The industrial age is coming in a hurry to the fishing village of Kwangyang on the southwestern coast of the Korean Peninsula. Graves have been moved, land reclaimed from the sea and foundations are being dug for a giant steel plant that eventually could expand South Korea's production capacity by almost 40 percent.
It will be the second integrated plant of the Pohang Iron and Steel Co., known here as Posco, the state-controlled enterprise that in a little over a decade has turned South Korea into the world's 15th-largest producer of steel.
Posco has moved to expand despite five-year quotas slapped onto its exports to the United States and a 10 percent downturn expected this year in South Korean steel exports as a whole.
Officials here say that a steadily growing market at home will absorb most of the new plant's output. Despite its production capabilities, South Korea is also a major importer of steel and will remain that way even with Kwangyang in operation, they say.
Nonetheless, the new plant, expected to begin operation in 1987, has been condemned abroad as an unwelcome addition to an industry that already is plagued by overcapacity worldwide.
The Koreans have an answer for that. The problem "is not an oversupply of efficient steel capacity," said Kye Mook Jun, director general of the Ministry of Trade and Industry bureau concerned with the South Korean plants.
According to Iron Age magazine, Posco was the world's most efficient producer of steel on a personnel basis in 1983, turning out 582 tons per employe, 25 percent more than the number-two-ranked company, Japan's Kobe Steel.
South Korea's energetic workers are paid much less, too -- a 1982 survey found the average U.S. steel worker was making $23.40 an hour, while his counterpart here got only $2.70.
South Korea's rush into heavy industry in the 1970s was an uneven success. In petrochemicals and heavy machinery, it went too far and had to retrench. But steel turned out to be a textbook case of Third World industrial development.
In the 1960s, the steel industry here was a collection of backyard-style operations melting down scrap left from Japanese colonial times and the Korean war or bought from foreign countries.
But late in the decade, government leaders decided that modern steel production was indispensable to their plans for the economy. Turning aside objections that other developing countries had made this decision and failed, they decided to use Japanese war reparations and low-interest loans to build the country's first integrated facility, or one that could turn iron ore into finished steel under one roof.
In 1973, officials christened phase one of the plant, situated on Pohang Bay on the peninsula's southeast corner and furnished with state-of-the-art Japanese equipment. "Steel Stands for National Strength," read a calligraphy slogan presented to its management by President Park Chung Hee.
The timing of the plant's opening could not have been better. Worldwide demand for steel in the 1970s was strong, and South Korea's home economy and export machine were gaining steam. Every high-rise office building going up in Seoul needed a steel skeleton, and every Korean car produced needed steel plate.
The Pohang plant's capacity began at a modest 1 million tons a year. By 1983, in three major phases, it had expanded to 9.1 million tons.
Pohang has become a national showcase since then, attracting an unbroken stream of admiring foreign visitors. The latest was Pakistani President Mohammed Zia ul-Haq, who took time during a state visit earlier this month to fly down from Seoul by helicopter for a tour.
Today, the South Korean industry employs about 65,000 people. In addition to Posco, which controls all but one-third of its total 14-million-ton-a-year capacity, South Korea has five small steel mills, six pipe manufacturers and 25 to 30 processing companies.
By 1984, South Korea was exporting $2 billion worth of steel a year, which is 5.6 million tons, or about 40 percent of its total production. The United States and Japan were its most important foreign customers.
As with its other successful export items, South Korea focused on the high-volume, lower end of the market -- wire, steel plate for cars and electrical equipment, pipes for drilling oil wells.
This success provoked resistance in the United States, where aging plants and high wages had helped put the steel industry into serious trouble. Dumping complaints mounted, with at least five filed in 1983. In some, U.S. authorities dismissed the allegations; in others, they imposed duties of up to 5 percent.
The Japanese industry, which had provided the technology the Koreans were applying so successfully against Japanese steel on world markets, also became concerned. Tokyo steel executives began talking disapprovingly of "the boomerang effect."
When Posco announced plans for Kwangyang, the protests abroad were loud. The plant's phase one, to begin production in 1987, would have a 2.7-million-ton capacity. A second phase at an undetermined date would boost output capacity to 5.4 million tons. It would be a continuous-casting facility, occupy a 2,200-acre site and use robots in places.
The U.S. Export-Import Bank, citing a "serious oversupply" in steel, announced it would not finance equipment for the project. The Japanese declined to get involved, but changed their minds when the Koreans turned to Western Europe and it became clear that the plant would go up with or without Japanese help.
Meanwhile, the United States decided it had to control steel imports. Late last year, South Korea agreed to hold its share of the U.S. market to 1.9 percent for five years. That meant a 20 percent cutback from 1984's record level of 2.4 percent, which had meant sales of about $750 million, according to Korean statistics.
South Korean newspapers still are complaining about it. South Koreans argue that, in view of their country's defense burden and still underdeveloped status, it deserves special understanding from its patron, the United States, and should not be penalized for being successful.