Occupational Safety Sea Change
Local Leader Takes on Petrochem Giant
After four major fires, Yunlin County magistrate Su Chih-Fen has axed operations at the Formosa Plastics Group's sixth naphtha cracker. As Taiwan begins to take occupational safety seriously, can the petrochemical industry survive?
Local Leader Takes on Petrochem GiantBy Rebecca Lin
From CommonWealth Magazine (vol. 473 )
"Last night I was finally able to sleep better," declares Yunlin County magistrate Su Chih-Fen with a smile. Despite her upbeat mood, fatigue and stress are still written on her face.
Her sports jacket, sneakers, and disheveled hair reveal how heavily the events of last year are weighing on her. "Since July last year a dark cloud seemed to hang over my head, whenever I thought about the sixth naphtha cracker project," Su confides. In the eleven months from July 7 last year to May 18 this year, four massive blazes occurred at the Formosa Plastics Group (FPG) sixth naphtha cracker plant. (Table 1)
On May 27, Su made a decision that shocked FPG and the global industry chain that the petrochemical giant supplies. She decreed that, starting June 1st, operations would be suspended indefinitely at the chloroethylene (VCM) plant at the FPG complex in the Mailiao Industrial Zone, as well as the Nan Ya Plastics Corp. complex in the Hai Fong Industrial Zone.
In its 40-year-history FPG has never been forced to suspend operations on such a large scale.
With her decision Su set a precedent. It is the first time that a local government in Taiwan has used its powers to order a multinational-level petrochemical concern to halt operations. The economic impact of the suspension will be tremendous.
The Nan Ya Plastics Hai Fong complex is the world's fourth largest producer of ethylene and the third largest producer of bisphenol-A. Both chemicals account for a major share of Nan Ya Plastics profits. FPG told CommonWealth Magazine that due to the current suspension, the company is losing NT$34.4 million per day. (Table 2) Panic hoarding by downstream manufacturers has already become a concern.
Political Sea Change
"My friends warned me to be cautious about my own safety," Su revealed in a nighttime interview at the high-speed railway station in Taichung. One hour into the interview Su finally admitted under how much pressure she is. "FPG really has very good connections. It's very, very well connected 'from the top to the bottom'," Su notes gravely.
Why does she dare to make a decision of such far-reaching implications? And why now?
In comparison with the fire that engulfed the sixth naphtha cracker last July, the blaze in May this year was minor. Why wasn't FPG heavily penalized last year? And why did Su issue a suspension order this time, on top of a NT$5 million fine?
Although Su does not openly admit it, the overall political climate has changed.
First of all, on April 22 President Ma Ying-jeou stepped up to the firing line, declaring that he no longer supports Kuokuang Petrochemical Technology Company's plans to build a new plant in Jhanghua County, and that the island's petrochemical industry needs to upgrade toward high-end products and technologies.
The Jhanghua plant would have potentially turned Kuokuang into FPG's biggest competitor. But even though the Kuokuang project is indefinitely on hold, FPG has gained little in regards to its own sixth naphtha cracker.
On May 12, leaks from liquefied petroleum gas and isodecanol pipelines caused a fire. Minister of Economic Affairs Yen-Shiang Shih, usually known for his good-tempered, gentlemanly image, did not mince words this time, declaring: "No occupational safety, no petrochemicals." He also advocated a thorough investigation into the cause of the blazes and heavy punishment in line with the law.
Seeing that top government officials were changing course, lower level officials have been emboldened.
Following the May 12 fire, even Lien Chin-chang, deputy director general of the Industrial Development Bureau under the Ministry of Economic Affairs, personally helped the Yunlin County government process the necessary documents and interpret the law. The documents reached the central government on May 17 and were sent back to the Yunlin County Government on May 19. In just three days experts had confirmed that shared pipelines are an extension of factory facilities and therefore fall under Paragraph 3 of Article 21 of the Factory Management Act. The said article stipulates that municipal city or county governments may suspend operations and demand improvements in the event of accidents that seriously affect a plant or public safety.
In a meeting of the Ministry of Economic Affairs, Lien openly displayed his indignation: "If we at the Ministry of Economic Affairs have a sword of power, I'll definitely use it to chop them down."
Wielding the Sword of Power
The Factory Management Act was amended in June last year. But when the Yunlin County government asked the Ministry of Economic Affairs for an interpretation of the legal situation after the July 7 fire at the naphtha cracker, the ministry nonchalantly brushed off the request, saying, "Without relevant subordinate legislation, the Act cannot be applied."
Without a doubt, the central government's subsequent about-face boosted the courage of the Yunlin County government.
Su acknowledges that local governments need to completely "comply with the law" when imposing fines or punishment.
Therefore, she asked Democratic Progressive Party whip Ker Chien-ming to hold a closed-door meeting in Taipei on occupational safety at the sixth naphtha cracker plant. Two days before terminating plant operations, Su invited officials from 14 cabinet agencies to the meeting, including the Bureau of Energy, the National Fire Agency, the Construction and Planning Agency and the Environmental Protection Administration. The central government officials, Su and her county government team debated how the law could be applied best to address a list of 15 problems.
Another Naphtha Cracker Accident in the Making
The next day, the heads of the Yunlin County Government's Economic Affairs Department and Environmental Protection Bureau attended a meeting on "Supervisory Actions for Safety Management of the Formosa Plastics Mailiao Industrial Zone" chaired by Vice Minister of Economic Affairs Hwang Jung-chiou. In that meeting the central government did not voice any objections to the punishment that the Yunlin County government was planning to impose.
That night, Su called in her supporting staff for a roundtable discussion to figure out how far the Yunlin County government could go. "Find out where the limits are, and I'll make the decision," she told the meeting.
"They (county government officials) and I spent so much time on this. From last year until now, we held at least 100 meetings to discuss occupational safety at the sixth naphtha cracker," Su recalls. She not only had to convince the central government, but also needed to win the support of her own staff. "We held so many meetings because I wasn't willing to force any civil servants to stamp their chops on anything they weren't confident in."
Following painstaking communication and confirmation inside and outside government, and encouraged by the central government's change of course since April, Su finally on May 27 made the far-reaching decision to suspend operations at the affected plants.
Although the move will deal a heavy blow to the Taiwanese economy, Su insists that the safety of Yunlin residents must come first.
Su recalls how the fire was still raging wildly when she visited the scene on May 12. While Su was originally standing upwind behind the advancing fire line, she was splashed with water from the fire hoses when the wind suddenly reversed.
Standing in the wind, she recalled how an expert warned her in April that another accident was bound to happen at the FPG sixth naphtha cracker plant this summer.
Pointing to his experience with occupational safety meetings at the FPG plant during the previous year and his understanding of FPG corporate culture, the expert remarked that the petrochemical giant was not alert enough to occupational safety. No one expected his words to come true just a little over one month later.
National-level Survey Needed
"I often wonder what should be done to make the central government pay attention to this problem, and to let top management at FPG headquarters know that occupational safety is not a kid's game," muses Su. That's why she decided to heavily penalize FPG, to make them weigh the costs and benefits of their lax attitude.
FPG can only apply for a resumption of operations if its pipelines meet the safety standards of advanced nations such as the American Petroleum Institute's piping inspection code API570. On top of that, the government needs to conduct a national-level survey to clarify the true causes of the fires.
Along with the Minister of Economic Affairs, Su is insisting that without occupational safety, there can be no petrochemicals. But given the current political trend, will Taiwan still be able to have a petrochemical industry even if occupational safety is ensured?
Su's decision has also caused a subtle shift in the relationship between government and the petrochemical industry. Su believes, "As a local government we need to take on a monitoring role and aggressively establish a monitoring relationship that puts us on an equal footing with them."
Such a "new relationship" is sure to pose a new challenge for FPG and other petrochemical companies.
Translated from the Chinese by Susanne Ganz