

political transformation, one that had a dramatic impact on Thai society

as a whole. On 14 October, university students led people from all

walks of life in a protest to oust the long-standing military government.

After violence erupted between security forces and the protesters,

the military leaders resigned. Then, just two days later, Thailand was

struck by a global economic crisis when the Arab-led Organization of

Petroleum Exporting Countries, or OPEC, announced a 70 percent hike

in crude oil prices. OPEC’s drastic action – taken in response to the

support Western countries had shown Israel in the Arab-Israeli War –

caused world oil prices to soar.

The major political changes that swept through Thailand that October

also directly impacted SCG. General Manager Boonma, together

with two other members of the Board of Directors, Professor Sanya

Dharmasakti and Osot Kosin, were given temporary leave from their

positions in the company in order to assume political posts. Professor

Sanya Dharmasakti became prime minister of Thailand, while Osot

Kosin and Boonma assumed the positions of Minister of Industry and

Minister of Finance respectively. All three men felt compelled to use

their experience to help the nation. Ultimately, Boonma returned to the

general manager’s office after formally completing his duties as Minister

of Finance in August 1974.

46 47OF INNOVATIONS FOR SUSTAINABILITY THE DEVELOPMENT OF SUSTAINABILITY

Top: The Siam Kubota Industry Co., Ltd. presents tractors to His Majesty King Bhumibol Adulyadej’s development program, the Chaipattana Foundation, on 15 January 1991. Bottom: The Kubota tractor, an innovation which helped farmers.Various types of kraft bags used for packaging cement by SCG.

Upon taking up his post at SCG again, Boonma was immediately

confronted with a test of his leadership. Thai Paper Industry Co.,

Ltd., a supplier of the kraft paper used for SCG’s cement bags, was

struggling from an accumulated deficit of more than 200 million baht

and accumulated debt of one billion baht. Some of its customers, no

longer confident in the management of the company, had decided to

establish their own paper factories. Thai Paper Industry Co., Ltd. asked

SCG to guarantee a short-term loan of 50 million baht that would help

keep the business alive. However, when the loan they received did

not end the company’s struggles, Thai Paper Industry’s major creditors

agreed that the company could no longer continue operating and

SCG should intervene. SCG studied the conditions carefully, ultimately

agreeing to a long-term contract to manage the business under the

name The Siam Kraft Paper Co., Ltd.

Amaret Sila-On, vice president of the marketing department at the time,

was given the task of leading SCG’s new business unit. Amaret said

that the company’s Board of Directors and major creditors realized

only SCG could lead the unit back to health. Boonma believed that the

takeover was also a socially responsible move. The Siam Kraft Paper

Co., Ltd. became an early testing ground for SCG executives and

personnel, who were required to adapt to and improve a new business.

Most importantly, this marked the starting point of SCG Paper, a unit

that would expand to become one of SCG’s core businesses.

During Boonma’s first two years as general manager, Thailand’s

political situation, its economy and society as a whole remained

unstable. During this volatile period, the cement business in Thailand

could do little more than simply survive. With government-ordered

price controls in effect, there were few opportunities to expand. In a

book marking SCG’s 70th anniversary, Boonma commented: “Due to

these price control measures, no one is going to be brave enough to

set up a new cement plant. Within the next four years, we can expect to

face shortages and will have to import cement from abroad.” Ultimately

such limitations, however, inspired SCG to take steps in new directions

and the crisis was transformed into an opportunity. These steps would

build the foundations for the further diversification of SCG’s business

interests.

At the end of 1976, SCG’s leadership underwent a change when

Sommai Hoontrakool, who held an honorary PhD in Economics from

Keio University in Japan and was a former Minister of Finance in the

government of Sanya Dharmasakti, was appointed general manager.

By this time, the Thai and global economy had begun to rebound. SCG

had borrowed large sums from abroad to boost production capacity

and expand investment in a diverse range of businesses. In order to

survive, strong action was occasionally required.

The iron and steel business became more successful after the

government’s automotive industry development policy mandated

manufacturing plants to use auto parts produced in Thailand. The

growth in the export of agricultural products also bolstered the iron and

steel business as the agricultural sector saw a move toward increased

mechanization and thus new demand for machinery. SCG’s cast iron

business, meanwhile, also benefited from the expansion of the Thai

agricultural and automotive sectors.

SCG capitalized on these growth areas by investing in a joint venture

with the Japanese company Kubota Co., Ltd., to produce agricultural

machinery under the name The Siam Kubota Diesel Co., Ltd. SCG


Top: CPAC’s ready-mixed concrete remains a popular product to this day. Bottom: A technological innovation that creates more convenience for the consumer, concrete mixer trucks allow concrete to be continually mixed as the trucks deliver the concrete to the destination.

Thung Song cement plant in Nakhon Si Thammarat province produces cement for the south of Thailand and neighboring countries.

would be directly involved in the management of the venture, while

Kubota would supply the technical know-how and also help manage

the plant. This type of joint venture became the prototype for

cooperation between SCG and overseas businesses, and differed from

other industries in which the overseas partner typically held only a 49

percent share, in accordance with the law, but nonetheless enjoyed

full management control. With a reputation in industrial circles for its

confident performance and a president who had attended university in

Japan, The Siam Kubota Diesel Co., Ltd. marked the starting point of

SCG’s strong business relationship with Japan as well as its entry into

the production of machinery and automotive parts, a sector in which

SCG has been continuously operating for over two decades.

At the end of 1977, Sommai Hoontrakool reorganized SCG’s distribution

system by merging the distribution business of The Siam Cement Co.,

Ltd. with those of The Siam Fibre-Cement Co., Ltd. and The Concrete

Products and Aggregate Co., Ltd. (CPAC), and placing it under

the responsibility of SCG’s marketing department. Meanwhile, The

Construction Materials Marketing Co., Ltd. which had been established

in 1962, changed its name to The Siam Cement Trading Co., Ltd. and

focused solely on international trading. This structural reorganization

revolutionized SCG’s warehousing system, product dispersal and sales

agent network.

Ayus Israsena Na Ayudhya, who had been general manager of The

Construction Materials Marketing Co., Ltd. since 1966, became

instrumental in building up and expanding this revitalized distribution

network. Notably, he enhanced the bulk transportation system by

having powder cement transported in large tanks by truck, train and

sea freight and then packaged at the destination, instead of shipping

it in paper bags which ripped easily. This innovative idea reduced

product and revenue losses stemming from damaged packages.

In 1980, after Sommai assumed the position of Minister of Finance in

Prime Minister Prem Tinsulanonda’s new government, Charas Xuto

became head of SCG, with the title of “president” instead of “general

manager.” The first general manager or president to be promoted from

within the company, Charas helped transition SCG toward new internal

systems management and introduced structural reorganizations

that improved the overall efficiency of the company. SCG also made

plans to further expand production capacity, this time seeking out

technological innovations that would save energy, increase production

efficiency and also be environmentally friendly. The Kaeng Khoi and

Thung Song plants stopped using fuel oil and operated on lignite

instead, and the Tha Luang plant changed its manufacturing process

from a wet process to a dry process, the latest innovation at that time.

In the early 1980s, the global oil crisis and the government’s

devaluation of the baht had a dramatic impact on the industrial sector,

triggering the government to seek renewable energy resources within

the country. Research and development of national gas resources in

the Gulf of Thailand became a government priority. SCG was eager to

use natural gas to power its cement production. Using domestic energy

instead of imported energy would reduce production costs. To achieve

this, however, the Petroleum Authority of Thailand (PTT) would need to

invest in building a gas pipeline. SCG decided to invest in and lay a

180-kilometer-long gas pipeline to the Tha Luang and Kaeng Khoi plants

itself, making SCG’s cement business the first industry in the country to

use energy from natural gas as its driving force.


(1982 – 1991)A Leap Forward

}The company’s registered capital – one million baht at its founding in

1913 – had increased to one billion baht.

~

When it opened, Kaeng Khoi cement plant in Saraburi province was powered by lignite, the most advanced energy-saving process at the time, instead of fuel oil. The new head office building at Bangsue during its construction in the early 1980s.

In the 1980s, the Thai economy grew at a breathtaking clip and

became closely linked to the world economy. SCG itself had grown

and progressed dramatically. The company’s registered capital –

one million baht at its founding in 1913 – had increased to one billion

baht. The company now had almost 10,000 employees and sales

had increased to over 10 billion baht annually by the company’s 70th

anniversary in 1983. During this decade, SCG made several major leaps

forward. Operations expanded into new sectors, such as chemicals,

and existing businesses such as the paper business became full-scale

enterprises. These moves paved the way for future investments at the

regional and international levels.

Buoyed by its growth, SCG decided to relocate its headquarters. In

1979, a working group was appointed to find a suitable location that

would take into account the interests of all companies in the group. The

committee ultimately decided on the Bangsue site of SCG’s original

cement plant. Since new plants had opened in Tha Luang, Thung Song

and Kaeng Khoi, the importance and role of the Bangsue plant had

diminished, and the area around the plant had urbanized. Featuring a

large area of land of 148 rai (58.51 acres) and full utility supply system,

including road, rail and canal transportation systems, the Bangsue area

was now more suitable for commercial rather than industrial use. So in

1981, all three kilns at the Bangsue plant ceased production. White

cement continued to be produced for one more year, while cement

milling and distribution continued until the middle of 1983, at which

point Thailand’s first cement plant ceased production.

The location was redeveloped to support construction of SCG’s new

head office building and the foundation stone was laid on 6 January

1982. The total construction budget for the project was 235 million


SCG’s paper industry developed from the humble production of kraft paper for cement bags into a full-scale, integrated paper business manufacturing printing paper (as seen in the top picture) and packaging (bottom).

The early days of the chemicals business: (top) Pacific Plastics (Thailand) Co., Ltd.’s plant in the Map Ta Phut industrial estate in Rayong province, a joint venture between SCG and Dow Chemical Co., Ltd; (bottom) engineers at work inside a facility at Thai Polyethylene Co., Ltd.

baht, with half the funds coming from the sale of another building and

land belonging to SCG on Phaholyothin Road. On 9 December 1983,

SCG celebrated the opening of its new headquarters as well as its 70th

anniversary. The company’s new office building was a smart, modern

11-story building, and the company itself stood primed to grow in line

with the Fifth National Economic and Social Development Plan (1982-

1986), which supported export production and the development of

energy resources within the country.

In order to follow this development plan, the Petroleum Committee,

with Deputy Minister of Industry Dr Chirayu Isarangkun Na Ayuthaya as

chairman, voted at the end of December 1983 to establish the National

Petroleum Company to create the basic structure of a petrochemical

industry that would optimize the use of natural gas from the Gulf of

Thailand. Four joint investors were selected from the private sector.

Thai Polyethylene Co., Ltd. was established, under SCG, as one of the

companies involved in pioneering the project.

Four years later, SCG bought shares in a company that produced

polystyrene and was run by Dow Chemical, a global giant in chemical

products from the U.S. This joint venture was heralded as the first Thai

corporate partnership with a global chemicals company. As production

capacity expanded continuously, SCG entered into joint ventures with

other leading global manufacturers such as Mitsui Chemicals, Inc. and

Mitsubushi Rayon Co., Ltd. The period from 1983 to 1992 is regarded as

a pioneering period for the chemicals industry in Thailand. Ultimately,

the chemicals business would become a significant business for SCG.

In the same period as this proactive entry into the chemicals industry,

the performance of The Siam Kraft Paper Co., Ltd. had improved, but

the company was still unable to pay off all its debts. SCG’s management

therefore started a process in which The Siam Pulp & Paper Co., Ltd.,

which had been established in 1979 to produce pulp and raw materials

for paper production, would take over all of the businesses of The Siam

Kraft Paper Co., Ltd.

First, in November 1984, The Siam Pulp & Paper Co., Ltd. established

The Siam Kraft Industry Co., Ltd. and built a plant with machinery to

produce kraft paper with a production capacity of 100,000 tons per

year. Then, two years later, at the Annual General Meeting, shareholders

of The Siam Kraft Paper Co., Ltd. voted to sell the entire business,

including tools and machinery, to The Siam Kraft Industry Co., Ltd. This

move freed The Siam Kraft Paper Co., Ltd. from all debts and began

a new era for SCG’s paper business. The Siam Kraft Industry Co., Ltd.

doubled its production capacity to 200,000 tons per year.

SCG’s next objective was to expand its paper business to be a full-

scale enterprise by partnering with a business group from Taiwan to

establish Thai Paper Co., Ltd. A large, state-of-the-art plant was built

in Ratchaburi province to produce printing and writing paper used in

high-quality printing industries. The plant acquired business from Thai

Union Paper Co., Ltd, which had a production capacity of 50,000 tons

per year. This marked the beginning of SCG’s integrated paper business.

In 1983, there was another significant expansion of SCG when SCG

Building Materials Co., Ltd. was established to produce and distribute

building materials and a wide range of decorative products. Then, in

1987, SCG partnered with Toyota Motor Corporation to establish Siam

Toyota Manufacturing Co., Ltd. to manufacture engines for Toyota

pickup trucks, which have long been popular in Thailand.


TileCera’s plant in the United States was established to produce and distribute ceramic tiles. Members of the media visit the Khao Wong cement plant in Saraburi province, which boasted the biggest kiln in the world at the time.

From 1985, when Paron Israsena Na Ayudhya became president,

SCG began a serious search for investment opportunities outside the

country. During this period, SCG expanded both its traditional and new

businesses. There were not only acquisitions, ranging from medium-

to large-sized businesses, but also joint ventures with Japanese and

Western companies. Confident in its strengths and professional working

methods, many global companies chose to partner with SCG.

New ventures were constantly being pioneered. In 1988, SCG entered

the sanitary ware manufacturing industry, establishing The Siam

Sanitary Fittings Co., Ltd., with TOTO, a leader in the technology,

as a joint investor. Following this, SCG was able to offer consumers

a complete range of sanitary ware. At the same time, color television

manufacturers in Thailand invited SCG to lead the application process

to the Board of Investment to gain support for cathode ray tube

manufacturing. From there, Thai CRT Co., Ltd. was established as a

joint venture with Japanese company Mitsubishi Electric Co., Ltd.

Recognizing that the moment had come to assume new challenges

even further afield, SCG’s management decided to take its business

global. In 1990, SCG expanded to the United States where it established

TileCera Co., Ltd., a producer and distributor of ceramic tiles. Although

this venture was unsuccessful, it provided valuable lessons in the

management of businesses based abroad, with SCG learning more

about its own readiness, in terms of personnel, technology and overseas

markets. These lessons did not cause SCG to fear or abandon the

idea of pursuing business abroad, but instead gave it the courage to

expand the business more carefully and with more understanding of

the market. From that point on, SCG expanded continuously within the

ASEAN region. Starting with the export of its products from Thailand

and the purchase of shares in market-leading local companies, SCG

gradually opened businesses in the Philippines, Vietnam, Cambodia

and Myanmar. Later, in 1995, SCG invested heavily in setting up

production bases in the Philippines, China and Indonesia.

The widening scope of its business did not impact SCG’s traditional

businesses. Increased demand in the country for cement exceeded

the manufacturer’s capacity. SCG therefore decided to build a new

cement plant, known as Khao Wong plant, in Saraburi province in

1989, employing Ube Industries, Ltd., a Japanese company that was

a global leader in the production of cement manufacturing machinery,

in tandem with SCG’s own team of engineers. Equipped with the most

modern technology, this cement plant, SCG’s fifth, had the largest kiln

in the world at that time. Cement production capacity reached 10,000

tons per day, or approximately 3.6 million tons annually.

To help sustain this rapid development, SCG attached great importance

to caring for the surrounding environment. All the water used in the

production process at the Khao Wong plant was in a closed system,

with waste water reconditioned for reuse. Water for general use was

stored in a clarifier before being used to water plants on the premises.

Electrostatic precipitators were installed to keep the environment as

natural as possible. The surrounding community was also looked after,

because SCG has always believed that business growth should be

coupled with community development.


SCG’s Business ExpansionSCG has continuously expanded its cement, building materials, paper and chemicals businesses. During the period 1982-1991, SCG also joined with other

established companies in Thailand and abroad to begin new ventures in challenging business areas such as the production of cathode ray tubes for color

television sets, which was the most advanced technology at that time. Additionally, SCG joined with other companies to add value to its existing product lines, by

producing, for example, steel for the automobile industry, which manufactured cars, trucks, engines and other parts.

Top left and top right: Steel wires produced for the construction industry. Bottom left: The production of cathode ray tubes by Thai CRT Co., Ltd. Bottom right: The production line for the machinery produced by The Siam Nawaloha Industry Co., Ltd.

Top left: The production of disc breaks, an automotive part that uses steel as a main component. Top right: Automated assembly line at The Siam Compressor Industry Co., Ltd. Bottom left: The Siam Alloy Wheel Industry Co., Ltd., the first company in Thailand to use X-ray machines for quality control. Bottom right: Inside The Siam Guardian Glass Co., Ltd., a glass manufacturer.


(1992 – 2003)

Overcoming Challenges

}SCG decided that the sustainable solution would be to focus on risk

management and its core businesses. ~

Operations expanded into China with the establishment of Beijing Cementhai Ceramic Co., Ltd. At SCG, knowledge and expertise are transferred between the older and younger generations in a family-like atmosphere.

In May of 1992, a conflict erupted between the public and the Thai

government at the time, which was backed by a military junta. Referred

to as “Black May” by the media, this conflict reached its unfortunate

conclusion when government security forces resorted to violence to

suppress the protestors.

Having experienced political crises in the past, SCG followed these

events closely. In the end, the impact of “Black May” on the country’s

overall economy was not too severe. World oil prices were weak and

internal and external interest rates were low, so economic growth was

still assured.

Around this time, there was good news on the regional front. Major

cooperation between ASEAN nations resulted in the establishment

of the ASEAN Free Trade Area (AFTA). In 2015, this body will further

liberalize trade and be known as the ASEAN Economic Community

(AEC). ASEAN will become a large market with a shared population of

600 million people.

After Paron completed his term as president, the Board of Directors

elected Chumpol NaLamlieng as his successor in 1993. At the same

time, a resolution was also passed to change SCG’s management

structure by grouping various businesses as follows: Cement, Building

Materials, Ceramics, Distribution, Petrochemicals, Paper, Iron and

Steel, Auto Accessories, Electrical Products and Machinery. This

restructuring allowed each group to devise its policies more freely and

to further expand its investment in the region, with an emphasis placed

on Indonesia, Vietnam, the Philippines, other Indochina countries and

southern China.


Chumpol NaLamlieng, president of SCG at that time, talks to journalists about SCG’s financial outlook.

Top: SCG’s booklet on the principles of the Sufficiency Economy. Bottom: Headlines of major Thai newspapers report the economic crisis of 1997. One Thai headline states, “The Devaluation of the Baht Causes 400 Billion In Losses,” while the other announces, “The Bank of Thailand Calls for 75 Trust Companies to Prevent People from Chaotic Withdrawals.”

During the mid-1990s, the Thai economy grew faster than ever before.

In some years, the rate of economic growth exceeded 10 percent. The

foreign media forecast that Thailand was about to become a new Asian

“tiger economy.” SCG accelerated the expansion of its own business,

not only growing its traditional industries, but also proactively entering

into new ventures. This expansion resulted in profits of 4,000 million to

5,000 million baht annually. In 1996, in particular, net profits shot up

to 6,800 million baht, while the rapid investment expansion led to net

borrowing of 119,000 million baht.

Then, in 1997, the Thai economy collapsed. Speculation by the private

sector, a lack of financial oversight and regulation by the government,

and the subsequent loss of confidence in Thailand by the foreign

investment community resulted in a comprehensive crisis. When the

government decided on 2 July 1997 to float the value of the Thai baht,

the economic bubble burst entirely. The value of the baht plummeted

over the subsequent months. Many businesses and financial institutions

went bankrupt. SCG itself received a heavy blow. Operating profits

of nearly 7,000 million baht in the preceding year turned to a loss of

52,551 million baht within just one year. The value of its already high

borrowing debt more than doubled to 246,700 million baht.

SCG decided that the sustainable solution would be to focus on risk

management and on its core businesses. The company also decided to

emphasize increasing its revenues through exports and more efficient

use of resources. These goals were in accordance with the ideas of His

Majesty King Bhumibol Adulyadej, who had created what he called the

“Sufficiency Economy.” His Majesty’s idea, offered to all Thais, stressed

the importance of reducing exposure to risk created through either

internal or external changes. It also espoused the virtues of moderation

and reasonableness. While his philosophy was typically associated

with agricultural or family contexts, it could also be applied to large

organizations, and could help lead these organizations to sustainable

success and growth.

SCG did not lay off staff during this time, as the company believed they

were its most valuable asset. Indeed, SCG continued to emphasize

the development of its human resources. To meet its debt, SCG’s

management negotiated directly with its creditors and did not request

the debt to be compounded. Management was confident that it still had

a strong foundation for future growth and would be able to pay off any

interest incurred during the repayment of the debt. The economic crisis

taught SCG to invest prudently. At the same time, SCG learned it could

overcome major obstacles through unity and cooperation between

all employees, and by maintaining the organization’s credibility. As a

result, when SCG twice issued debentures for a total value of 90,000

million baht after the crisis, the company received a strong public

response, demonstrating continued confidence in SCG. Other large

organizations hoping to mobilize funds followed SCG’s example and

also issued debentures.

Following the collapse of the Thai economy, SCG restructured from ten

business units to five units: chemicals, paper, cement, building materials

and distribution. These five units represented the core strengths of SCG.

The chemicals business grew rapidly and its performance was excellent.

By 1999, this success had allowed for new investments, including

in the production of various types of plastic pellets and olefins, the

upstream materials of SCG Chemicals. SCG now operated a complete

cycle chemicals business, placing it among the ranks of the leading

manufacturers in ASEAN.

63THE DEVELOPMENT OF SUSTAINABILITY62 OF INNOVATIONS FOR SUSTAINABILITY

(2004 – 2013)

Innovation and Sustainability

}SCG began to emphasize innovation in its production technology, products,

services, working processes and business models.

~

Rolls of paper ready for distribution. An SCG Experience staff member offers information about building materials to clients at SCG Experience in Bangkok’s Crystal Design Center.

By the early 2000s, Thailand had fully recovered from the economic

crisis, and SCG, guided by His Majesty’s Sufficiency Economy

principles, had successfully restructured and become profitable again.

Indeed, in 2004, SCG recorded its highest profit since its establishment,

an achievement that was even more remarkable given that Thailand

that year faced fluctuating oil prices, the bird flu epidemic and civil

disturbances in the deep south of the country. Nonetheless, SCG’s

revenues exceeded 194,000 million baht, and its net profit was over

36,400 million baht. SCG Chemicals was the most successful business

unit with a net profit of 20,000 million baht.

Success is what all business organizations wish to have and it is

difficult to achieve, but sustaining success is even harder in an

increasingly competitive world. SCG’s management is well aware

of this, so research has been undertaken to determine what would

bring SCG greater success in the future. The answer is “innovation.”

SCG has begun to emphasize innovation in its production technology,

products, services, working processes and business models, and also

in terms of its communication and creativity in the office. The goal is for

all SCG employees to become innovators and jointly create an innovative

organization that meets the challenges of a competitive marketplace as

well as the needs of the modern consumer and society.

When Kan Trakulhoon was promoted to become president in 2006, many

of the organization’s goals were systematically integrated. At the same

time, clear strategies were determined both for business expansion

in the region (under the slogan “Go Regional”), and for creating what

is known as High Value Added (HVA) products and services. These

innovations have become a key selling point for SCG’s products and

services, and differentiate the company from its competitors. The


Top: SCG’s House Cooling System is an innovation in the building materials sector that helps people cope with climate change by reducing costs and saving energy. Bottom: An event held in 2010 announced that all building material products produced by SCG would fall under one brand, SCG.

1913 1963

2004 2006 2013-2014

1972

Used from the company’s inception, the white elephant emblem has always remained at the heart of the SCG logo. In Thailand, a white elephant is a symbol of greatness and has long been associated with the nation. The white elephant also represents the accumulated merit of kings and is traditionally considered an animal of great prestige. The hexagon frame logo was created and added to an updated logo when the company was restructured as The Siam Cement Group in 1972. This design represents the integration of different business groups and departments within SCG. It was drawn to resemble the cut of a diamond, thus signifying strength and value.

The current SCG logo has two key new elements that imbue it with a more modern and international feel. The letters SCG, an abbreviation of The Siam Cement Group, were especially designed to be easily identifiable and are used to unite all aspects of the company’s business, not just its cement business unit, under one corporate umbrella. The straight red lines reflect the honest and determined way in which SCG conducts its business. Finally, the special logo created for SCG’s 100-year anniversary sees the introduction of the words “100 years” and a yellow ring which represents an innovation organization that is constantly evolving.

SCG Logos from Past to Present emphasis on innovation is the first time the entire business is based

around one core vision in order to ensure sustainable growth in the

future.

A key strategy adopted by SCG was to modernize the organization’s

image. “SCG” was adopted as the new name of the company, replacing

“The Siam Cement Group.” Under the original name, most consumers

thought that SCG made only cement products and building materials,

and were unaware that SCG produced a much wider range of products.

To boost this rebranding effort, a new company logo was designed that

was easily identifiable by consumers. All business units adopted both

the name SCG as well as the SCG logo. This formal change of name to

SCG not only gave the company a modern and international image, but

also helped pave the way for a full entry into regional and world markets.

The image of various SCG-branded products also continued to evolve. In

2010, products in the building materials business were all brought together

under the SCG brand, a name which was already long established in the

market by that time.

The tiles and sanitary ware product groups were also all integrated

under the existing brand COTTO. This strategy helped the COTTO

brand in a number of ways: it strengthened the brand image, and

there were clear, new directions for marketing in order to establish

the brand internationally. COTTO also initiated a new emphasis on

design. Products would not only be functional, but they would also

meet customer expectations in terms of aesthetics. Out of this initiative,

COTTO Studio, featuring state-of-the-art design equipment and talented

designers, was born. These brand integration strategies have helped

COTTO to become an internationally recognized brand, with products

featured at Milan Design Week in Italy. The brand integration of COTTO


Top: A COTTO Studio designer reviews a new design. Bottom: At Bangkok’s Architect Expo 2011, SCG showcased its products and innovations to the public.

Left: SCG’s research and development staff at work. Right: A poster for SCG Chemicals focuses on the benefits of R & D in developing new innovations that will be useful to society as a whole.

SCG is committed to the research and development of products and services that are innovative both conceptually and in terms of the production process. These High Value Added products and services, known as HVA, include eco-friendly products (SCG eco value) focused on not only increasing SCG’s sales, but also promoting a good quality of life for consumers and helping preserve the environment.

SCG has placed significant emphasis on research and development work based on collaboration with other organizations and research institutes in Thailand and abroad. Moreover, budget allocations for this area are increased every year. In 2011, for example, SCG’s expenditure and investment in R & D reached 1.43 billion baht. Meanwhile, income from such products and services increased to 34 percent of total sales, demonstrating a clear return on investment. SCG has made it a top priority to drive the organization forward by creating HVA products and services both in Thailand and also with its ASEAN and international partners.

A Commitment to R & D

and SCG products under their own unified products line has also had

another benefit—products that were previously separated in the same

group now promote each other through association, which allows for

the marketing budget to be managed more efficiently.

SCG’s aims, however, go beyond the production of useful and attractive

products. It also attaches significant importance to the environment. In

2009, SCG issued the “SCG eco value” product label, and became

the first organization in Thailand to introduce such a label. This is a

standard set to certify that SCG products and services bearing these

labels have been produced using entirely environmentally friendly

processes. In addition, the label ensures that the product will not harm

the environment when and after it is consumed, is of excellent quality,

reduces the consumption of natural resources, and also saves the

consumer money.

After these major rebrandings, SCG decided to restructure its

operations in April 2013, by combining the cement, building materials

and distributions business units together to create a more efficient unit

that responds to the needs of the consumer and the expansion of the

ASEAN market. This means that SCG presently has three business units:

SCG Chemicals, SCG Paper and SCG Cement-Building Materials.

The commitment to develop products and services that improve the

quality of life of consumers and help create a sustainable future for

society is part of the mission of all SCG employees, who now number

more than 40,000. One hundred years after its establishment, the SCG

family has expanded to neighboring countries, and encompasses and

integrates a wealth of ideas and cultural backgrounds.


Profiles of SCG’s Core Businesses

SCG ChemicalsSCG Chemicals, founded in 1983, manufactures and supplies a full range of chemical products, ranging from upstream petrochemicals, such as olefins, to intermediate petrochemicals, such as Styrene Monomer, PTA and MMA, to downstream petrochemicals, such as the four main types of plastic resins: Polyethylene, Polypropylene, Polyvinyl Chloride and Polystyrene. SCG Chemicals is now a major integrated petrochemical manufacturer in Thailand and a leading manufacturer in the entire Asia-Pacific region. With its widely recognized management capabilities and business operations, SCG Chemicals has successfully entered into joint ventures with leading global companies such as Dow Chemical of the U.S., and Mitsui Chemicals and Mitsubishi Rayon of Japan.

SCG Chemicals is committed to developing High Value Added products by seeking new business opportunities both in Thailand and abroad. SCG Chemicals is therefore dedicated to continuous research and development, which will lead to innovations and new products. Successes include plastic resins such as PE 100 for high pressure pipes, Low Density Polyethylene (LDPE) resins for LD coating, and colored plastic compounds to produce plastic products from molds in the Roto Molding process. Other types of innovations focus on Polypropylene resins and high quality special grade PVC, a pioneering product which meets the global standards required in the production of medical equipment.

SCG Chemicals also prioritizes innovations that will promote sustainable development and growth in society. To fulfil this commitment, SCG Chemicals develops products and production processes that are environmentally friendly. An example is bioplastic resins, produced from natural materials that are one 100 percent compostable. These are certified by the DIN CERTCO certification organization and are also given the SCG eco value label. In terms of social concerns, SCG Chemicals drives and supports the concept of Eco Industrial Towns by upgrading all factories in SCG Chemicals to become Eco Factories. SCG Chemicals has also expanded its eco network to the public at large by creating an Eco Community which truly embodies the concept of sustainability.

SCG Chemicals has built production bases in Vietnam and Indonesia and continues to discover business expansion opportunities in ASEAN countries. In addition, SCG Chemicals has new joint ventures planned with its global partners in order to promote sustainable growth in the chemicals industry.

Top: An SCG Chemicals plant in the Map Ta Phut industrial estate in Rayong province. Bottom: Plastic pellets, SCG Chemicals’ key product, are the raw material used in the production of a variety of products.

Left: Packaging paper is one of many products produced by SCG Paper. Right: The development of eucalyptus clones at SCG’s Paper Seedling Center in Kanchanaburi province. They are distributed to farmers to grow eucalyptus plantations.

SCG PaperFrom its roots in 1976 as a paper business that was concerned with responsibility toward both the business community and society, SCG Paper has become the leader in the paper business in Thailand. It is the only company in the country and the ASEAN region to operate an integrated paper industry, covering the production of everything from pulp to printing and writing paper under the brand “Idea” to packaging paper. SCG Paper has factories in Thailand and also abroad in Vietnam, the Philippines, Singapore and Malaysia.

Like SCG’s other business units, SCG Paper’s policy is to emphasize sustainable development in all its business practices, by developing technology and using the philosophy of operational excellence to raise the quality of products and services through innovations and High Value Added processes that preserve the environment. SCG Paper emphasizes environmental awareness from the earliest stages by selecting recycled materials for the components in its Green Products, which follow the certified standard of the Forest Stewardship Council (FSC). This emphasis continues all the way through the end-use by the customer. For example, Green Series paper is produced from EcoFiber, which derives from a combination of excess agricultural products and recycled paper, meaning no new pulp products are utilized. Other examples of SCG Paper’s commitment to sustainable

development practices include TTF and CAF packaging paper, both of which use 100 percent recycled materials and are certified as FSC recycled. In addition, SCG Paper makes containers known as Green Carton. This technological innovation uses “G Technology” to reduce the use of natural substances to less than 25 grams per square meter. But the packaging still offers protection of the objects inside and the ability to bear significant weight. SCG Paper also offers the Design Solution Center, which provides integrated services on design and product development. It offers consultancy, design and production of packages based on customers’ needs, with a special focus on eco-friendly packages.

This sense of social and environmental responsibility also extends to the production line. For example, all paper production processes must optimize resources by taking into account optimal cutting practices and re-use of excess to prevent unnecessary waste. In addition, this policy covers the management of production waste (Green Process); creation of recyclable, environmentally friendly products (Green Product); and promotion of environmental awareness among employees and all parties involved (Green Mind).


SCG CementSCG Cement, formed in 1913 when the company was founded, is the original business unit of SCG. At present, SCG Cement produces and distributes gray cement, white cement, ready-mixed concrete, precast concrete products and refractories (materials that can withstand extremely high temperatures), and provides technical services and plant installations for its customers under three major brands: SCG, Tiger Cement and CPAC.

In addition to conducting business in Thailand, SCG Cement’s policy is to continuously invest in the cement industry in the region. To date, SCG Cement has established a cement plant in Cambodia and has also acquired a white cement mill in Vietnam. In Indonesia, SCG Cement is building a cement plant and has acquired a market leader in ready-mixed concrete. SCG Cement is also building a network of ready-mixed concrete factories in the ASEAN region. At the same time, SCG Cement continues to export its products throughout the region.

Committed to protecting the environment, SCG Cement has designed the first environmentally friendly Semi Open Cut mine in Thailand at its mine plant in

Lampang province. Replacing the traditional Side Hill Cut mine, which creates a large amount of dust, noise and vibrations that can spoil the scenery of the surrounding area, this new mining technique uses a unique drilling method and top-down explosions to create a downward staircase which eventually becomes a hole in the mountain. Tree cover around the mine also helps reduce the spread of dust and absorbs noise, preserving the green mountain scenery and nearby natural habitats.

SCG Cement is also well aware that alternative energy sources must be found to reduce dependence on current resources. Thus, in 2008, a Waste Heat Power Generator (WHG) was installed to produce electricity by re-using heat created by cement production processes. This innovative process can replace 25 percent of electricity usage. Although this project required a very large financial investment, the return has been more than worthwhile, with value created through the recycling of previously valueless waste. In addition, the process reduces the environmental impact of the heat released during cement production.

Left: The natural environment surrounding SCG’s cement plant in Lampang. Right: Transportation of SCG cement.

Left: The prototype SCG HEIM modular house on display for the public at the Crystal Design Center in Bangkok. Middle: Sanitary ware items from COTTO, where customers choose items based on their lifestyles. Right: SCG’s Roofing Center at a HOME MART store, where a variety of SCG products are available to meet customers’ needs.

SCG Building Materials

Ever since SCG entered the building materials business in 1938, SCG Building Materials has produced and distributed a wide range of premium quality building materials products, including roof products, ceramic tiles, sanitary ware, water faucets, paving blocks and heat-insulating materials. Production and quality control is based on modern technology, while contemporary, international designs are created by a team of experts, making SCG a market leader in building materials both in the country and in the ASEAN region. In addition, subsidiaries have been established in many countries such as Indonesia, Vietnam, the Philippines, Cambodia and Laos, while export markets have been expanded continuously. Important export markets include the ASEAN countries, Europe, the U.S. and Australia.

SCG Building Materials is determined to continuously develop innovations in building materials in order to create a better standard of living for consumers. The business unit presents its products and full-scale services through SCG Roofing Center, COTTO Studio and Home Solution Center, which provide comprehensive services starting from design through product selection and installation under the concept of “One Stop Shop, One Stop Service” for consumers’ convenience.

Dedicated to practicing its business with environmental awareness under the concept of sustainable development, SCG Building Materials has introduced innovations that reduce the impact of construction on the natural environment, help create a balance between society and the environment, and offer progress in terms of the consumers’ well-being. For instance, the SCG House Cooling System combines the use of SCG eco value products that not only save energy but also save money and are truly eco-friendly. Additionally, the SCG HEIM modular house is a new innovation that provides convenience, value, and a healthy environment because every part of the house is produced in factory via high-quality production processes. The SCG HEIM modular house features a shorter installation time, is easy to clean and durable, has a good ventilation system, and helps create a better flow of natural air. These aspects of the SCG HEIM modular house help create a happy home that is also environmentally friendly.

SCG Cement–Building Materials: Development Toward SCG’s Second Century


Left: HOME MART building materials stores offer a large variety of construction materials under one roof. Right: The free-form architecture of the exterior of SCG Experience at the Crystal Design Center in Bangkok.

SCG Distribution

The Distribution Department came into being in 1915 during the very first years of SCG’s operations, and then in 1962 developed into a separate distribution company. Today, SCG Distribution operates within Thailand through a distribution network and internationally through trading offices around the world. Its services also include transportation services, and product distribution and warehousing.

Since 2006, the distribution business has designated HOME MART as SCG’s direct retail store. It employs Customer Relationship Management (CRM) to maintain an accessible database and meet customers’ needs at all levels. HOME MART is one of only a few distributors in the world committed to the implementation of this system. The system helps create more personal and in-depth relationships with end customers as well as construction contractors, builders and house owners. Complete information is systematically stored and can be used efficiently for marketing plans. In 2009, SCG Distribution opened SCG Experience at the Crystal Design Center in Bangkok as an architectural landmark that reflects SCG’s identity. SCG Experience acts as a learning center, with an emphasis on providing professional opinions and services and introducing new innovations to inspire the customer, instead of only selling products. In return, SCG learns about customers’ needs and can use

the input to develop new products. Customers receive knowledge about different aspects of construction, from building a new house or an extension to renovating or fixing an old house. They can also research information about construction and design at SCG Experience’s library and through its website. SCG Distribution aims for SCG Experience to be a new space for communication between SCG and the public. A new branch opened at the Mega Bangna shopping complex in 2012. Additionally, SCG Distribution has also invested in a joint venture called Siam Global House PCL to expand into the retail business of building materials through a warehouse store. Regarding international trade, SCG Distribution has, through SCG Trading, surveyed and developed new markets in many countries, covering every region in the world. This push has also included surveys to find new high quality materials and products. SCG Distribution also includes SCG Logistics, a leader in the logistics business in Thailand and featuring the country’s biggest network. SCG Logistics provides various logistics services and warehouses, including consultant services and design services to match clients’ needs. They also provide logistics service for other countries in the ASEAN region.

Since the financial crisis in the late-1990s triggered a reorganization of the company, SCG was administrated under five core business units. As of 1 April 2013, SCG restructured into three core businesses: SCG Chemicals, SCG Paper and SCG Cement–Building Materials. SCG Cement–Building Materials merged the three earlier core business units related to the construction industry, SCG Cement, SCG Building Materials and SCG Distribution, into a single unit. This restructuring will help create more efficiency at SCG, bringing SCG closer to the consumers and creating a better understanding of their needs, thus leading to the creation of new products, services, and business models. Meanwhile, SCG continues to develop new innovations and technologies that will help increase its capacity to compete and respond to the growth of SCG’s business in the ASEAN region and to ensure a long-term future that is in line with SCG’s vision to become a sustainable business leader in ASEAN. This change will also impact the development of SCG staff’s capabilities, allowing them to learn about new and challenging areas of the business.

SCG is committed to understanding the real needs of the consumer and developing its own management systems to better respond to them.

People: The Key to Sustainability

“SCG People” come from a variety of backgrounds and are the key to the success of the organization. The driving force that makes SCG a leader in many fields, “SCG People” are committed to the long-standing Four Core Values, are dedicated to being talented as well as ethical people, and believe in being innovative and open to new challenges.

SCG staff refresh their awareness about teamwork and safety protocols.


The Four Core Valuesof “SCG People”

}The first thing one learns

is not related to the daily tasks at hand. Instead, new staff learn about the company’s

Four Core Values.~

As part of SCG’s mentoring system, those with more experience teach those who are new to the job. Inside the control room of SCG’s cement plant in Lampang province, where staff use the most advanced technology to accurately and thoroughly monitor the plant’s systems.

Throughout its 100-year history, SCG has considered its workforce to be

the company’s most valuable asset. While other factors also contribute

to the success of the company, the importance of its human resources,

or “SCG People,” cannot be understated. From the outset, “SCG

People,” having passed through a rigorous recruitment process, are

developed into well-rounded personnel in order to help them overcome

obstacles of any kind. As a result of this training, “SCG People” are

ready to innovate together, to act as socially responsible citizens, and

to lead SCG into its second century of sustainability—and they are

prepared to create growth for the country as well as the organization.

During its early years, SCG gained technological expertise from the

foreign managers working with the company at that time. This was

the starting point for the Thai staff to become independent and self-

reliant. Engaging with the best available knowledge, working practices

and technology from the outset also had the effect of embedding

the concept of excellence in the company’s psyche. During each

subsequent period of its history, SCG consistently put itself at the frontier

of advances in terms of work practices and production processes. This

ongoing dedication to excellence is a key reason why “SCG People”

naturally perform all tasks responsibly and to the highest standard, and

it provides the overall foundation for SCG’s sustainability.

SCG’s human resource practices have evolved over time. In the past,

those who worked in the plant lived in company-owned accommodation.

Plant working hours could be long. There were no fixed working hours.

During critical periods, when the engineers and supervisors needed to

monitor progress closely, work would often continue late into the night

in order to be completed as planned. When repairs to cement kilns

were needed, those too had to be completed at night after the kilns

78 79OF INNOVATIONS FOR SUSTAINABILITY PEOPLE: THE KEY TO SUSTAINABILITY

had cooled so that daily production was not interrupted. In addition,

junior staff would stay behind with the senior staff in order to learn from

them, even if they were not directly involved in the tasks at hand. This

practice can be considered the foundation of SCG’s mentoring system,

through which older members transfer knowledge, working methods

and organizational culture to younger staff.

Indeed, the “DNA” of “SCG People” has always been transferred

by example. Learning is experienced naturally as senior staff teach

younger staff members regarding matters both small and large. One

generation passes on both their experience and knowledge to the next.

Although in the past there were no regulations or written guidelines

for such practices, everyone inherently knew what kind of behavior

and approach to the work represented “SCG People.” Besides the

commitment to self-development in pursuit of excellence, SCG staff

also aimed to possess a strong social conscience. SCG now has a

Thai phrase for this – khon gaeng lae khon dee – which is referred to in

English as “Talented and Ethical” people.

This is just one example that demonstrates SCG’s organizational

culture and identity. These values have been distilled into a unique

and rigorous philosophy of doing business known as the Four Core

Values, which have been maintained throughout SCG’s history. On the

first day of work at SCG, the first thing one learns is not related to the

daily tasks at hand. Instead, new staff learn about these values, which

must be clearly understood and followed as the guiding principles of

the workplace.

The Four Core Values were codified when President Charas Xuto

appointed a working team to review and encapsulate SCG’s strengths The personnel at SCG’s plants lived and worked together like family. Some employees who worked at the plant were provided housing nearby, forming a community in which everyone supported one another like neighbors.

Efficient teamwork is the result of internal brainstorming inside the organization. The annual sport competition is an activity that creates bonds between many different departments. It also enhances teamwork, and promotes unity and good sportsmanship.


and also investigate the working practices of many long-established

and successful international companies. The former president Boonma

Wongswan, who was on the Board of Directors at the time, encapsulated

them in the Thai language, while his wife enshrined them in the English

language. The Four Core Values are rooted in the idea that just as an

individual prospers in life through moral conduct so does a company

through ethical practices. SCG’s Four Core Values are as follows:

Adherence to Fairness: SCG is committed to the concept of

fairness to all parties concerned.

Dedication to Excellence: SCG earnestly focuses on right

performance with effort to consistently provide excellence.

Belief in the Value of the Individual: SCG believes that employees

are its most valuable assets.

Concern for Social Responsibility: SCG fully performs its duty as

a good corporate citizen by contributing to the communities and

countries where it operates.

During Paron Israsena Na Ayudhya’s term as president, the clear

vision established by the Four Core Values was regularly applied and

extended even further. SCG was steadily expanding and had assumed

management of many companies in which it had purchased shares.

This growth increased the total number of SCG staff and created

the need for a common set of values and understanding between

personnel, so that SCG employees in all areas could move forward

in the same direction. It was around this time that the “Talented and

Ethical” campaign was initiated.

In 1987, Paron introduced SCG’s Code of Conduct, which contained

guidelines and policies to promote strong and ethical corporate

governance. Paron grasped that as business operations expanded and

became more complex, and competition also became more intense,

effective management of people and successful adaptation to change

would be vital to SCG’s future success. Management had to ensure

that staff could work independent of constant supervision and would

apply themselves to improving their own performance throughout their

working lives.

A compilation of guidelines and advice for the workplace, the Code of

Conduct has been revised constantly in keeping with the evolution of

SCG and to keep up with economic and social changes. The latest, fifth

update of the Code of Conduct was completed in 2007. It combines

the previous code of conduct of each business unit with a range of

clear principles and easy-to-understand scenarios covering a variety of

detailed, up-to-date topics. In addition to good practice guidelines, the

Code of Conduct also includes advice to help prevent mistakes from

occurring in the first place.

Protection measures for an employee who files a complaint or who

gives information concerning behavior which is illegal or against the

company’s rules and regulations, known as the “whistleblower policy,”

are now included in the Code of Conduct. There is also a working

committee featuring senior management and representatives from each

business unit that determines policy and gives advice on following the

Code of Conduct. The team has a duty to follow up, investigate and take

responsibility for any complaints. This policy is an important addition,

which has taken SCG forward, and also created global credibility for

SCG’s workplace standards.


All “SCG People” must commit to the Four Core Values and the concept

of “Talented and Ethical” without compromise. As the Four Core Values

represent the principles and values upheld by executives and staff

across every generation, no matter how innovative the organization is,

these Four Core Values must remain in place.

Indeed, the continued success of SCG is based on “SCG People” being

“Talented and Ethical”, and following the Four Core Values and Code of

Conduct, all of which can truly be said to be the heritage passed down

by “SCG People” from one generation to the next, forming the working

culture that will move SCG forward, and sustain its position as a leader in

the ASEAN region. For this reason, these principles are communicated

to all SCG companies, leading to a shared sense of purpose for the

mutual benefit of all.

Lastly, SCG values and business practices must follow the principles

of good corporate governance. SCG has followed these principles

throughout its history, acting as a good example to other organizations

and supporting them to also follow these principles so that society and

the nation can benefit.

Logistics management personnel work inside the Laem Chabang Logistics Center, which provides warehouse services that meet international standards and uses modern technology to respond to the needs of the client.

SCG employees at every level are fully dedicated to developing products and services together.


A Culture of Innovation

} In a large organization, changes cannot be implemented overnight.

Change depends on the attitudes and behavior of many people.

~

SCG has reached a point in its development where certain organizational

directions must be re-evaluated and adjusted, and where certain

traditional practices must be reconsidered and replaced with new ways

of thinking and working. In a large organization, however, such changes

cannot be implemented overnight. Change depends on the attitudes

and behavior of many people, and on the working culture already in

place. The company and its personnel need to be able to respond to a

fast-changing world in which new technologies are developed to meet

new demands from customers, and in which competitors are seeking

to develop better and more attractive products and services. If SCG

stuck to simply selling its traditional range of products, and working

and thinking in traditional ways, such complacency could ultimately

prevent the organization from creating new opportunities for growth.

In other words, SCG cannot take its past success for granted. It must

continually look toward the future.

To meet the challenges of tomorrow, SCG has focused on the concept

of innovation. Innovation is not simply about creating new products. In a

deeper sense, it is about instilling a new approach and way of thinking

in SCG staff. In the past, SCG staff would simply follow their leaders,

who were knowledgable and experienced in completing their tasks.

Therefore, the staff were not challenged to try new things or express

their opinions. This is the reason why SCG needed to build a new

culture of innovation. SCG therefore conducted research to determine

all the factors that were impeding progress and also the factors that

could serve as a catalyst to create an innovative organization. A plan

was then drawn up.

The company’s new strategy was introduced on 18 August 2004 during

an SCG forum entitled “Innovation: Change for a Better Tomorrow.” The At the SCG Power of Innovation event, President and CEO Kan Trakulhoon (5th from left) and other executives marked the beginning of SCG’s mission to become an innovative organization. The library at the Lampang cement plant was designed to support the belief that SCG staff should constantly learn new things.

SCG Power of Innovation Award


Everyone at SCG continues to work even in crisis by following the Business Continuity Management (BCM) concept.

logo for this event depicted an elephant jumping out of the hexagon

frame of the company’s corporate logo. This symbolic illustration helped

indicate to SCG personnel that it was time to think outside the box.

Speaking to staff that day, former president Chumpol NaLamlieng

encouraged SCG staff to share their own potential, knowledge and

skills with each other. This marked the beginning of SCG becoming

an innovative organization. In 2005, SCG founded a working

committee dedicated solely to innovation, in order to identify policies

and directions to promote employees at every level to recognize the

significance of innovation and create benefit from it. SCG encouraged

its staff to become “Inno People,” who have five key characteristics.

They are Open-Minded, Assertive, Risk Taking, Think Outside The Box,

and Eager To Learn. Meanwhile, managers were encouraged to be

“Inno Leaders,” facilitating creativity and acting as strong role models.

SCG’s internal communications system, or Intranet, a learning resource

that is accessible at any time, was an important tool in spreading

the concepts of this new working culture, while the “Inno News”

newsletters sent to all SCG personnel has kept everyone abreast of

news and events within the company. In addition, the SCG Power of

Innovation Award competition was introduced to showcase and reward

the concrete results of the campaign.

For SCG, being an innovative organization also means having a creative

working environment, working processes, business models and work

practices. All SCG personnel are expected to participate in creating this

new innovative culture by constantly thinking about and implementing

ideas that benefit everyone and that will help the company to succeed

during more complicated times in the future.

In a period of rapid economic, social and technological change, past

success does not guarantee future success. This culture of innovation

replaces a traditional organizational culture that dates back to the

company’s inception in which the company was led by a manager who

was tough and imposing (called nai hang in Thai), but who, nonetheless,

managed people fairly according to their performances. Those who did

their work according to expectations were given support, while those who

failed to meet standards were given warnings. Subsequently, there was

also an “engineers’ organizational culture” that developed over time in

which technical specialists managed and disciplined the junior personnel.

Nowadays, SCG people share their knowledge and talk to each other

as equals. Everyone is afforded access to the company’s leaders

in an atmosphere of being fellow family members. They do not feel

intimidated by their superiors and are not afraid to offer constructive

suggestions. Even the president and CEO is accessible and can be

referred to as pi in Thai (“elder brother”) instead of “sir” or by an official

title. However, some traditional elements of human resources practice

still remain, such as the concept of being “Talented and Ethical” people.

This change in the organizational culture of SCG was partially inspired

by the recruitment, over a short period of time, of a large, new generation

of staff. The old and new blood mixed well together. At the same

time, there was commitment from the management team, especially

the president and CEO, to meet and talk to everyone informally. This

informality has helped break down the culture of ranking and seniority

and has unleashed the potential of all SCG staff.

The SCG Power of Innovation Award provides a stage to promote, support, stimulate and motivate SCG staff to think outside the box. It supports the exchange of knowledge among SCG employees in each business unit and is also a way of honoring innovative people within the organization.

The competition is divided into three categories: Best Innovative Product, Best Innovative Manufacturing Process, and Best Innovative Service and Non-Manufacturing Process. A highly qualified panel comprising members from inside and outside SCG periodically meet to evaluate candidates and select the three winners. The decision criteria is based on four categories: creativity, working processes, benefits received and intellectual property management. The winner in each category receives an award valued at one million baht. The winning selections are promoted as models for other SCG staff to inspire them to develop additional innovations for SCG consumers and partners.


A Life at SCG

}During its recruitment process, SCG values as embodied in the ‘Talented

and Ethical’ concept are emphasized. SCG staff are then developed to be

devoted to the organization and contribute usefully to society.

~

The development of new channels through which one can apply to work for SCG has created more convenience and efficiency for the applicant. An open working environment allows for cultural differences and the free exchange of ideas.

During its recruitment process, SCG values as embodied in the

“Talented and Ethical” concept are emphasized. SCG staff are then

developed to be devoted to the organization and contribute usefully to

society. SCG has a variety of human resource development programs

that together are allocated a budget of not less than one billlion

baht per year. The entire human resource system is overseen by the

Personnel Committee. This committee, introduced during the tenure of

President Charas, has the right to make the decision on any policy

related to human resources. The creation of such an advisory board is

considered a significant innovation in human resources. Additionally,

every supervisor has a role in promoting human resources through the

supervision and leadership of their own team.

SCG uses recruitment methods that support the continuous selection of

“Talented and Ethical” people. Management has recruited on university

campuses since the early days of the company, interviewing students

who have not yet completed their studies. The current president and

CEO was recruited to SCG via this process.

As SCG’s business rapidly expanded, increasing the number of

positions available, the employee recruitment process was refined. A

panel interview system featuring at least five executives and chaired by

an executive at the managing director or director level was introduced.

The panel must reach a consensus before a new employee is offered

a position. This system ensures fairness and thorough attention to

detail and aims to find people who represent the “Talented and Ethical”

concept to join the SCG family.

SCG also refined and enhanced its recruitment system through the

SCG Career Camp program. Those who are selected to join the


The SCG Excellent Internship Program allows university students to gain knowledge and first-hand experience in the world of business and learn the concepts of corporate governance. An SCG Career Camp activity promotes unity and teamwork.

SCG Career Camp get to know SCG in more detail. They take part

in activities supervised by the older generation of SCG management

from the three core businesses, who mentor and observe the students

during the activities. The selection process is based on their behavior,

their leadership and teamwork skills, their ideas about innovation,

English language proficiency, personality and attitude. The students

also receive capacity development training to prepare them for the

professional world.

In addition, Campus Road Shows showcase the opportunities available

at SCG, and applications are accepted from final-year students at

various leading universities around the country at both the bachelor’s

and master’s degree level. These students also take written English

tests and have their skills and attitudes assessed. Each year, almost

9,000 students submit applications, which suggests that SCG is widely

recognized among the new generation as an attractive workplace.

SCG also has a training program for third-year university students called

the SCG Excellent Internship Program. This program was started in

2001 to develop Thai youth to be “Talented and Ethical” and to uphold

the principles of corporate governance, with SCG employees offering

individual guidance throughout the internship. Those who join the

program experience a professional working environment and receive

practical, on-the-job training and advice.

Every year, more than 2,500 university students apply and a maximum

of 200 are accepted. They receive insights which go beyond textbook

learning, and experience new interpersonal relationships outside of the

traditional campus context. Some SCG Excellent Internship Program

interns go on to join the company and become an important force for

the future of SCG. The internship program allows for direct recruitment

from educational institutes. Although the main objective of all of these

programs is to recruit highly capable people to join the SCG family, there

is a wider benefit to society as well. Even though not all participants will

return to work for SCG, they have still learned useful concepts and

practices that can be applied wherever they choose to work.

New members of the SCG family pass through an orientation program

called SCG Ready Together, which has been held since 2008. This

preparation program promotes understanding of SCG’s business and

organizational culture and offers training in the basic systems and

tools necessary for performing daily tasks. Senior staff also share

their experience and knowledge with the new employees. The open

dialogue instills a positive attitude and working energy in the new staff,

as well as a sense of pride in the organization. The president and CEO

Kan himself presents SCG’s Four Core Values and vision as the first

part of this orientation program.

Other programs are generally focused on the concept of competency

development, pushing staff to acquire advanced knowledge and

capabilities. Each individual has his or her own training road map.

Achieved partly through partnerships with top global educational and

research institutions, these skills are offered to all staff levels, from the

newest, youngest members to senior members of management. The

programs take them through Functional Training, which develops skills

specific to their jobs, to the development of business knowledge, and

general management and leadership skills.

Once employees reach the supervisory level, SCG runs a range of

business administration training programs, starting with Abridged


Digital guru Erik Qualman conducts a talk session at SCG on the topic of “Digital Marketing Best Practice,” as part of SCG’s commitment to keeping staff up-to-date.

Regardless of the varying nature of the work, staff receive equal treatment both in terms of welfare and capacity development. Top: Quality control work at an SCG ceramics plant. Bottom: Logistics management at a logistics center.

Business Concepts (ABC) and then Business Concept Development

(BCD) programs. Additionally, in 1981, SCG initiated the Management

Development Program (MDP) for employees at the first management

level in cooperation with the prestigious Wharton School of the

University of Pennsylvania in the U.S. This program has been

developed continuously for over 30 years. In 2010, SCG added an

MDP in cooperation with Duke Corporate Education, which is affiliated

with Duke University in Durham, North Carolina in the U.S.

SCG has also developed a Leadership Development Program (LDP).

This program trains staff how to effectively manage their own time and

work and how to work well in a team, and how to set an example to

others, under the catchphrase “lead yourself, lead your team, lead

the organization.” For SCG employees at middle to top management

levels, the Executive Development Program (EDP), conducted in

collaboration with Columbia University, focuses on creating executive

leadership skills and understanding of global business practices and

trends. Meanwhile, senior executives undertake a training program

called the Advanced Management Program (AMP), which sends them

to executive programs offered by leading global business schools such

as Harvard Business School and Wharton School. These programs

offer courses, seminars and lectures, and bring together executives

from companies from around the world for eight weeks and five weeks

respectively of intensive study, dialogue and collaboration.

Specialized SCG programs include the Mobility Development

Framework to prepare SCG staff for working abroad. This program,

organized six months in advance of travel, provides knowledge and

understanding about the culture of the destination country.

By training with employees from different divisions of the SCG family,

staff gain a broader worldview as well as understanding of the company.

This knowledge of other business units helps staff apply new practices

to the business or job for which they are responsible.

The foundation for these human resource innovations were laid during

the era of President Charas Xuto and further developed during the

tenure of President Paron Israsena Na Ayudhya, following the idea that

SCG staff can and should update their skills and knowledge constantly

throughout their careers. Another important human resources initiative

is the MBA (Master of Business Administration) scholarship program,

which was introduced by President Chumpol NaLamlieng in 1973.

Chumpol knew firsthand the benefit of developing management skills

and understood that they would be useful when SCG competed

internationally. Believing that the cross-functional learning provided by

MBAs would aid future SCG executives, SCG offered scholarships to

those who were accepted to master’s degree or doctorate programs,

ultimately not only in the field of business administration but also in

any subject area which could prove helpful to SCG. Those who pursue

studies abroad help build networks, make SCG recognized around the

world, and later return to contribute their knowledge.

Developing personnel from within the organization and investing in a

variety of resources that help to constantly develop staff competence has

another benefit. A strong internal labor market is created, and SCG can

effectively promote from within the organization. The training courses and

programs build off each other, increasing each employee’s skills, so that

he or she can conceivably reach the executive level. This forms a fair and

transparent succession plan for the company’s employees.

95PEOPLE: THE KEY TO SUSTAINABILITY

Members of the SCG Alumni club, which features retired SCG staff. Their valuable knowledge and experience is passed on to the younger generation through social activities. Training programs not only help staff learn new skills, but also help them form bonds and improve teamwork.

Through all these different policies and practices, the company covers

the entire life path of “SCG People,” looking after them from beginning

to end. In general, the guiding principle is to give without being asked.

The company wants to develop leaders through its human resource

practices and offer a structure in which its employees can progress in

their career path. Performance appraisals are conducted systematically

and fairly. Staff are promoted on merit, and a fair and equal system of

employee care applies to both pay and benefits, including matters of

physical and mental health.

Because SCG staff are encouraged to never stop learning, everyone

believes in the benefits of job rotation. Job rotation prepares employees

to handle change and meet new challenges. The concept is the

inspiration for SCG’s Career Click program, a system for switching jobs

within SCG that was implemented in 2010. The program encourages

job rotation so that “SCG People” become involved in different parts of

the business, and engage with colleagues with whom they may never

have previously interacted. This program benefits both the individual

and organization. President and CEO Kan Trakulhoon, who has

personal experience working in many different positions, believes job

rotation helps staff learn new things and develops their capabilities,

strengthens the work force by fostering relationships between older

and younger colleagues, and thus contributes to the organization’s

overall success.

SCG has also established the “Chang Poon Club” (SCG Alumni club) as

a center for older, retired members of staff to share their work knowledge

and experience with younger members. Each retired staff member is

an important source of information, possessing valuable institutional

knowledge and experience that can be presented anecdotally. Each

Fit for Work – Fit for Life


Sharing experiences allows SCG employees to form close personal and professional relationships.

Technical knowledge is obtained on the spot at The Siam Fibre-Cement Co., Ltd.’s plant in Saraburi.

one also links the past to the present, embodying the heritage of the

company. The SCG Alumni club has regular annual activities, including

a visit to the plant to see the latest SCG innovations.

The SCG Alumni club is proof of how SCG “Values the Individual” and

pursues this Core Value through every stage of an employee’s career.

Outstanding human resource management is considered an important

element of SCG’s mission, no less important than producing quality

products for consumers. The company also sees it as part of its larger

mission of giving back to society, because when “SCG People” fulfill

their potential, the country benefits too.

SCG’s human resources development and management work has

been widely recognized, including, for 11 consecutive years, by the

Thailand Management Association (TMA) and Sasin Graduate Institute

of Business Administration of Chulalongkorn University (SASIN) for

Human Resource Management Excellence as part of their Thailand’s

Corporate Excellence Awards. While these awards are evidence of

SCG’s past and current success in human resource management,

SCG continues to work proactively in this area and is determined to

share their advancements with other organizations.

For more than 30 years, SCG has promoted the physical and mental health of its employees by hosting annual health checkups. In 2006, SCG started the Fit for Work – Fit for Life initiative. Annual health checkups measure stress and overall physical fitness levels. Health experts provide advice about exercise as well as encourage employees to spend free time on activities that will promote their general wellbeing.


SCG Today

}In order to prepare for future

competition and form a creative, open, transparent and enthusiastic

working environment, SCG reviewed the organization’s image, its

reputation and its work practices. ~

SCG staff working in Indonesia, where SCG has expanded rapidly in recent years, part of its larger investment in the ASEAN region. R & D work is essential to innovation. SCG’s budget for R & D work in 2012 was 1.4 billion baht.

To achieve its goal of being a sustainable business leader in ASEAN

by 2015 – as declared in its vision statement “SCG Vision For 2015”

– SCG has invested heavily in research and development in order to

promote themselves as an innovative organization. The R & D budget

and number of personnel have been consistently increased. In 2005,

the number of research personnel stood at 100 and the research and

development budget that year was about 40 million baht, with sales

revenue from the resulting High Value Added products at 7,700 million

baht (4 percent of total sales). In 2012, SCG had nearly 1,000 members

of staff in the research and development department (including around

70 PhD graduates), and a research budget of more than 1,400 million

baht per year, resulting in over 140,000 million baht of sales from High

Value Added products (34 percent of total sales).

In order to prepare for future competition and form a creative, open,

transparent and enthusiastic working environment, in 2008 SCG

reviewed the organization’s image, its reputation and its work practices.

While the outstanding qualities embodied in the Four Core Values

and “Talented and Ethical” concept remain forever, the company has

decided to complement these with an additional concept SCG refers to

as “Open and Challenge.”

Being “Open” means being open-minded, listening carefully, showing

respect, being keen to learn, being cooperative, creating strong

working relationships, being willing to admit one’s own mistakes and

also learning in order to move forward.

“Challenge” refers to not being fixated on personal success, but having

the courage to think outside the box, express different opinions, and

proactively make decisions and meet challenges.


The unity and teamwork of “SCG People,” the key that will lead the company to sustainable success.

The figures of SCG employees above include consolidated companies both in Thailand and abroad. Of these, 29,471 are Thais and 13,894 are non-Thais. This graphic does not include the 11,773 employees of associated companies. All together, there are 55,138 employees.

Total Quality Management (TQM) is a concept designed to improve the quality of products and services. It was originated by the American statistician Dr W. Edwards Deming and later disseminated by Japanese industrial groups, who implemented and developed the concept until it became a popularly accepted model.

Since 1992, SCG has maintained a policy to promote TQM across the organization. Since it implemented the TQM principles, all SCG staff have become involved in understanding and sharing the same objectives, and service strategies have become more customer-oriented. All SCG staff are committed to running the business with the philosophy that when customers are satisfied, increased sales and profits will follow, creating stability and strength for the organization as a whole. SCG believes promoting TQM will help the company reach its target of becoming a truly global company.

Quality Matters

“Open and Challenge,” combined with the Four Core Values, mixes

the SCG characteristics of the past with the preferred characteristics

for the future to form a new way of working, thinking and organizational

culture throughout SCG.

As of its 100th year of operations in 2013, the SCG family has over

40,000 employees in Thailand and abroad. More than 10,000 are

based outside Thailand. All personnel are seen as important in driving

the organization forward.

In those neighboring countries in which it has invested, SCG believes

it cannot be passive in recruiting talent or assume that its brand is

well known. Instead, the company must get to know local people in

those countries, establish its identity and “employer brand,” and

recruit those people who will best represent the values of SCG. In part,

this can be achieved by organizing CSR activities that benefit local

communities, and also by inviting lecturers, deans and presidents of

leading universities in those countries to witness for themselves the

modern, extensive and state-of-the art operations of SCG in Thailand.

Lecturers who have visited the company in Thailand often return home

impressed and write articles for their university newsletters, publicizing

SCG’s work to university students who then may become interested in

joining the organization.

At the same time, Thai personnel who are based abroad must possess

maturity and leadership skills. They should have broad knowledge

and a global perspective, and they must be prepared to adapt to a

different culture. They need to be ready to transfer both technical and

management knowledge to locals in order to create successful new

working teams. SCG staff based abroad must be well-rounded because


The Heritage and Pride of SCG

A training exercise in Vietnam. As SCG’s operations have expanded overseas, training programs have been implemented to ensure all personnel share common values and approaches to work.

they have a duty to not only transfer their working expertise, but also

serve as brand ambassadors who can have a positive impact on SCG’s

overseas reputation. SCG plans to further develop its human resources

so that they reflect a wide range of ethnicities, cultures and experience.

Such diversity will help meet the constantly changing expectations and

needs of the customer. SCG management of every era has possessed

such a broad vision. This strong organizational culture has supported

stable business growth and clear business directions.

The key to SCG’s success over the past 100 years has always been

and always will be “SCG People.” They are people who always adhere

to the Four Core Values, who are open-minded and enjoy challenges,

and who are always keen to learn and develop themselves. They will

help SCG face future challenges, create new innovations and ever

higher standards of performance for a second century of growth.

Even though SCG has been in operation for 100 years, the organization has remained up-to-date. With its long history, SCG itself is part of the heritage of Thai society. Now it is time for the new generation to carry the torch and dedicate themselves to see that this legacy is sustained into the future. To ensure that SCG never loses sight of its past and its special privilege of being a leader in Thailand, SCG Heritage was established to collect historical information and artifacts for later generations of SCG to study and learn from. To find out more about the work of SCG Heritage, visit www.scg-heritage.com.

Sustainable Society, Sustainable Happiness

SCG believes its business should be conducted with strong social and environmental awareness. To this end, its policies and strategies, in all areas of its business, follow the concept of sustainable development. Leading by example and supporting many outreach programs and other activities, SCG is fully committed to being a good corporate citizen.

Check dam building activity at Khao Yai Da, Rayong province, one of SCG’s major activities to preserve natural water sources. The activity also helps create a better relationship between SCG and the community.


A Sustainable Society Starts with Us

}Since the earliest days of SCG, the company’s aim has been to create

prosperity not merely for itself, but for the country as a whole.

~

SCG believes that in order to be a leader in creating a sustainable

society, SCG must act as an example itself. Thus, over the course of

its 100-year history, SCG has striven to operate transparently under

good corporate governance. SCG has also constantly innovated new

products and services, including eco-friendly production processes

and socially responsible business practices. Overall, SCG’s aim is to

develop the highest standard of work in every country where it operates

in order to ensure progress and gain international recognition.

Since its inception, SCG has emphasized within the organization the

concept of sustainable development in order to create balance between

economic, social and environmental concerns. This focus involves both

upstream and downstream stakeholders, as well as business partners,

consumers, the communities where it operates and society as a whole.

To achieve its goal, SCG also believes in transferring this knowledge

and experience to help inspire other business organizations, both

in Thailand and the ASEAN region, to also apply the concepts of

sustainable development, thereby uplifting everyone’s quality of life. In

this way, a sustainable society based on sustainable happiness may

be created well into the future.

Since the earliest days of SCG, the company’s aim has been to

create prosperity not merely for itself, but for the country as a whole

as a good corporate citizen. Ever since the day SCG was founded,

SCG employees have seen themselves as subjects of a larger cause:

dependable people who create trust, produce high-quality products

and improve the well-being of all people. These principles remain at

the heart of SCG’s current business practices involving sustainability.

To reduce pollution and as a good way to exercise, some employees ride bicycles to commute around the Lampang cement plant. The Thung Song cement plant grounds demonstrate how nature and industry can coexist harmoniously.

108 109OF INNOVATIONS FOR SUSTAINABILITY SUSTAINABLE SOCIETY, SUSTAINABLE HAPPINESS

Indeed, SCG is one of the first companies in Thailand to implement the

concept of sustainable development. This concept requires a business

to strive for long-term rather than short-term growth, and to look beyond

immediate profit and shareholder gains toward the creation of mutual

benefits for all stakeholders. This long-term vision has become a driving

force behind SCG’s business operations.

Today, SCG is internationally recognized as a sustainable business

organization. This year, 2013, is the ninth year that the company has

been ranked on the Dow Jones Sustainability Indexes (DJSI). The

DJSI assess the sustainable development performance of leading

international companies and has rated SCG a leading company in

sustainable development since 2004. In 2011 and 2012, SCG was

ranked a Sector Leader in the Building Materials and Fixtures category.

This recognition is proof of SCG’s success in the area of sustainable

development and also evidence that it has reached world-class

standards in the field. From here, the priority is to raise the current

performance to an even higher level.

Since its establishment, SCG has always taken environmental and

social concerns seriously and updated its policies and practices

to keep pace with the latest changes and advances. Therefore, it is

not surprising that SCG was one of the first businesses in Thailand to

declare an environmental policy in 1991, followed by the announcement

of its Environmental Conservation Guidelines in 1995, which focused on

controlling the impact of pollution emitted by its plants.

In 2002, SCG expanded the scope of its environmental policy beyond

the aim of controlling the impact of pollution, to include conservation of

natural resources, the health and safety of its workers and safety of its

products, and the promotion of environmentally friendly practices by

its employees and stakeholders. In addition, SCG decided to extend

its mission beyond SCG to the wider society through regular corporate

social responsibility activities. In 2005, SCG added four more guidelines

to its policy, agreeing to work according to international standards, to

help communities participate in its sustainable development mission,

to be open to opinions from all stakeholders, and to share information

with the public.

Subsequently, in 2008, SCG widened the scope of its Sustainable

Development Guidelines further to include economic, social,

environmental and corporate governance aspects. While many of

these guidelines were already being followed, setting and declaring

such a clear direction made it easier for everyone at the organization

to achieve its goals. Finally, at the managerial level, SCG formed the

Sustainable Development Committee to establish and maintain policies

and guidelines toward sustainable development. The members of the

committee comprise the Board of Directors, the president of each

business unit and executives of each company.

SCG first officially used the term sustainable development in 2006 when it investigated the sustainable development practices of international organizations in order to establish its own framework. This framework focuses on how SCG benefits the overall economy, and takes into account how profits are generated and dispersed. It also examines the company’s social impact, covering community investment and donations; labor standards and practices to uphold human rights; human resources management and knowledge development; occupational health and safety; and stakeholder participation. Issues involving the environment are also highlighted, including energy, climate change, water management, waste management, ecological balance, biodiversity, and the need for environmentally friendly products. These economic, social and environmental concerns must be addressed through good corporate governance, requiring strong general management and risk management, and the disclosure of information and economic reporting related to both business performance and income distribution.

What is Sustainable Development

Seedlings are grown at the Thung Song cement plant in Nakhon Si Thammarat province as part of a program to restore land that has been mined to its original condition.

Every SCG employee working in the mining areas, even those who are not driving or operating machinery, must take a breathalyzer test to check for alcohol consumption.


On a Green Path

By having clear policies, directions and guidelines, and with a history of

adopting the most eco-friendly technology for its production processes,

SCG is a well-known leader in environmental management in Thailand.

For example, SCG changed its cement production process from a wet

process, which uses water as a component and thus expends a lot of

energy, to a dry process, which reduces fuel use. SCG also researched

alternative energy sources to replace coal. These are just two early

examples of how SCG chose to use the best and most eco-friendly

technologies as part of its green production processes.

Even in the past, when environmental regulations were not as strict

as they are today, everyone at SCG, especially those involved on

the production line, were well informed about how to comply with all

standards and to meticulously comply with laws, even if it entailed

higher costs. A much more advanced SCG notion was to operate

above and beyond legal requirements, and this is now embedded in

the company’s thinking and practices. For example, SCG’s cement

plant in Lampang was the first plant in the country to develop the

eco-friendly Semi Open Cut mining process, managing sustainable

quarrying throughout its life cycle by extracting rocks from the middle

of the mountain from an open pit. This method reduces noise and the

spread of dust. From the outside, the natural landscape of the mountain

looks untouched. After the mining process is completed, the landscape

is further rehabilitated through reforestation. This method of mining may

incur higher costs, but it is immensely beneficial to the environment.

Another pivotal moment for SCG’s environmental performance came in

2006, at a time when the world was becoming increasingly aware that

climate change was causing an environmental crisis. SCG released its

“Zero Waste to Landfill” policy. The goal of this policy is to find a way

}A much more advanced SCG notion was to operate above and beyond legal requirements, and this is now

embedded in the company’s thinking and practices.

~

It is customary for SCG to publish annual reports to provide transparent information to its shareholders and stakeholders. The annual report mainly covers SCG’s business performance and progress. In 2001, SCG released an additional report that recorded its environmental performance. This unique report demonstrated SCG’s awareness of its environmental impact and assessed its continuous efforts to reduce this impact. The SCG Environmental Report is now known as the Sustainability Report, and conforms to the standards set by the Global Reporting Initiative (GRI). In this report, SCG sets out clear principles regarding its environmental mission and how each part of the organization can contribute to minimizing environmental impact, from production processes, procurement and outsourcing, to research and development on products and services.

Thailand’s First Sustainable Development Report

Engineers monitor the Waste Heat Power Generator (WHG). The system measures the power generated in terms of carbon dioxide reduction.

The “Think Safe, Work Safe” slogan reminds employees to stay aware during operations.


to dispose of industrial waste without impacting ecological systems.

Following the guidelines of sustainable environmental management,

SCG applies the “3Rs” principle (“reduce, reuse/recycle, replenish”)

to improve the efficiency of their production processes and minimize

the amount of waste. In 2012, SCG sent only 0.3 percent of hazardous

waste to landfill and 3.6 percent of its non-hazardous waste.

SCG is still taking many other steps to advance its environmental

management standards in line with its sustainable development goals.

For example, SCG Cement-Building Materials is installing Waste Heat

Power Generators and is pushing the idea that different companies

within each unit may be able to use the waste of another as raw

materials. Meanwhile, SCG Paper is the first company in Thailand to

receive certification for its sustainable forest management under Forest

Stewardship Council (FSC) standards.

In this way, SCG’s green path focuses on minimizing its ecological

footprint. Increasing innovation will help reduce environmental impact

while also improving the consumer’s quality of life through eco-friendly

production processes that value natural resources. This is how SCG

delivers sustainability to the consumers. As part of this drive, in 2009,

SCG was the first organization in Thailand to self-certify products and

services to an environmental standard it labeled “SCG eco value.”

“eco” is a reference to both the economy and ecology, while “value”

refers to the value created for consumers, society and the environment

from such innovation. In addition to having minimal impact on the

environment during the production process, those products labeled

SCG eco value must also be of higher quality than other standard

products. When it certifies products with the SCG eco value label, the

company uses many criteria.

When a decision was made to invest in a new cement plant in the heavily forested province of Lampang, SCG executives introduced a policy to obtain a licence from the community, not just the government, under the vision to “Create Jobs, Develop Community Prosperity, Preserve Environments and Be Lampang’s Good Citizen.” SCG also took a different approach to the construction of The Siam Cement (Lampang) Co., Ltd., or “Cement Lampang,” striving to ensure harmony between the factory and the community.

These were important steps in creating a prototype factory that existed in harmony with nature. The latest technology at that time, the Semi Open Cut mining process, was adopted by Cement Lampang to help reduce noise pollution and the impact of dust on the surrounding environment. Cement Lampang was also the trailblazer in implementing a Waste Heat Power Generator (WHG) system. Instead of being released into the atmosphere, waste heat created by the heating and cooling of raw materials is captured in order to generate electricity.

In addition to implementing environmentally friendly technology into its production processes, Cement Lampang was the site of several other environmental initiatives. Over a span of one thousand rai (395 acres), the area has been improved by SCG, using check dams. Through a process of experimentation and implementation, “SCG People” built many check dams and then transferred the skills to the community. They also collaborated to tackle other problems such as drought and forest fires.

Cement Lampang:The Coexistence of Industry and Nature

Top: Environmentally friendly products under the SCG eco value label are displayed for consumers at the HOME MART, Bangna branch in Bangkok. Bottom left: SCG Logistics and its Green Logistics, eco-friendly logistics system. Bottom right: The production line of Idea Work paper, which uses EcoFiber as a raw material, at the Phoenix Pulp and Paper PCL.’s plant in Khon Kaen province.


As of 2012, there were 61 SCG eco value–endorsed products and

services. The revenue from these products comprise 14 percent of

SCG’s total sales. SCG forecasts that by 2015 the revenue from its

SCG eco value innovations will have reached one-third of total sales.

A wide range of these products are currently on the market. Examples

include products which use minimal natural resources, such as Idea

Green paper, which reduces the use of trees by 30 percent. Another

innovation is EL Green plastic pellets (used for plastic packaging),

which biodegrade under certain temperatures and levels of moisture.

Meanwhile, SCG Marine Cement is seawater resistant, and greenhouse

gas emissions resulting from its production have been reduced by at

least 350 kilograms per ton of cement. Among other innovations at SCG

are COTTO’s Hygienic Tiles, which are anti-bacterial ceramic tiles, and

SCG Logistics’ Multimodal Management transportation system, which

reduces green house gas emissions by improving the efficiency of its

transport network and delivery systems.

With its many eco-friendly paper products, SCG Paper is a leader in paper manufacturing innovation. SCG Paper is also committed to protecting ecosystems and restoring biodiversity according to the internationally accepted standards of the Forest Stewardship Council (FSC), an international organization that promotes sustainable forest management.

SCG Paper was the first paper business in the country to be awarded an FSC forest management certification. To reach this standard, at least 10 percent of its forest holdings had to be designated as a conservation area. It has also earned the FSC Chain-of-Custody (CoC) certification, which guarantees that its products derive from the natural resources of commercially certified forests, not protected areas. SCG Paper owns 43,200 rai (17,080 acres) of man-made forest. Twenty-one percent of this, or 8,943 rai (3,536 acres) has been conserved for the local community.

SCG Paper and Sustainable Forest Management

Compostable plastic bags, which are biodegradable at certain temperatures and moisture levels. They are one of the innovations from SCG Chemicals.

Daily logistics work by SCG Logistics. Its environmentally friendly system, “Green Logistics,” is an innovation aimed at conserving resources and helping preserve the environment.


Even though SCG’s own work in the area of sustainable development

is already recognized both nationally and internationally, SCG believes

in spreading its mission to every stakeholder. So SCG has created a

network of partners in order to integrate the concepts of sustainable

development throughout its supply chain. By expanding this mission

both upstream and downstream and transferring its policies and

expertise, SCG believes it can help create a green business community.

Ultimately, the dissemination of these goals throughout the business

community will lead to a green and sustainable society.

This extension of the goals of sustainable development beyond its

own organization to other entities is what is codified as the “SCG

Sustainability Supply Chain.” At the upstream level are business

partners and at the downstream level are customers and end users. The

plan was initiated in 2004 when SCG was the first company in Thailand

to launch a “Green Procurement” policy, which means the company

strives to purchase from companies that are environmentally friendly.

This policy in turn encourages other organizations to adopt eco-friendly

practices. In the early stages, there were not many suppliers who

could offer green products and services, but recent years have seen

the companies adopt more environmentally aware approaches. SCG

believes its Green Procurement policy can help in further stimulating

this change. As of 2012, there were 737 products and services on the

Green Procurement list with a value of 3 billion baht.

SCG also transfers the concepts of sustainable development to business

partners, such as producers, service providers and distributors, through

what is known as the “Greening the Supply Chain” project, which

offers expertise, consultancy, incentive and encouragement regarding

environmental management systems and safety measures. In addition,

}The goals of sustainable development extend beyond SCG through to the

entire supply chain.~

SCG Paper staff and eucalyptus farmers exchange ideas and information. A eucalyptus farmer, who is a business partner with SCG, delivers raw materials that meet SCG’s standard and criteria for environmental management.

Green Business Communityfor Sustainability

119SUSTAINABLE SOCIETY, SUSTAINABLE HAPPINESS

SCG provides guidance, technical knowledge and assessment for

certification in these areas. By creating more business partners who

maintain such high standards, the project ultimately reduces risk

throughout SCG’s supply chain while also increasing competition.

Furthermore, SCG publishes the Business Partners’ Code of Conduct

to support these partners to be good corporate citizens with principled

management that benefits the community, society and the environment

in the name of sustainable development.

At the downstream level of the supply chain, SCG makes an effort to

understand the real needs of the client, consumers and end users

in order to develop new innovations, such as eco value and High

Value Added products and services. These products and services

help create more awareness about environmental conservation and

recycling among all stakeholders, leading to sustainability in society

and the environment.

In 2011, SCG introduced the “Human Value Marketing” concept, which is considered an original marketing innovation for Thailand. Human Value Marketing considers the entire product cycle and how it impacts the community, society and the environment. This marketing model is not only concerned with the creation of high-quality, durable products, but it also takes into account how the product is produced and how the consumer will use or ultimately dispose of it.

In order to address all of these concerns, this new marketing model focuses on three related factors. Firstly, understanding customers, which means not simply meeting their needs, but also looking into their hearts to find out what they really want and what kind of products will please them. Secondly, innovation, developed out of this deeper customer understanding and using new environmentally friendly technologies. Thirdly, co-creation between companies in the group, as well as business partners, to develop co-products to better meet a wide range of needs. In this way, SCG believes its products and services will not only add value for customers but also create a better quality of life for society in the future.

Human Value Marketing: Marketing for Tomorrow

The transportation of eucalyptus from plantation to the production line at the SCG Paper plant in Kanchanaburi province.


SCG recognizes the fact that at the heart of the concept of sustainable

business is how industry coexists with the community, how they support

each other and how they prosper together. So SCG aims to not only

develop its own eco-friendly processes over time, but also transfer its

concepts and techniques for environmental conservation to its related

communities and networks. With a core belief that people’s participation

is key to a sustainable future, SCG works on these issues with all of

the communities where it operates. This has created opportunities for

members of these communities to engage in more active dialogue

and to analyze and solve problems by themselves in order to build

sustainable and strong lives together. This is important because SCG

believes that people are inseparable from their environment, and that

the environment will change for the better only when people change.

Concrete changes that took place in Lampang province represent a

major step and evidence that such efforts and cooperation can reward

both SCG and the community. In Lampang, SCG helped lead community

members to participate in solving their own problems. It all started when

SCG’s cement plant in Lampang joined with surrounding communities

to fight frequent outbreaks of forest fire. This marked the start of one

of SCG’s renowned environmental projects, “SCG Conserving Water

for Tomorrow,” a flagship environmental conservation project which

supports the building of check dams to help bring water resources

back to their natural equilibrium. SCG uses these dams to implement

the water resource management initiatives created by His Majesty King

Bhumibol Adulyadej.

In 2003, SCG led members of the surrounding communities in Lampang

to visit and study at the Huai Hong Khrai Royal Development Study

Center. Once they returned, the community members built check dams

Develop Communities, Develop Environmental Sustainability

}SCG aims to not only develop its

own eco-friendly processes, but also transfer its concepts and techniques for environmental conservation to its related communities and networks.

~

SCG engages community members in dialogue to determine their real needs in order to help them elevate their quality of life. Check dam building is an activity that not only preserves water resources but also raises awareness about the surrounding natural environment among local community members.


with natural substances like bamboo, soil, rocks and sand in order

to slow the stream and allow more water to absorb into the soil. This

process helps the forest to become more damp, thus reviving the entire

ecological system.

As a result of check dam building in Sasobhok community in Jae Hom

district, and other communities in Mae Tha district in Lampang, an

increase in the diversity of animal species in the forest can now be

seen. In addition, there are fewer forest fires, and the soil surface is

sturdier as the strong current of the stream no longer erodes it. Besides

the environmental benefits, check dam building has also enhanced the

quality of life of the community by creating a more fertile forest with

more sources of food as well as water sources for irrigation. The project

has also shown the communities that they can rely on themselves to fix

their problems. One village, for example, began generating additional

electricity from water sources. Based on the success of the Lampang

project, SCG has expanded this work. More than 45,000 people have

participated in check dam building and more than 50,000 check dams

have been built across the country. Water conservation communities

have been formed in more than 35 villages in various provinces.

Although the project’s ultimate goal is to restore ecological balance,

the project-driven process has also led to a cooperative learning

initiative called “Creating Environmental Conservation Awareness in

People’s Minds,” which aims to raise awareness among people in local

communities, using check dams as tools. This has created opportunities

for members of these communities to engage in more active dialogue

and to analyze and solve problems by themselves in order to build

sustainable and strong lives together.

This project reflects SCG’s conviction that social responsibility and

sustainability should respect community beneficiaries. This means

making sure the projects and charitable efforts meet the community’s

real needs; getting local communities involved in projects so that

they feel a sense of ownership; acquiring in-depth knowledge

before proceeding with plans; and basing the implementation on an

understanding of fully rounded, sustainable development.

This approach drives all SCG social activities across the nation.

Sustainable and concrete solutions for solving communities’ problems

must respect the individual context of each community and each

problem. In addition, SCG employees participate by using both their

time and ability to help the communities. For example, in the “Protect

Bueng Jode” project, SCG Paper employees have employed their

engineering expertise to revive more than 300 rai of public water

resources at Bueng Jode, Nam Pong district, Khon Kaen province.

Situated on the eastern side of the Phoenix Pulp and Paper PCL’s plant,

the project features an innovative vessel that eliminates unwanted weeds

that are polluting the swamp water. This project, which has helped to

revive the condition of the water, is also being applied to other parts of

Khon Kaen province, thus extending SCG’s determination to create a

sustainable environment for society at large. Besides the direct benefits

that the communities receive from SCG’s efforts, SCG staff also gain

practical and firsthand knowledge from members of the community.

This exchange between staff and community members can help create

a sustainable relationship between SCG and the community.

The “One Cell One Project” (OCOP) is one of several programs that

offer opportunities to employees and business partners to contribute

to the development of their communities. Again, SCG employees work “Protect Nam Pong” boat (“Rua Rak Nam Pong”) is an SCG Paper innovation to improve the condition of swamp water by clearing out unnecessary weeds.

Top: An activity to create supplementary income for local housewives under the One Cell One Project (OCOP) program by Thung Song cement plant. Bottom: Another OCOP activity promotes mushroom farming for a supplementary household income.

125SUSTAINABLE SOCIETY, SUSTAINABLE HAPPINESS124 OF INNOVATIONS FOR SUSTAINABILITY

together with communities to determine their needs and the solutions

to their problems. Rather than SCG independently deciding how to

help a community, this method allows employees in each department

(“cell”) to conduct activities that will respond to the actual needs of the

communities surrounding the factories.

The One Cell One Project began at the Kaeng Khoi plant, and has since

been extended to other SCG Cement-Building Materials companies. Over

200 projects have been implemented, including Biogas Generation from

Food Waste, Housewives and Community Groups Vocational Training,

and Religious Places and Community Public Property Renovations.

Through these projects, SCG employees and business partners have

not only become more active in their communities but have also fostered

understanding by listening to local opinions and helping to solve problems

or resolve complaints when they arise.

One project, called “Sharing Opportunities…Drawing the Future”,

helps SCG staff become directly involved in their communities and

implement their own creative ideas for a better society. SCG Foundation

encourages employees to form groups of at least three members to

develop projects beneficial to the public in different areas throughout the

country. Any activity that involves creative ideas and the participation

of the community is given special consideration. Currently, more than

10,000 “SCG People” have applied to participate in over 1,000 social

and environmental activities, such as teaching housewives skills to earn

extra income, training them in the management of personal finances,

and joining in water conservation and check dam projects.

Indeed, SCG has worked constantly to find new solutions to problems

in the communities where it operates, even when it requires hard work

and dedication. For example, in 2010, when there were serious

disputes in the community over the Map Ta Phut Industrial Estate and

concerns about its environmental impact, SCG played a proactive

role in finding a solution. A cooperation network mechanism called

“Community Partnership Association” founded by five business

organizations – SCG Chemicals, PTT, BLCP Power, Dow Chemical,

and Glow Group – is working together with the common goal of

developing clean, eco-friendly industry, operated alongside

sustainable communities.

In addition, the “Friends Help Friends” project was formed. As part

of this initiative, more established plants in Map Ta Phut Industrial

Estate share their experience with smaller plants to help them meet

environmental and safety standards. This work is conducted in parallel

with other efforts that address health, education or other community

needs, such as tutoring for university entrance examinations,

scholarships for nurses and a mobile medical unit serving the

Community Partnership Association. The efforts are paying off. In

2012, seven more companies joined this association.

The Community Partnership Association model has also been

expanded to other business units. SCG Cement-Buildings Materials,

Thai Cement Manufacturers Association, Siam City Cement and

Asia Cement have joined forces to create the “Cement Partnership

Initiative” in Kaeng Khoi district, Saraburi province. This network is

used to assist with the development of eco-factories and to improve

health, education and livelihoods in the local community.

About one-third of the land in the northeastern region of Thailand, more than 17 million rai (6.72 million acres), contains an excessive concentration of salt, turning what could otherwise be healthy soil into what is known as saline land. An incubator farm project for the rehabilitation of saline soil was established at Ban Dung district, Udon Thani province by SCG and the National Center for Genetic Engineering and Biotechnology. This project is intended to serve as a prototype training center for farmers. There, they can exchange knowledge and learn, among other things, how to use the technology of The Siam Forestry Co., Ltd., a subsidiary of SCG Paper, to genetically engineer salt-tolerant eucalyptus for planting along earthen dykes. The villagers can sell the eucalyptus back to SCG Paper. Development in the form of community enterprise has also emerged, with villagers learning how to produce organic fertilizer, set up a community rice mill, create a community rice brand, and more. These efforts have added value to their agricultural products, increased their income and helped create a more sustainable community.

Transforming Saline Lands

Top left: The Community Partnership Association logo. Top right: The Cement Partnership Initiative logo. This network facilitates dialogue between the community and local cement plants in Saraburi province. Bottom: The Community Partnership Association is a collaboration between five major companies in the Map Ta Phut industrial estate: SCG Chemicals, PTT, BLCP Power, Dow Chemical and Glow Group.


Concern for Social Responsibility

Throughout its long history, one of SCG’s Four Core Values, “Concern

for Social Responsibility,” has endured. The origins of these social

activities was not different from those of other organizations. They

began with occasional donations to charities on request and then

became more structured and regular.

Initial projects in this long-term vein were for the benefit of the public.

SCG would undertake some research to ascertain what kinds of support

were most desired by the community. The findings from this survey

were considered in light of SCG’s products and services, leading to,

for example, the construction of passenger shelters and traffic police

boxes that were both needed by society at that time and appropriate

projects for SCG to undertake, as the company was an expert in

building materials.

Throughout its history, SCG’s concern for social responsibility has

been clearly evident as “SCG People” have consistently used their

knowledge and expertise for the larger social good. For example, SCG

trained community members to make large wells from roofing tiles

and large cement jars to collect water during drought. Back in 1971,

people in the countryside faced public health problems. Clean water

for drinking and general use was scarce. SCG sent employees to train

people in rural areas how to make large jars out of cement by first laying

bricks and then using plaster cement mixed with sand as a seal. This

new method of jar making was a model for the Thai public sector and

also for international organizations.

Meanwhile, educational support has developed from the granting

of occasional scholarships to individual students to the promotion

of scientific and mathematical knowledge in general, considered by

}The origins of these social activities

were not different from those of other organizations. They began with occasional donations to charities

on request and then became more structured and regular.

~

During the flood crisis of 2011, which impacted millions of Thais in Bangkok and around the country, about 6,000 SCG staff were also affected. SCG management, supported by the Board of Directors, responded by establishing The Assistance Coordination Center for SCG Employees on the 5th floor of the SCG Headquarters building in Bangsue. Operations began with the human resources department helping to coordinate with other departments. SCG set up team centers, including the Call Center Team, Sandbag Provision Team, Temporary Accommodation Team, Rescue Team, Transportation Team, Volunteer Team, Food Provision Team, Parking Space Provision Team, Procurement Team (for procuring equipment and relief supply bags), Communication Team and Paramedic Team. SCG employees at all levels and from all departments joined the effort. The flood crisis was a demonstration of the unity and cooperation of SCG staff and also reinforced the company’s reputation for being innovative. In particular, SCG’s outreach effort showed how the company is innovative in responding to people’s needs, for example, by supplying goods and services such as floating toilets and paper toilets to those affected by the crisis.

Innovations to Manage Disaster

SCG helped drought victims by teaching them how to produce cement jars for water collection.

Dr Chirayu Isarangkun Na Ayuthaya, chairman of the Board of Directors of SCG (5th from the left); Arsa Sarasin, member of the Board of Directors of SCG (6th from the left); Kan Trakulhoon, SCG’s president and CEO (4th from the left); and other SCG executives participate in an activity to raise awareness about sustainable development in Lampang province.


SCG as fundamental to the success of Thai youth. A mathematics and

science television show called 180 IQ was initiated in 1982. In 2002, a

new program called IT Genius, a technology quiz, was launched to help

students keep up with global trends in computer and information science.

The economic crisis in 1997 led SCG to group its social activities into

categories in order to develop a road map for each activity to suit

economic conditions and respond to the actual needs of the people.

Since then, SCG has focused on youth capacity building, conservation

of the environment and charitable activities under good corporate

governance, together with the development of working processes that

involve the communities in decision making, thereby making them more

self-reliant in the future.

Many projects reflect this last idea, such as those aimed at helping

victims of natural disasters. Besides offering emergency assistance

and donations, SCG has developed social innovations to respond to

disasters. For example, a project to help victims of the 2004 Indian

Ocean tsunami focused on restoring the livelihoods of those affected.

SCG created the SCG Tsunami Relief Fund, which helped local

communities establish repair shops where fishermen could have their

boats and fishing gear fixed. This type of project enhanced cooperation

between developmental and business organizations and showed that,

besides offering financial aid, SCG and other organizations can also

support people through their skills and expertise. Another illustration of

this approach occurred during the major floods of 2011. In addition to

emergency assistance, SCG followed up after the natural disaster with

projects such as “My school...flood-fight preparedness,” which allowed

schools impacted by the flood to propose targets for renovation. SCG

is also working on a flood prevention program. Students on the TV show 180 IQ, a popular educational game show, compete in math and science. A project to help repair the boats of those victimized by the 2004 Indian Ocean tsunami and thus ensure their livelihoods.


}SCG believes that empowering

people is the key starting point in creating positive forces to shape our

collective future. ~

SCG’s early CSR activities involved basic projects such as the granting of scholarships.

Top left: A playground in Vietnam, part of the SCG Sharing the Dream project, which aims, in part, to increase recreational space for children in urban areas so that families can spend quality time together and the kids can reach their potential. Top right: The Tales in the Garden project is one of SCG Foundation’s projects to promote child development. Bottom: Students in Indonesia receive scholarships as part of the SCG Sharing the Dream project.

Believing in the Value of Peopleto Create a Strong Society

SCG’s social activities may have developed gradually, step by step, but

one aspect remains fundamental to the distinct identity of SCG—many

of SCG’s social activities are dedicated to the constant development of

human capacity because SCG believes in the value of each individual.

Indeed, the company’s efforts at social development place people at

the center. SCG believes that empowering people is the key starting

point in creating positive forces to shape our collective future.

In this vain, SCG conducts activities that are aimed at developing

human capacity at every level. The focus begins with toddlers to six-

year-olds, which encompasses the prime period of child development.

SCG Foundation has joined with other organizations, such as the Books

for Children Foundation, to organize events such as the Tales in the

Garden festival. Since 2004, this event has helped encourage parents

to read to their children in order to nurture them. This festival was

expanded to include Chiang Mai province in 2011.

For school-age children, since 1981, SCG has focused on giving them

opportunities by offering many scholarships from the high school to

bachelor’s degree levels. It is SCG’s firm conviction that education

is a key step for anyone seeking a better future. With the number of

scholarship recipients having increased significantly, SCG realized the

company could not follow up and monitor all of the recipients closely.

To address this situation, since 2005, SCG employees can nominate

candidates themselves. The nominating employee also becomes the

scholarship recipient’s mentor. Today, there are 400 mentors who take

care of more than 1,000 scholarship recipients.

Over the years, SCG’s scholarship scheme has evolved along with

changes in society, both in terms of locations and coverage. For example,


As badminton is one of the sports that Thais have long enjoyed and excelled at, SCG has supported the sport for over 30 years. Badminton requires speed and accuracy, not just size and strength. It also does not cost much to play and can be played anywhere. For these reasons, SCG has supported the development of players from the youth level up. For example, SCG has organized the SCG Junior Badminton Championships of Thailand, now in its 33rd year; the SCG All Thailand Badminton Championships; and also the SCG Thailand Open – all international-level tournaments which many famous athletes from all over the world join.

In 2007, the SCG Badminton Academy, the first international-standard badminton academy in Thailand, was established. The SCG Badminton Academy offers top-notch coaching that applies the latest concepts from the sport in order to raise the play of Thai badminton players to an international level. At the SCG Badminton Academy, athletes receive intensive and proper training, and one-on-one attention under a scheme that maps their training regimen and future. The SCG Badminton Academy has quickly assumed as important role in producing skillful badminton players for the Thai national team, and it has become a source of pride for SCG to witness this popular national pastime reach an international level of play.

In addition to badminton, SCG supports football, and is the official sponsor of SCG Muangthong United Football Club, which was ranked number one in the Thai Premier League in 2012. SCG Stadium, where SCG Muangthong United Football Club plays, has a seating capacity of 17,500 people. SCG’s support has helped improve the team’s ability and also elevated the status of football in Thailand to reach an international level. SCG encourages good sportsmanship and a positive atmosphere at games among both the team’s players and supporters.

SCG has also focused on golf, one of the world’s most popular sports and a game that has become increasingly popular in Thailand. SCG sponsors two young golfers, Moriya and Ariya Jutanugarn, who are known as the “Thai sisters.” The pair are recognized as rising stars and are already competing at a professional level. Besides bringing recognition to Thailand, they are inspiring role models for other Thai youth who are interested in golf.

SCG and the Promotion of Sports SCG has established the SCG Sharing the Dream Scholarship project,

which gives opportunities to those who are “Talented and Ethical,” but

who would otherwise be deprived of a normal education. This project has

been expanded to the ASEAN region, with models and criteria suitable for

each country. An average of 5,000 scholarships are awarded each year

throughout Thailand and other ASEAN countries.

Other educational funds also provide indirect support to communities,

such as the SCG Foundation Scholarships for Families of Community

Service Worker Program and SCG Talent Scholarships, the latter of

which provides 125 young people with excellent academic records

with scholarships that have no conditions attached. In addition, SCG

Cement-Building Materials conducts the Home Solution Career Choice

project in cooperation with educational institutions. This program

promotes vocational skills and work experience, allowing youth to

develop knowledge about construction as well as technical skills that

may prove useful later in their lives.

Indeed, SCG is committed to supporting talented young people

through a variety of social activities. The Young Thai Artist Award, for

example, was started in 2006. It is now the biggest art competition for

youth in Thailand. Additionally, SCG, being an innovative organization,

has started to promote the creative abilities of Thai youth through

projects like the SCG Thailand Rescue Robot Championship in 2004,

which later in 2012 evolved into the SCG Thailand Robot@Home

Championship. It is the first platform through which Thai youth can

create interactive robots with advanced technology and then enter

international competitions. Representatives from Thailand supported

by SCG have received the first prize in the World RoboCup rescue

robot category for six consecutive years.

SCG Foundation: Tangible Responsibility Toward Society

SCG’s commitment to creating activities beneficial to society became more formalized in 1963. To mark the company’s 50th year of operations, an organization was established to manage a fund drawn from company profits. In 1967, the fund was registered as a charity organization under the name Siam Cement Foundation, one of the first corporate foundations in the country. The company donated money and stock to increase the fund’s budget so that it could conduct activities beneficial to the public in the name of one of the company’s Four Core Values – “Concern for Social Responsibility.” If, in any year, the foundation does not receive much income from dividends, the company will still allocate a budget to ensure its activities are not interrupted. SCG recognizes that giving support and assistance to society is a never-ending mission.

In 2004, the Siam Cement Foundation changed its organizational structure and work procedures in order to be able to expand its outreach efforts. In 2011, the name was changed to SCG Foundation and its activities were reorganized in order to meet contemporary modern social conditions and social needs. Its key focus is promoting child development and providing emergency relief. The foundation is managed by a committee which consists of SCG’s executives.


At an informal session between local villagers and SCG staff, experience and knowledge are shared so it may be applied usefully in the future. A local forest in Kanchanaburi province which was targeted for revival is now used as a learning resource by the community. Children learn about the diversity of natural resources in their area.

Sustainability Network for Sustainable Happiness

The ultimate goal in the journey toward sustainable development is

to create sustainable happiness for all of society. Collaboration from

every unit and the creation of strong networks are key to driving the

idea of sustainable development forward and expanding it on a larger

scale. Besides expanding its community environmental networks, such

as through the SCG Conserving Water for Tomorrow project, SCG is

involved in several associations at the national level that promote social

and environmental responsibility and allow organizations to share their

experiences on sustainable development. For example, SCG joined

the Thailand Business Council for Sustainable Development (TBCSD)

in 1993. TBCSD was founded by the Thailand Environment Institute

with the objective of raising awareness about sustainable development

among business organizations. SCG also joined the CSR Club in 2009.

This is a gathering of 27 listed companies in the Stock Exchange of

Thailand, and is supported by the Thai Listed Companies Association,

Securities and Exchange Commission of Thailand, and the Stock

Exchange of Thailand, in order to encourage and coordinate CSR

efforts among member companies.

At the international level, since 2000, SCG has been a member of the

World Business Council for Sustainable Development (WBCSD) and

also joined two of WBCSD’s programs: the Cement Sustainable Initiative

(CSI), which focuses on research on sustainable practices in the cement

industry, and the Sustainable Forest Products Industry (SFPI), which

seeks improvements in the management of forest resources.

Since 2004, SCG has joined the Dow Jones Sustainable Indexes (DJSI),

which measure business organizations in terms of their implementation

of sustainable development business concepts. DJSI reassure investors

from all over the world that the efficiency of each business organization

}Collaboration from every unit and the creation of strong networks are

key to driving the idea of sustainable development forward and expanding

it on a larger scale. ~


Peter Bakker, president of the World Business Council for Sustainable Development (WBCSD) and one of the key speakers at the annual ASEAN Sustainable Development Symposium in 2012, stands in front of a “mind map,” which gathered useful ideas about sustainability that may be applied in the future.

is based not only on profits but also on sustainability. SCG has ranked

as a Sector Leader in the Building Materials and Fixtures Sector for two

consecutive years (2011–2012).

As a model organization in sustainable development in the ASEAN

region, SCG applies similar sustainable development standards in every

ASEAN country in which it has invested. SCG also aims to spread the

concepts of sustainable development to other business organizations,

both in Thailand and in the ASEAN region. In 2010, SCG initiated the

Thailand Sustainable Development Symposium in order to support the

exchange of new ideas and expertise, and also to act as a role model in

sustainable development for other business organizations. As of 2012,

the symposium has been expanded to the regional level. It is currently

known as the ASEAN Sustainable Development Symposium, a platform

for world-class organizations to share their sustainable development

experience. The knowledge exchanged through the collaboration of

national and international organizations, including public, private and

independent non-governmental organizations, strengthens the growth

of a sustainable ASEAN network.

SCG is still moving forward as a good corporate citizen, creating

products and services that will help uplift the quality of life of consumers,

and practicing its business with social responsibility under the highest

international standards. It is SCG’s belief that if all sectors of society

work together, using sustainable development guidelines and concepts

throughout their operations, we can achieve not only economic growth,

but also a good quality of life for all people: a strong society, healthy

environment and an enduring happiness for the world.Sutichai Yoon hosts a talk (far left) at the ASEAN Sustainable Development Symposium 2012 with Dr Supachai Panitchpakdi, secretary-general of the United Nations Conference on Trade and Development (2nd from left), Peter Bakker (3rd from left) and SCG President and CEO Kan Trakulhoon (4th from left).

Towarda Sustainable Future

SCG aims to be a sustainable business leader in the ASEAN region by 2015. SCG has focused on becoming a company that continuously develops innovations that respond to the needs of the consumer and add value to society and the environment for all stakeholders, ensuring balance and sustainable growth into the next century.

The SCG Pavilion was the most popular pavilion at the 2011 Board of Investment (BOI) Fair. Presenting various innovations that improve the public’s standard of living, the pavilion also won the fair’s Best Pavilion award.


Growing Sustainably in ASEAN

}SCG’s early expansion in Southeast

Asia was an important building block that has enabled SCG’s core businesses to move forward today.

~

SCG’s cement plant in Kampot, Cambodia is SCG’s first cement plant outside Thailand. It was launched as a result of demand from the regional market. “SCG People” in every country work with determination to help SCG become an innovative organization and a sustainable business leader in ASEAN.

Over the last 100 years, SCG has consistently developed all aspects

of the organization. Together, these changes form the SCG of today.

Among the key changes in recent years are the creation of an open

organizational culture and the adoption of new ways of thinking and

approaches to its businesses. In addition, SCG has moved beyond

the creation of basic products and into the production of a High

Value Added product line. Other key changes are SCG’s expansion

in the ASEAN region and emphasis on sustainability through strong

management and corporate governance that balance economic, social

and environmental issues. All of the above underpin SCG’s goal to

become a sustainable business leader in ASEAN, a company always

ready to face future challenges through not only the expansion of its

operations but also through original ideas and the creation of new

technology. By driving forward toward these goals, SCG hopes to create

a more sustainable future for everyone, one based on the successful

coexistence of business and society.

In its 100th year, SCG has made its plans for expansion within ASEAN

a priority, the first time in the history of the company that SCG has

clear goals for its investment outside Thailand. SCG recognizes the

outstanding growth potential of the regional market and has therefore

taken a very proactive approach toward this expansion.

The routes of this expansion beyond Thailand date back more than

two decades ago when SCG made inroads in Southeast Asia, a move

pioneered by SCG Trading. This expansion, which took place during a

period when the Thai government was strongly encouraging overseas

investment by the Thai private sector, required mutual understanding

between partner nations, owing to their economic, social and cultural

differences. SCG’s sincerity and dedication allowed it to establish an

142 143OF INNOVATIONS FOR SUSTAINABILITY TOWARD A SUSTAINABLE FUTURE

Top: SCG and COTTO products are displayed at a trade fair in Laos. Bottom: The opening of an SCG authorized dealer in Mandalay, Myanmar.

The exterior of the PT Chandra Asri Petrochemical Tbk plant in Indonesia, a joint venture undertaken with SCG.

office in Vietnam. The company then later expanded into Myanmar

and Laos. As of 2013, SCG’s core businesses have continued to

operate in Vietnam. A comprehensive showroom for building materials

was opened for the first time outside Thailand in Hanoi. SCG has 19

business operations in Vietnam and more than 6,300 employees. After

Indonesia, Vietnam has attracted the second highest total investment.

Meanwhile, SCG’s business in Myanmar has also expanded rapidly.

SCG-branded products, such as those from SCG Cement-Building

Materials, are already recognized for their high quality. A strong

distribution network has been established, and retail outlets are

operating as SCG authorized dealers in the three main cities of Yangon,

Mandalay and the capital Naypyidaw. SCG has plans to further expand

to other cities and build a cement plant in the country.

In Laos and Cambodia, SCG Cement-Building Materials is also expanding,

with the goal of making the SCG brand well known and accepted in the

domestic markets there. SCG is planning future investment projects

in these countries, such as increasing the production capacity of the

Kampot cement plant in Cambodia from 1 to 1.9 million tons in order to

meet the continuing increase in demand.

SCG’s early expansion in Southeast Asia was an important building

block that has enabled SCG’s core businesses to move forward today,

especially in the four countries which are considered the core strategic

locations: Indonesia, Vietnam, the Philippines and Myanmar.

All of these countries have increased rates of growth since 2011. SCG’s

path forward in all of these countries has been, at first, marketing-led.

Products are distributed to the domestic markets in order to create

purchasing demand as well as brand awareness. Once these are

established, the business is expanded through the construction of

local factories or through mergers and acquisitions. For example, SCG

distributed its first paper products in Vietnam over ten years ago. Once

the quantity of the paper sent for distribution had reached a certain

point, a decision was made to build a factory in the country. This step-

by-step method of expansion is seen as more effective than building a

factory at the same time as entering the market. The proven success of

the products imported for distribution essentially provide a guarantee

that the products produced in that country will also be well-received.

SCG’s path into the key Indonesian market has followed a similar

trajectory. In 1995, the company began by establishing a trading office,

called SCG Trading, whose main role was to introduce products for

distribution and at the same time study the local market. SCG then

expanded its Indonesian investment through historic mergers, recently

purchasing a 30 percent share of Chandra Asri Petrochemical (CAP),

one of the leading chemical businesses featuring a full range of

products in Indonesia. SCG also acquired the ceramic tiles business

of PT Keramika Indonesia Assosiasi Tbk (known as KIA), and, in

order to fully expand its product distribution channels, the company

purchased shares of PT Kokoh Inti Arebama Tbk (known as Kokoh), a

leader in the building materials distribution business with 19 branches

around Indonesia. They have positioned the company very strongly in

Indonesia, which boasts the largest population of any ASEAN country

with 250 million people.

In 2011, SCG expanded even further in Indonesia by investing in a

leading ready-mixed concrete manufacturer in the country, owner of

the Jayamix brand. The move builds SCG’s strength in core sectors of


Employees at PT SCG Readymix Indonesia, producers of ready-mixed concrete under the brand name Jayamix. All SCG employees work according to the same principles. The first SCG showroom featuring a full range of products outside Thailand is in Hanoi, Vietnam.

the cement industry, such as precast concrete products and concrete

pipes, quarrying and limestone reserves.

The success and growth of SCG’s mergers and acquisitions have

underlined SCG’s sense of renewed direction and purpose in ASEAN

markets. Business expansion through mergers or acquisitions can be

seen as the new approach for future investment. This strategy offers

expertise derived from an incubation period so that approaches can

be adapted to suit local conditions. For SCG, there are two additional

advantages to the strategy: it is more time efficient and the overall

quantity of products in the market is not increased.

Mergers, acquisitions and business expansion have another notable

consequence – a diversity of people from different backgrounds as

well as cultures are brought under the SCG umbrella and integrated

into the same working culture. The resulting differences can also act as

a business advantage. A more diverse workforce can lead to creative

ideas that are beneficial to the organization, and allow for further

expansion and cooperation within the region.

Even though expansion in ASEAN is occurring rapidly, SCG still

applies the concepts of His Majesty’s Sufficiency Economy by rationally

considering the balance between business opportunities and the

capacity of the organization.

The ASEAN region represents a future growth market with enormous

economic potential compared to, for example, the struggling economies

of Europe and the United States. With the ASEAN Economic Community

(AEC) set to launch in 2015, indeed all roads lead to ASEAN.

147TOWARD A SUSTAINABLE FUTURE

In response to the introduction of the AEC in 2015 and SCG’s stated vision to be a sustainable business leader in ASEAN, the company has expanded its operations throughout the region.

“SCG People,” featuring a diverse range of cultures, ethnicities and expertise, will be the driving force behind SCG’s sustainable growth in the future.

Myanmar• SCG Cement-Building Materials

Laos• SCG Cement-Building Materials

Vietnam• SCG Chemicals• SCG Paper• SCG Cement-Building Materials

Cambodia• SCG Cement-Building Materials

Philippines• SCG Paper• SCG Cement-Building Materials

Brunei

Indonesia• SCG Chemicals• SCG Cement-Building Materials

Singapore• SCG Paper• SCG Cement-Building Materials

Malaysia• SCG Paper• SCG Cement-Building Materials

The direction implemented by SCG has given SCG assets in ASEAN,

excluding Thailand, of 55,300 million baht, or 14 percent of SCG’s total

assets of 395,573 million baht, as of 2012. SCG had sales revenues of

31,208 billion baht in ASEAN, or approximately 8 percent of total sales,

which is an increase of 39 percent compared to the previous year.

SCG will continue to make investments abroad, focusing on becoming

a sustainable business leader in ASEAN by 2015 with an investment

budget of 150,000–200,000 million baht for the five-year period of 2012–

2017. This will mark a shift in investment direction with the majority of

investments focused on ASEAN. At the same time, guidelines have

been set for investments in other countries outside the ASEAN region,

especially in markets with emerging potential such as Africa and South

Asia, including India and Bangladesh. All are considered markets

which offer opportunities for future growth. SCG plans to become a

regional leader before moving on to become a global leader.


Innovation: The Answer for Tomorrow

}By innovating products and services that meet customers’ modern needs,

not only for today but also for tomorrow, SCG believes it will be

well positioned for the future.~

New innovations in information technology are used to offer consumers accurate information about home construction materials at SCG Experience in Mega Bangna, Bangkok.

SCG’s HEIM modular house, a construction innovation for the future, uses advanced technology to create a convenient, eco-friendly and healthy lifestyle for its residents.

While there will be fiercer competition in the future, the growth of ASEAN

presents SCG with many opportunities for growth. The business model

that emphasizes organizational efficiency through cost reductions is

now outdated. Recognizing this, SCG has spent several years updating

its approach from one focused on manufacturing basic products with

increasingly lower costs of production to one that emphasizes the

creation of High Value Added (HVA) products and services.

In a word, this strategy is based on promoting innovation. By innovating

products and services that meet customers’ modern needs, not only

for today but also for tomorrow, and by using resources efficiently and

creating a positive impact on the economy, society and the environment,

SCG believes it will be well positioned for the future.

The ability to innovate will be an important driver of operational growth

and also key to competing globally. Evidence for this can already be

found. For example, in 2009, total sales decreased, but there was

dramatic growth in the sales of SCG’s HVA products and services. In

2012, the price of oil – a core cost for SCG Chemicals – increased,

putting many companies around the world in a difficult position. But

businesses in SCG Chemicals, aided by HVA products and services,

recorded strong operational results.

For SCG, the incentive to innovate is not simply to create new business.

Innovation will be essential to meet future challenges that impact all

people. Creating a better and more sustainable quality of life, when

new challenges such as climate change may lead to more frequent

and severe natural disasters, will require innovation. In addition, major

social changes, such as Thailand and ASEAN’s shift toward aging

societies, will present new problems that can only be addressed


Technological innovations that were showcased at the 2011 BOI Fair included (top) SCG Care Home, a house with an interior design specifically tailored toward the elderly and (bottom) the SCG HEIM modular house, which is designed to endure a massive earthquake as high as level 7 on the Richter scale.

Shield Life provides victims of a natural disaster with temporary shelter. It was unveiled at the SCG Pavilion at the 2011 BOI Fair.

through innovative solutions. Indeed, SCG is constantly looking ahead

and developing products and services that anticipate future needs.

Such preparations have led to new, tangible innovations, as displayed

at the 2011 BOI Fair, which was organized by the Thailand Board of

Investment. The SCG Pavilion received overwhelming interest from the

public. Some displays showed product innovations that had yet to be

launched on the market.

Members of the public who visited the pavilion were able to experience

original applications such as the SCG HEIM modular house, which

was co-created with the Japanese company Sekisui Heim. This house

features a structure especially designed to withstand earthquakes that

register at a magnitude of 7 on the Richter scale. Meanwhile, the SCG

Care Home is designed to improve the quality of life of elderly people

by focusing on safety and convenience, while Shield Life is a temporary

accommodation for victims of natural disasters. An innovation from

SCG, the latter was produced using polyethylene materials in order

to make it lightweight and easy to move but also durable. At the fair,

SCG presented its Cement Bunker, which offers outstanding strength

as well as resilience against wind, explosion and erosion. In addition,

it featured translucent cement blocks made from a formula of concrete

mixed with special polymer materials. Light can pass through the

blocks, which are also resistant to alkali and UV light and help save

energy.

The direction of SCG’s research and development is based not only

on business decisions, but also environmental issues. For example,

in 2011, when Thailand suffered extensive flooding, SCG was able

to use some of its innovations to help victims. Paper toilets, which

are lightweight, easy to transport and easy to use, and floating toilets,

which feature a waste and water treatment system that uses microbial

degradation to eliminate waste discharge, thereby helping to prevent

water contamination and the spread of disease, are two examples of

recent innovations. Indeed, the direction of SCG’s R & D focuses on world

trends and changes in terms of energy, materials and the environment.

Projects are frequently inspired by challenges and natural disasters

that have occurred in Thailand such as regular floods and droughts.

Current innovations being developed include a floating house, which

would reduce property damage during a flood, and a “two-in-one”

house that effectively handles both floods and drought.

SCG’s human resources policies also emphasize the promotion of

innovation. Under the Technology Roadmap that SCG has established,

SCG staff are encouraged to be “Inno People,” or open-minded

people who think outside the box. Recruitment emphasizes hiring

more personnel with skills in research and candidates with doctorate

degrees. Innovation is also promoted through increased cooperation

within the organization itself and through external alliances. Currently,

more than 25 percent of SCG R & D projects involve cooperation with

other organizations within Thailand and abroad. In the future, SCG will

see even more extensive cooperation in its drive to innovate.

Innovation that drives sustainable growth, however, depends on more

than just the ability to discover, research and develop. The greatest

challenge is to turn knowledge and research work into useful and

attractive consumer products and services. Therefore, supporting the

conveniences of life as it will be lived tomorrow will provide the focus

for SCG’s future operations. It is this path that can lead the business

toward sustainable growth, while at the same time benefiting society

and the environment.


Creating a More Sustainable Future

}SCG is fully committed to being a good corporate citizen, one that

strives to improve the communities and countries where it operates, one

that respects diversity in culture and opinion.

~

SCG’s CSR activities in local communities emphasize long-term problem solving and the promotion of skills and values that will promote self-reliance and a stronger community.

Besides helping to conserve forests, which are a source of water, the check dam building project has made people more aware of the importance of preserving natural resources.

SCG believes in developing eco-friendly, energy-efficient buildings. To set an example, the company has upgraded its Headquarters 1, Headquarters 2 and Building 5 at its corporate headquarters to be energy efficient. Besides reducing environmental impact, these buildings also encourage their inhabitants to cooperate in the energy-saving process. The buildings employ SCG and COTTO building materials with key characteristics: they are durable in different kinds of weather, easy to maintain and, in general, environmentally friendly.

As these buildings are over 25 years old, this renovation demonstrates how existing buildings can be improved and made environmentally friendly. All three buildings have been certified as eco-friendly, meeting energy efficient building standards at the highest level, including the prestigious LEED Platinum standard for existing buildings as certified by the US Green Building Council (USGBC), a first in ASEAN. Headquarters 3, which will be completed in 2013, and other new buildings will also accord to green building concepts. In addition, SCG has set up a new department dedicated to giving advice to other organizations who wish to renovate their existing buildings or construct new ones that can be certified according to LEED standards.

Green Buildings for a Better Future

In all the countries where SCG operates, SCG follows the company’s

sustainable development guidelines. These guidelines focus on

creating balance between business, social and environmental concerns

– what SCG refers to as the “triple bottom line.” They also illustrate

SCG’s belief that in order to reach its objective of being a sustainable

business leader in ASEAN, the company must be widely accepted and

respected by the regional business community. Strong operational

performance alone does not ensure success. SCG believes it must

give back to society and also be environmentally friendly in order to

create benefit for the countries where it operates.

SCG’s commitment to excellence in environmental management can

be seen throughout its operations: modern machinery and technology

are selected, conservation of natural resources is emphasized, the

production process ensures the product life cycle reduces the usage of

natural resources while waste is reused, and the use of “rehabilitated”

resources (such as recycled material) and new options which have a

minimal impact on the environment are always considered.

Today, SCG is one of the leaders in Green Procurement in Thailand. The

technology used by the company accords with international standards

and the organization produces eco-friendly products to improve its

consumers’ quality of life. At the same time, it makes outreach efforts to

surrounding communities, developing the potential of children and young

people to create sustainable growth for society through activities carried

out under the SCG Sharing the Dream project. Such projects not only

raise awareness about SCG’s mission and activities, but also create a

healthy working relationship between SCG and the many communities

and countries where it operates.

155TOWARD A SUSTAINABLE FUTURE

SCG is dedicated to taking care of both society and the environment, and creating happiness for all people through product innovation.

SCG has been evaluated and ranked in the Dow Jones Sustainability Indexes, or DJSI, as a Sector Leader in the Building Materials and Fixtures category for two consecutive years (2011-2012). SCG was first invited to the assessment in 2004 and has been ranked in the Gold Class for five consecutive years, since 2008.

Starting in 1999, DJSI became the first world-wide index to evaluate the efficiency of businesses according to their sustainable development practices. The information DJSI provide is used by various investment institutions and funds around the world in evaluating their investments. Investors can be confident that companies in the DJSI rankings will create strong and sustainable returns.

DJSI attach great importance to freedom, transparency and creditability. The criteria it uses is developed by Robeco Sustainability Asset Management (RobecoSAM), an external independent organization with specific expertise in this field. The criteria also features assessments by additional external independent organizations.

SCG is proud that external organizations have recognized the value of its work in all aspects of sustainable development. It is SCG’s intention to continue such work in the future to reach ever-higher standards.

A Leader in Sustainable Development

Throughout its 25 years of providing scholarships, the company has

recognized that youth form the driving force of the nation, and has

sought to unlock their potential and help them to become “Talented

and Ethical” people. If youth develop their knowledge and learn

good morals and leadership skills, and if they commit to personal

development throughout their lives, they can become leaders who

contribute to others and thus the greater good of ASEAN.

Now SCG’s community outreach efforts have reached a significant new

stage. The company’s current aim is to contribute toward sustainable

growth by giving community members the tools to solve problems

themselves. Rather than determining the needs of or a course of action

for the community, SCG encourages the community to brainstorm or

receive education or training in skills that they can apply further in the

future. This type of outreach effort provides the community with long-

lasting lessons that they can also transfer to other communities.

Indeed, SCG is fully committed to being a good corporate citizen,

one that strives to improve the communities and countries where

it operates, one that respects diversity in culture and opinion, and

one that creates a sustainable environment and future. SCG is also

dedicated to promoting innovation to improve the standard of living

of the consumer, and to handing down all of these values from one

generation to the next.

At the same time as other offices in ASEAN celebrated, Kan Trakulhoon, president and CEO of SCG (far left), leads the SCG management team in a flag waving ceremony at the “99th Anniversary of SCG – Moving to SCG’s 100th Year” celebrations at the headquarters at Bangsue on 7 December 2012.

160

162

164

178

180

182

186

SCG’s Founders and Presidents

Memorable Places: Historic Buildings at SCG Headquarters

Important Milestones

The Pride of SCG People”

100th Anniversary of SCG

Reflecting Thai Society Through SCG’s Advertisements

Kan Trakulhoon, president and CEO of SCG (4th from left); Pramote Techasupatkul, president of SCG Cement at that time (5th from left); and Venus Asavasitthithavorn, Corporate Communications Director of SCG (3rd from left); take a picture with SCG Ambassadors at the “99th Anniversary – Moving to SCG’s 100th Year” celebrations.

APPENDICES

99th Anniversary – Moving to SCG’s 100th Year” Gallery

1 2

5 76

3

8 10

4

5

1 2 3

6 87

4

9

161160 OF INNOVATIONS FOR SUSTAINABILITY APPENDICES

SCG’s Founders and Presidents

Founders

Chao Phya Yomaraj

(Pan Sukhum)

Phya Arthakara Prasiddhi

(Tilkee Gunatilaka)

Phya Singhol Sagara

(Frank Gunatilaka)

Phra Boribun Raja Sombat

(Mom Rajawongse Moon Darakara)

Phra Montri Pochanakich

(Thienhee Sarasin)

Luang Svasti Wiengchai

(Sawasdi Sukhum)

E.G. Gollo

Commander W.L. Grut

Oscar Schultz(1914-1925) Erik Thune (1925-1934) Carsten Friis Jespersen(1935-1959) Viggo Fred Hemmingsen (1959-1974) Boonma Wongswan (1974-1976) Sommai Hoontrakool (1976-1980) Charas Xuto (1980-1984) Paron Israsena Na Ayudhya (1985-1992) Chumpol NaLamlieng (1993-2005) Kan Trakulhoon (2006-present)

1

2

3

4

5

6

7

8

9

10

1

2

3

4

5

6

7

8

Presidents


Memorable Places: Historic Buildings at SCG Headquarters At the headquarters complex in Bangsue, Bangkok, there are several historic buildings which form an important part of the heritage of SCG. These buildings are

a source of pride for “SCG People.”

Guest House

Stacks and Kilns

Loading Center

Building 1

Pavilion

Engineers’ House

Fusing Thai and Western-style architectural styles, the engineers’

house was constructed at the same time as the Bangsue plant.

Home to Danish engineers, it was built to suit the tropical climate

of Thailand. Originally there were three houses, but only one was

preserved.

The loading center was constructed in 1915 to load the cement bags

onto ships. The boats then transported the cement via the Chao Phraya

River to destinations around the country. Once Thailand’s road network

expanded, water transportation was phased out, and the loading

center was eventually closed in 1972. In 2013, this building received

the Architectural Conservation Award from the Association of Siamese

Architects Under The Royal Patronage of His Majesty the King.

The Thai-style royal pavilion was purpose-built for the special

occasion of His Majesty King Bhumibol Adulyadej and Her Majesty

Queen Sirikit’s visit to the Bangsue plant on 14 February 1964, to

celebrate SCG’s 50th anniversary, and the 25th anniversary of The

Siam Fibre-Cement Co., Ltd.

The ventilating stacks connected to the Bangsue kilns first went into

production in 1915. Over time, they became a significant symbol of

Thailand’s cement production. These stacks ceased operations in

1983 when the Bangsue premises were redeveloped into SCG’s

headquarters.

In the past, before Bangkok expanded, Bangsue was on the outskirts

of the city. One of SCG’s founders, E.G. Gollo, designed this guest

house to be used by the Danish managers and engineers who worked

at the Bangsue plant. The house was furnished with Western-style

facilities and amenities in the style of a Western hotel.

The first headquarters opened on the Bangsue premises in 1948.

The building was designed to stand without supporting poles. On

the occasion of SCG’s 50th anniversary in 1963, His Majesty King

Bhumibol Adulyadej bestowed the royal garuda on SCG to honor

the company’s service to the crown and country. As per tradition,

the garuda was placed on the front of the headquarters building.


1913 - 1931

1913 1915

1914 1921

The Siam Cement Co., Ltd. registers as a limited company on 8 December, the official founding date of SCG.The first SCG meeting is held at the offices of the newspaper The Siam Observer.His Majesty King Vajiravudh presides over the opening of the first telegram office in Thailand.International conference for the protection of nature is held in Bern, Switzerland. Ford Motor Company launches the moving assembly line.

Bangsue plant begins operating with an annual cement production capacity of 20,000 tons, which later increases to 27,000 tons.SCG’s pricing and product transportation systems are first established, marking the start of the distribution business unit.His Majesty King Vajiravudh visits the South, where he learns more about the lifestyles and needs of its residents. The first “STOP” sign is introduced in Michigan, the United States.

1925

19321922

(From left – 1st image) Bangsue plant in the early days; (2nd image) Control room at Samsen power plant soon after it opened; (3rd image) French military forces during World War I; (4th image) Train station in the early times (5th image); Royal funeral of His Majesty King Vajiravudh (Rama VI); (6th image) The ceremony for laying the cornerstone of Memorial Bridge (Phra Buddha Yodfa Bridge) led by His Majesty King Prajadhipok.

SCG History

Thai History

World History

Bangsue plant begins operation of Kiln No. 2; annual cement production capacity rises to 35,000 tons.The Train and Highway Act regulates the country’s key networks. Gandhi, the leader of India’s independence movement, is arrested by the British Empire’s police.

Bangsue plant begins operation of Kiln No. 3, with an annual cement production capacity of 46,000 tons, resulting in combined plant production capacity of 108,000 tons per year.His Majesty King Prajadhipok (Rama VII) places the cornerstone for Memorial Bridge (Phra Buddha Yodfa Bridge).The U.S. stock market crashes, leading to a global financial crisis.

Danish national Erik Thune is appointed the second general manager of SCG (1925–1934).His Majesty King Vajiravudh (Rama VI) passes away on 25 November 1925 at the age of 46.Calvin Coolidge is the first U.S. President to broadcast a speech over the radio.

Danish national Oscar Schultz is appointed the first general manager of SCG (1914-1925).Thailand declares its neutrality at the start of World War I.Samsen power plant commences power generation.Stainless steel materials and wares go on sale for the first time.

New source of marl is discovered in Ban Mo district, Saraburi.The State Railway of Thailand starts the new southern route, connecting Thailand to Malaysia.Adolf Hitler becomes leader of the Nazi Party. The Communist Party is established in China with Mao Zedong as one of the founders.


1932 - 1950

1935 1938

1932 1937

1944 1950

1942 1948

SCG History

Thai History

World History

Kilns No. 1 and 2 at Bangsue plant are damaged by Allied bombings.The Free Thai Movement, an underground movement against cooperation with Japan, is established. Allied troops led by the United States invade Normandy in France on what is known as “D-Day”.Franklin D. Roosevelt becomes the only U.S. president re-elected to a fourth term.

SCG produces reinforced steel bars for the first time.His Majesty King Bhumibol Adulyadej marries Mom Rajawongse Sirikit and a coronation ceremony is held.The Korean War begins as North Korea invades South Korea.Walt Disney’s animated movie Cinderella makes its premiere.

SCG begins producing steel under the government’s steel industry promotion and development policy.Thailand declares war against the Allies in World War II, after Japanese forces enter the country.26 Allied countries in World War II co-sign and enforce the UN Charter, the starting point of the United Nations.

Tha Luang plant in Saraburi province begins cement production as the company’s second plant, with an annual production capacity of 130,000 tons. Thailand becomes a member of the World Bank.Korea is divided into North and South Korea.The World Health Organization is established by the UN.The International Union for Conservation of Nature (IUCN) is founded.

Carsten Friis Jespersen, Danish national, is appointed the third general manager of SCG (1935–1959).HM King Ananda Mahidol (Rama VIII) accedes to the throne after the abdication of HM King Prajadhipok (Rama VII).The Volkswagen Beetle is launched in Germany.

The Siam Fibre-Cement Co., Ltd, is established, marking the starting point of the SCG Building Materials business unit. Field Marshal Phibun Songkram becomes prime minister of Thailand.Dusit Zoo, part of Dusit Palace, opens to the public. German forces enter Austria.

Political changes lead to a reduced role for the Privy Purse, a major shareholder in the company.A revolution led by the People’s Party changes the country’s administration from an absolute monarchy to a constitutional monarchy.Amelia Earhart becomes the first woman to fly solo across the Atlantic.

Members of the People’s Party assume management roles at the company. The Privy Purse is replaced by the Crown Property Bureau. The first direct election for parliament is held in Thailand. Japanese forces occupy Nanking, China.

(From left – 1st image) The temporary Constitutional Charter for the Administration of Siam Act as displayed in front of Ananta Samakhom Throne Hall in Bangkok in the 1930s; (2nd image) Volkswagen Beetles at a plant in Wolfsburg, Germany; (3rd image) The public views SCG’s roof tile factory in operation; (4th image) Japanese propaganda spread in Bangkok during World War II; (5th image) A plane used by the Free Thai Movement; (6th image) Thai troops leave to join South Korea in a war against North Korea.


SCG History

Thai History

World History

1951 - 1961

The Concrete Products and Aggregate Co., Ltd. (CPAC) is established to produce ready-mixed concrete, reinforced concrete and pre-stressed concrete products at the country’s first pre-stressed concrete plant.A new terminal at Don Muang International Airport in Bangkok opens for service.Scientists successfully create the first artificial heart.

Tha Luang plant begins operating Kiln No. 3 with annual cement production capacity of 210,000 tons.His Majesty King Bhumibol Adulyadej opens Chainat Dam, also known as the Chao Phraya Dam.The government hosts the 2,500-year anniversary celebrations of the Buddha era. The Soviet Union launches Sputnik 1, the world’s first satellite.

Refractory brick factory production commences. Tha Luang plant begins operation of Kiln No. 2 with annual cement production capacity of 130,000 tons.U.S. Vice President Richard Nixon visits Thailand. Sir Edmund Hillary’s expedition reaches the top of Mouth Everest.

SCG steel plant opens the Structural Steel Department to produce parts for machinery to reduce Thailand’s reliance on imports. The government of Field Marshal Phibun Songkram announces a plan to provide water and electricity to every province in Thailand. The U.S. conducts its nuclear tests in the Nevada desert.

CPAC is the first company in the country to begin manufacturing reinforced concrete pipes to international standards.Thailand, the Philippines and Malaysia co-establish the Association of Southeast Asia (ASA).The World Wildlife Fund is founded to preserve and protect animals and their natural habitats.

HM the King and HM the Queen visit Tha Luang plant. Construction is completed on the “Friendship Highway,” from Saraburi to Nongkhai, opening up more of the country to efficient commerce. General Charles de Gaulle is elected president of France.

Tha Luang plant begins operating Kiln No. 4, with annual cement production capacity of 210,000 tons.Field Marshal Sarit Thanarat draws up the first national economic and social development plan.The oil consortium OPEC is founded by Saudi Arabia, Iraq, Iran, Kuwait and Venezuela.

1952 1957

1951 1953

1959 1961

19601958

(From left – 1st image) Don Muang International Airport; (2nd image) Field Marshal Phibun greets U.S. Vice President Richard Nixon during his visit to Thailand; (3rd image) Part of the celebration of the 2,500-year anniversary celebrations marking the Buddhist era; (4th image) Chainat Dam (or the Chao Phraya Dam) in Chainat province; (5th image) Three-wheeled pedicabs; (6th image) The parade of athletes at the Southeast Asian Peninsular (SEAP) Games.

Danish national Viggo Fred Hemmingsen is appointed the fourth general manager of SCG (1959–1974). The first Southeast Asian Peninsular (SEAP) Games are held in Bangkok.The government bans samlor (three-wheeled pedicabs) in Bangkok. The Barbie doll is launched in New York.


SCG History

Thai History

World History

(From left – 1st image) King Frederick IX and Queen Ingrid of Denmark visit the Tha Luang plant; (2nd image) Aerial photographs of the Bangkok International Trade Fair at Lumphini Park; (3rd image) U.S. President Lyndon B. Johnson and his wife during a visit to Thailand; (4th image) Bhumibol Dam in Tak province; (5th image) Mickey Mouse, mascot of Walt Disney World; (6th image) Ramkamhaeng University in the 1970s.

The Construction Materials Marketing Company is established to distribute the products of various companies of SCG. King Frederick IX and Queen Ingrid of Denmark visit Tha Luang plant as part of their state visit to Thailand. Construction of Thung Song plant in Nakhon Si Thammarat begins. Thailand’s first stock market is established as a limited partnership. U.K. newspaper The Sunday Times is printed in color, a first for a newspaper.

HM the King and HM the Queen preside over the 50th anniversary celebrations for The Siam Cement Co., Ltd. and the 25th anniversary celebrations for The Siam Fibre-Cement Co., Ltd.Bangsue plant begins operating Kiln No. 5, with annual cement production capacity of 100,000 tons. Bhumibol Dam in Tak province is officially opened. Thai Daimaru department store in Bangkok is the first in Thailand to use escalators. The U.S. Congress declares war against North Vietnam.

Kiln No. 4 at the Bangsue plant is installed, with annual cement production capacity of 100,000 tons. The Concrete Products and Aggregate Co., Ltd. sets up the first ready-mixed concrete factory in Bangson, and introduces the first mixer trucks.A charitable giving fund is established by the company, marking the starting point of SCG Foundation. The Bangkok International Trade Fair, held at Lumpini Park, showcases products and innovations from around the world.U.S. President John F. Kennedy is assassinated.

Thung Song plant opens in Nakhon Si Thammarat province as the first cement plant in Thailand to operate with a dry process and features a cement capacity of 460,000 tons per year. U.S. President Lyndon B. Johnson visits Thailand after his visit to South Vietnam. Construction starts on a concrete bridge crossing Pratunam junction. Mao Zedong starts the “cultural revolution” in China.

Kiln No. 6, with capacity of 190,000 tons per year, is installed at Bangsue plant. Kilns No. 1 and 2 cease production and Kiln No. 3 is modified to produce white cement. Color television makes its debut in Thailand. Countries in Southeast Asia sign the ASEAN Declaration in Bangkok. The supersonic aeroplane the Concorde is launched in France.

Corporate restructuring brings all of the company’s businesses under the Siam Cement Group (SCG), with a new logo of a white elephant in a hexagon. CPAC launches CPAC-Rocla concrete pipes on the market. The Industrial Estate Authority of Thailand is established under the Ministry of Industry in order to regulate industrial enterprises. The last U.S. army troops withdraw from Vietnam.A United Nations Conference on the Human Environment takes place in Stockholm, Sweden.

Construction of Kaeng Khoi plant, SCG’s fourth cement plant, begins with a capacity of 570,000 tons per year. The Silver Jubilee celebration of the 25th anniversary of HM the King’s accession to the throne is held. The new province of Bangkok is formed after Phra Nakorn province and Thon Buri are joined. Ramkamhaeng University begins its enrollment and becomes the first open university in Thailand. Walt Disney World theme park opens in Florida, the United States.

Boonma Wongswan is the first Thai to be named general manager of SCG (1974-1976). Thung Yai Naresuan national park is declared a wildlife conservation area. “Lucy,” a skeleton aged around 3 million years, is discovered in Ethiopia.

1971 19741963 1966

1962 1964

1962- 1974

1967 1972


SCG History

Thai History

World History

1975 - 1986

1976 1979

1975 1978

1981 1985

1980 1983

Sommai Hoontrakool becomes SCG’s sixth general manager (1976-1980). SCG rescues Siam Kraft Co., Ltd., a financially troubled manufacturer of kraft paper, marking the beginning of SCG’s paper business. Magic Land, an outdoor theme park, is opened. Steve Jobs and Steve Wozniak establish Apple Computer. In the U.S., National Aeronautics and Space Administration (NASA) launches Enterprise, the world’s first space shuttle.

The Siam Nawaloha Foundry installs Thailand’s first automated system to produce diesel engine parts and automotive parts. Construction begins on Taksin Bridge across the Chao Phraya River from Bangkok to Thonburi. To stem population growth, China implements its “one-child policy.”

Installation of Kiln no. 2 at Kaeng Khoi plant increases cement production capacity to 1,100,000 tons per year. Prime Minister Kukrit Pramoj’s government establishes diplomatic relations with China. Margaret Thatcher becomes leader of the Conservative party of the United Kingdom.

The Siam Kubota Diesel Co., Ltd. establishes a joint venture with Japanese company Kubota Co., Ltd. to produce small diesel engines, the first-ever joint venture for SCG. The Construction Materials Marketing Company changes its name to Siam Cement Trading (SCT) and operates SCG’s international trading business.Thailand and Vietnam sign civil aviation, trade, economic and joint-research agreements. Illinois Bell Telephone Company launches the world’s first mobile phone system. In the U.K., Louise Joy Brown is the first baby to be conceived by in virto fertilization.

Kiln No. 6 with cement production capacity of 1,600,000 tons per year is installed at Tha Luang plant. The government offers drilling concessions for natural gas in the Gulf of Thailand, the first use of natural gas in Thailand. U.K.’s Prince Charles marries Diana Spencer. IBM launches the personal computer through Microsoft MS DOS software. The word “Internet” is coined.

Paron Israsena Na Ayudhya is appointed SCG’s eighth president (1985-1992).McDonald’s opens its first branch in Bangkok. Back to the Future premieres in the United States and becomes the most successful film of the year worldwide. The ozone hole is discovered over Antarctica.

Charas Xuto becomes SCG’s seventh president (1980-1984), and the first to be promoted to the post from within the organization. With global oil prices soaring, protests are held at Sanam Luang. General Prem Tinsulanonda becomes prime minister.CNN, a 24-hours-a-day news station, starts broadcasting. The Pac-Man arcade game is launched.

Bangsue plant ceases all production. The opening ceremony for the new, 11-story head office building at Bangsue marks SCG’s 70th anniversary. SCG expands its business into the chemicals sector by establishing Thai Polyethylene Co., Ltd. The first ATM is introduced by Siam Commercial bank. Japanese company, Nintendo Co., Ltd., puts its family computer on the market.

(From left – 1st image) Prime Minister Kukrit Pramoj, and General Chatichai Choonhavan, Minister of Foreign Affairs, meet Mao Zedong in the People’s Republic of China; (2nd image) The space shuttle Enterprise during the rollout activity at a manufacturing facility in Palmdale, California; (3rd image) Construction of Taksin Bridge, known as Sathorn Bridge; (4th image) Bangsue headquarters office building; (5th image) Thailand’s first McDonald’s in Bangkok’s Amarin Plaza; (6th image) Equipment used to drill for natural gas in the Gulf of Thailand.


SCG History

Thai History

World History

1987 - 2002

A joint venture with TileCera Inc. allows SCG to enter the ceramic tiles market in the U.S. The Siam Cement Industrial Land Co., Ltd. is established to support the expansion of SCG’s affiliated companies and joint ventures. Construction on the Rama VII Bridge, linking Bangkok and Nonthaburi provinces, begins. West Germany is reunited with East Germany after the demolition of the Berlin Wall.

Chumpol NaLamlieng is appointed SCG’s ninth president (1993-2005). Four companies are established: The Siam Refractory Industry Co., Ltd.; The Siam Pipe Products Co., Ltd.; The Siam Fiberglass Co., Ltd.; and Siam Cement Myanmar Trading Co., Ltd.Thaicom 1, Thailand’s first communication satellite, is launched from a base in South America. The Chaipattana aerator, HM the King’s invention, receives a patent from the Intellectual Property Department in Thailand. Israel and the Vatican agree to begin diplomatic relations.

Siam Toyota Manufacturing Co., Ltd. begins producing automobile engines.Thai CRT Co., Ltd. is formed to produce cathode ray (TV) tubes.The Siam Sanitary Fittings Co., Ltd. is established to produce sanitary ware.Thailand celebrates HM the King’s 60th birthday. Rama IX Bridge opens to traffic. The world population reaches five billion people.

Khao Wong plant begins operations. Featuring the world’s largest kiln and most advanced technology, it boasts cement production capacity of 3.6 million tons annually. Bangkok hosts the Miss Universe contest. The government introduces a Value Added Tax (VAT). Alec J. Jeffreys discovers DNA fingerprinting in the U.K.

SCG is voted “Most Ethical and Veritable Company in Asia”, according to a survey conducted by Asian Business Review magazine. Prince Hitachi of Japan and his royal consort visit SCG’s Research and Development Center in Bangkok.The Golden Jubilee ceremony for the 50th anniversary celebrations of HM the King’s accession to the throne is held.Boxer Somrak Khamsing wins Olympic gold, Thailand’s first ever. A sheep named “Dolly” is the first mammal to be cloned.

After the Asian economic crisis of 1997-98, SCG restructures the organization into five core business units (Chemicals, Paper, Cement, Building Materials and Distribution).SCG issues debentures, which attract overwhelming public interest and stimulate private bond markets. The BTS Skytrain begins service. The People’s Republic of China launches its first manned spacecraft, Shenzhou-9.The world population reaches 6 billion people.

The Siam Cement (Lampang) Co., Ltd. is established with annual production capacity of 2.1 million tons.Seven companies in SCG receive Industry Standard - ISO 9002 certification for their quality systems.The Thai–Lao Friendship Bridge over the Mekong River linking Nongkhai with Vientiane opens. Seven years in the making and involving 15,000 workers, the undersea tunnel connecting the U.K. with France beneath the English Channel receives traffic.

SCG reacted to a major regional financial crisis by refocusing on businesses in which it specialized, carefully managing production costs and emphasizing exports. It also had a policy to retain all staff. A massive financial crisis leads to the devaluation of the baht. Tiger Woods wins the Masters golf tournament, the youngest person ever to win it. The first Harry Potter book by J.K. Rowling is published.

1990 1993

1987 1992

1996

1994 1997

1999

(From left – 1st image) Rama IX Bridge; (2nd image) The Chipattana aerator; (3rd image) Firemen in an exercise on the French side of the Channel Tunnel; (4th image) A marathon held to celebrate the official opening of the Thai–Lao Friendship Bridge; (5th image) Somrak Khamsing (far right) and other athletes who won Olympic medals during a parade in Bangkok celebrating their return; (6th image) The BTS Skytrain.


SCG History

Thai History

World History

2003 - 2013

2004 2009

2003 2006

2011

2010 2012

SCG is invited to join the Dow Jones Sustainability Indexes (DSJI). SCG Distribution opens over 20 branches of its redesigned Cementhai HOME MART stores. The Metropolitan Rapid Transit (MRT) subway system begins service. A violent earthquake, magnitude 9 on the Richter scale, unleashes a tsunami that kills over 5,000 people along the Thai Andaman coast.Mark Zuckerberg launches Facebook, a social network that later becomes one of world’s most popular Internet sites.

SCG Experience opens at the Crystal Design Center in Bangkok; it provides consultancy services for house construction and building technology. The BTS skytrain opens Krung Thonburi and Wongwien Yai stations to link Bangkok to Thon Buri.World Health Organization (WHO) declares the outbreak of swine flu (H1N1 influenza virus). U.S. President Barack Obama is inaugurated.

Reuters, US Institutional Investor, FinanceAsia magazine and the SET Awards 2003 recognize SCG as a leader in corporate governance. Thailand hosts the Asia-Pacific Economic Cooperation (APEC) Summit. China lends two giant pandas, Lin Hui and Chuang Chuang, to Thailand as “friendship ambassadors.”The United States declares war against Iraq.

Kan Trakulhoon is appointed SCG’s tenth president. The Siam Cement Group modernizes its brand with the name SCG.Waste Heat Power Generator (WHG) systems begin operation at the Lampang plant, transforming waste heat from cement production into electricity.Monarchs or their representatives from 25 countries attend the 60th anniversary celebrations of HM the King’s accession to the throne.Suvarnabhumi International Airport opens.North Korea tests its first nuclear weapon.

SCG joins the BOI Fair. Its pavilion wins the popular vote and the Best Pavilion Award. Thailand suffers from its worst flood crisis in decades. An underwater earthquake in Japan, measuring 9 on the Richter scale, causes a nuclear disaster at the Fukushima Daiichi Nuclear Power Plant.

SCG celebrates its 100th anniversary. Bangkok is the UNESCO World Book Capital City. Pope Benedict XVI resigns; Pope Francis assumes the position.

SCG hosts the Thailand Sustainable Development Symposium 2010 to share the practices of sustainable business operations. The Airport Rail Link project, which links downtown Bangkok to Suvarnabhumi Airport, is initiated. An earthquake with a magnitutde 7 on the Richter scale devastates Haiti. Myanmar holds its first general election in 20 years.

SCG hosts the ASEAN Sustainable Development Symposium.Nobel Preace Prize-winner Aung San Suu Ky visits Thailand as part of her first trip out of Myanmar in 20 years. The U.K. celebrates Queen Elizabeth II’s Diamond Jubilee. Russia becomes a member of the World Trade Organization after 19 years of negotiation.

(From left – 1st image) HOME MART store, a center of building materials products; (2nd image) Suvarnabhumi International Airport; (3rd image) The Airport Link electric train links Suvarnabhumi Airport and inner Bangkok; (4th image) Aung San Suu Kyi during her visit to a refugee camp in Tak province; (5th image) SCG volunteers help ease public hardship caused by the 2011 floods; (6th image) At the ASEAN Sustainable Development Symposium.

2013


The Pride of SCG People”SCG is dedicated to improving the lives of everyone in society as well as the environment. In recognition of its business practices, SCG has received awards

throughout its history, reflecting its commitment to high ethics, international-level standards and the principles of sustainable development.

FinanceAsia recognized SCG for having outstanding financial management that generated profits and benefits to shareholders, and also allowed for its business to be sustainable.

Financial Management

FinanceAsia named SCG a top organization in terms of the relationship between investors and management. This strong partnership resulted in continuous interest by investors in SCG.

Investor Relations

The Best Practice on Corporate Governance Award for the Large Public Companies Category for the first time in Thailand for conducting business with transparency and fairness.

The first in Thailand to receive HM the King’s Trophy for Best Practice of the Sufficiency Economy in the Large Enterprise Category.

A Role Model in Corporate Governance

Best Practice of Sufficiency Economy

Thailand Corporate Excellence Awards for seven consecutive years for its continued commitment to development of product and service innovations for customers.

Global Sector Leader in Building Materials & Fixtures on the Dow Jones Sustainability Indexes (DJSI) for two consecutive years.

Excellence in Innovation

A Role Model in Sustainable Development

Thailand’s most-admired company in The Wall Street Journal Asia survey and Superbrands Thailand Award for five years running by the Thailand Superbrands Council.

The first in ASEAN to be awarded the prestigious Leadership in Energy and Environmental Design (LEED Platinum) from the U.S. Green Building Council (USGBC).

SET Award of Honor in Best Corporate Social Responsibility for five years running for its dedication to raising the quality of life in every community in a sustainable manner.

Thailand Corporate Excellence Awards for 11 consecutive years for promoting and developing individuals to be talented and ethical.

The first Thai company to receive The Deming Application Prize from the Union of Japanese Scientists and Engineers (JUSE) for excellent quality management methods.

Most Admired Company

Dedication to Sustainable Environment

Commitment to Corporate Social Responsibility

Excellence in Human Resource Management

World-class Total Quality Management


The logo created in honor of the 100th anniversary is developed from the

current SCG corporate logo with an enlargement of SCG and the addition

of the “100 Years” emblem, which signifies stability, strength and the

company’s determination to move forward. The yellow ring symbolizes

SCG’s drive to be an innovative organization, while yellow, adapted from

gold, is a celebratory color representing thought and creativity.

100th Anniversary Logo

SCG’s 100th anniversary commemorative coin is made of bronze. The

white elephant logo, SCG’s original logo, appears on one side while

the other side features SCG’s 100th anniversary logo.

Commemorative Coin

The printed advertisement for the 100th anniversary conveys

the story of SCG’s journey over the past century, depicting

the company’s efforts to create a higher quality of life for the

public, as well as better living conditions and a sustainable

environment.

Print Advertisement

The stamp features a picture of the cement

plant at Bangsue, which was Thailand’s and

SCG’s first cement plant, and played a crucial

part in Thailand’s development at that time.

Commemorative Stamp

Decorative Media

Commemorative T-shirts The T-shirts feature SCG’s six “memorable

places.” The series started in 2008 when SCG

celebrated its 95th anniversary with the picture

of the cement kilns and stacks. This shirt was

followed by the guest house, loading center,

engineers’ house, and Building 1, until the

centennial anniversary (2013) shirt, which

features the royal pavilion.

To decorate SCG’s companies and factories in Thailand and abroad, SCG designed artwork

which reflects SCG’s mission over the past 100 years. The new Headquarters 3 building (“SCG

100th Anniversary Building”) forms the number “1” and signifies SCG’s dedication to create a

better quality of life for everyone, while the number “0” shows ASEAN youth, who are key to

future development, reflecting SCG’s dedication to create a better society, and the number

“0” is formed by the “Green World,” symbolizing SCG’s efforts to protect the environment.

th Anniversary of SCG



To Promote Thailand’s Image

Through its print advertisements, SCG has taken part in recording some key social and economic moments in different periods of time. The advertisements reflect

the perspectives of Thailand’s leading company toward each significant event.

Inspiring Investor Confidence



Reassurance After Major Floods of 2011 To Promote Corporate Governance To Promote Environmental Innovations

To Conserve Water On the Occasion of the 96th and 100th Anniversaries


99th Anniversary – Moving to SCG’s 100th Year” GalleryOn 7 December 2012, to celebrate its 99th anniversary, SCG held activities at its Bangsue headquarters and also at other offices across the country and throughout

the ASEAN region. In addition to acting as a celebration of its birthday, this event also marked the beginning of SCG’s 100th year of continuous operations.

Top left: Members of SCG’s Board of Directors prepare to give alms to monks at SCG headquarters. From left, they are Dr Snoh Unakul, Dr Chirayu Isarangkun Na Ayuthaya, Yos Euarchukiati, Arsa Sarasin, Dr Sumet Tantivejkul, Pricha Attavipach, and SCG President and CEO Kan Trakulhoon. Top right: A large 100th anniversary banner is unfurled to mark the beginning of the 100th year. Bottom: An exhibition organized by SCG Heritage to tell the story of SCG’s history.

Top left: A talk session in which senior employees shared their experiences at the company. Top right: SCG employees at the SCG Heritage exhibition. Middle right: SCG Ambassadors, representatives of the young generation at SCG, were selected from staff in Thailand and across the ASEAN region. Bottom right: Part of the night-time celebrations at which SCG staff demonstrated their unity. Bottom left: Kan presents SCG’s 100th anniversary flags to the presidents of each business unit and vice presidents of SCG.


Activities in SCG’s offices across the country. Top left: Flag-waving at the SCG Building Materials office. Top right: At the SCG Paper plant in Ratchaburi province. Middle left: SCG Cement’s staff at Tha Luang plant in Saraburi province. Bottom left: SCG Distribution staff at SCG headquarters at Bangsue, Bangkok. Bottom right: SCG Chemicals staff at their office in Rayong province.

Activities at SCG’s various offices in ASEAN. Top left: Flag-waving at the Cambodian main office. Top right: Performances during the celebration events at the Vietnam office. Middle right: Traditional dance at the Indonesian office. Bottom: The celebration in the Philippines.

99th Anniversary – Moving to SCG’s 100th Year” Gallery


SCG’s 100th anniversary logo as displayed on a pennant.

Board of Management, SCG

Chirayu Isarangkun Na AyuthayaSnoh UnakulSumet TantivejkulPricha AttavipachPanas SimasathienYos Euarchukiati Arsa SarasinChumpol NaLamliengTarrin NimmanahaemindaPramon SutivongTarisa Watanagase Kan Trakulhoon

Board of Directors

Chairman Director Independent Director Independent Director Director Director Independent Director Director Independent Director Independent Director Independent Director Director, President and CEO, SCG

Kan TrakulhoonChaovalit Ekabut

Tanawong AreeratchakulCholanat YanaranopSomchai WangwattanapanichRoongrote RangsiyopashKajohndet SangsubanPichit MaipoomAree Chavalitcheewingul

President and CEO, SCG Vice President - Finance and Investment and CFO, SCG and President, SCG Investment Vice President - Corporate Administration, SCG President, SCG Chemicals Vice President - Operations, SCG Chemicals President, SCG Paper President, SCG Cement–Building Materials Vice President - Operations, SCG Cement–Building Materials Vice President - Regional Business, SCG Cement–Building Materials

Remark: Kamthon Sindhvananda was an independent director until his place was assumed by Tarisa Watanagase through an appointment made at the Annual General Meeting of Shareholders in March 2013.

As of 1 April 2013.

Title: SCG 100 Years of Innovations for Sustainability

Published by: SCG The Siam Cement Public Company Limited 1 Siam Cement Road, Bangsue, Bangkok, Thailand 10800 www.scg.co.th

In collaboration with: Editions Didier Millet 11B, 11th Floor, Vanissa Building, 29 Soi Chitlom, Ploenchit Road, Lumphini, Pathumwan, Bangkok, Thailand 10330 Tel +66-2-252-2699 www.edmbooks.com

Edition: 1st Edition (2013)

Color separated by: Pica Digital Singapore

Printed by: Sirivatana Interprint Co., Ltd. 14/8 Moo 12, Bangna Trad Km 46 Road Bangpakong, Chachoengsao 24130 Thailand

ISBN: 978-981-4385-52-7 © 2013 The Siam Cement Public Company Limited All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any other information storage and retrieval system, without prior permission in writing from the publisher.

All illustrations belong to The Siam Cement Public Company Limited

Except illustrations from: - The National Archive (pages 10 left, 15, 16, 17, 18, 19 all, 22, 23 all, 27, 28 top, 31 all, 164 left and middle, 165 all, 166 left, 167 all, 168 all, 170 middle, 171 left, 173 middle).- Bangkok Post (pages 61 bottom left, 161 middle-second row, 169 middle and left, 163 left and right, 173 middle, 175 left and middle, 176 middle). - Getty Images (pages 164 right, 166 middle, 171 middle, 172 middle, 174 right, 176 right, 177 left).- iStock Photos (page 175 right).- Mary Evans Picture Library (page 12).

Original photography completed by: - Athit Perawongmetha (pages 2, 4, 8, 53 bottom, 62, 66 top, 67 left, 68 top, 69 left, 71 right, 77, 82, 83, 85, 93 all, 94, 96, 97 bottom, 101 all, 106, 107, 108, 109 top, 110, 111 top, 112 all, 113, 114 bottom, 116, 117, 118, 120, 121, 122, 123 all, 135, 149, 152) - Baramee Temboonkiat (pages 63, 71 middle, 119, 148)

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