On March 14, POSCO’s newly elected Chairman, Ohjoon Kwon, held a media session with 50 reporters to share his feelings on being the new CEO and also his vision for the future of POSCO. On this day, Chairman Kwon announced that “he would improve the financial structure through selective and focused decisions.” Read on to learn insights on Chairman Kwon’s views on the future direction of POSCO, as well as his values and philosophy.
Reorganize POSCO’s Overseas Business to Focus on Steel Business
Pictured here: Chairman Kwon speaking to reporters on March 14
▶Do you think entering international markets is still valid today considering the delay of establishing an integrated steel plant in India, launching FINEX business in China, and beginning phase 2 construction in Indonesia?
It is true that some of the businesses are delayed. First of all, because India tends to have many decentralized policies, we have had to negotiate with many different bodies regarding business implementation and also had communication difficulties due to the cultural differences. However, the visit of President Geun-hye Park made a lot of improvement in terms of obtaining mineral rights and adjustment of land. Based on this, I think there will be acceleration in administrative implementation.
In China, they are planning to launch FINEX business. FINEX is the unique technology of POSCO and I think it is the core business that needs to be implemented continuously when considering the trend of future technology and ore processes. Therefore, we should continue to take the lead in this area.
In the case of Indonesia, regular operation has been delayed for about 2 months due to the unexpected accident, but it has stabilized again with the last month. It will be difficult to achieve surplus due to the loss of approximate 0.6 million tons of production caused by the accident, but we will do our best to make a gain next year.
Pictured here: Chairman Kwon discussing the future of POSCO at the media session on March 14
Synergy of POSCO’s Technology Buttressed by Marketing
▶POSCO has been emphasizing improvement of the competitiveness of steel which is its core business. Please elaborate on the improvements in more detail and also explain what the role of the Steel Solution Center will play in the future.
Pictured here: Chairman Kwon holding his first executive meeting on March 18
The core of POSCO is its steel business. Therefore, for POSCO to increase its competitiveness, it should strengthen its role as a leading steelmaker. To achieve this, I am planning to integrate marketing strategies to POSCO’s latest technology to create a synergy effect. The Steel Solution Center was also founded with this purpose in mind. Providing customers with integrated marketing and technology solutions will transform the company into a more customer-oriented company. By combining POSCO’s superior technology with the proper marketing strategies will allow us to fulfill customer demands by offering not only the products and techniques that customers want but a total solution.
Researchers must Understand the Field to Provide Customer-Oriented Solutions
▶According to the researchers at RIST, Chairman Kwon considers marketing side first when developing technology. What is your philosophy behind technology development and marketing?
Pictured here: Chairman Kwon visiting Pohang Works to greet employees right after his inauguration
RIST, as well as, POSCO’s subsidiary technology research centers, all carry out research for POSCO. Basically, I think any research center that belongs to a company should commercialize whatever technology they have to contribute to profit making. The series of EVI activities that POSCO does are an example of this. In order to achieve more practical and value-oriented research, researchers should find answers and be close to the actual sites. Furthermore, a system which allows engineers who are working on site to be able to create and apply their technology should be established. Moreover, communication with marketing staff and customers is very important. No matter how good a product is, if it is not aligned with customer needs, it won’t be sold. Therefore, POSCO is putting researchers in marketing departments to produce solutions that address customer needs.
Evaluation of Internal Competitiveness, Market Attractiveness, Entry Barriers and More
▶Are there specific plans for improving financial structure against the decline of steel demand and an oversupply caused by the global economic depression?
Pictured here: Chairman Kwon delivering his speech at the 46th Shareholder’s Meeting on March 14
Presently, the biggest challenge for POSCO is improving financial structure. First of all, some businesses we think have little correlation will be listed on the stock exchange and restructured. Going forward we will try get our business direction aligned with shareholders in order to get more investments and improve debt ratios. We also have plans to re-examine existing businesses. We will consider internal competitiveness, market attractiveness, entry barriers and more to assess the businesses we should focus on and continue.
▶As the 8th CEO of POSCO, how will you ensure equality for POSCO’s election & succession process?
Starting this year, a more fair system for CEO succession was performed. Outside directors were the core members of the Succession Council and only one internal director was involved. Chosen outside directors were not influenced by any external stakeholders. In addition, the candidate selection committee was composed of only outside directors to ensure fairness. I also went through a fairly rigorous interview process which made me feel like I was doing college admissions interviews again (laughs).
▶What are POSCO’s views on the changing domestic steel industry?
Until now, POSCO has been sort of the elder brother of the domestic steel industry. However competition has increased in the domestic market now. While there is no longer a monopoly, the increase in competition has helped Korean steel business become more advanced. Through healthy competition, the domestic steel industry has been able to grow. Cooperation and healthy domestic competition will help Korean companies become more globally competitive. Furthermore, cooperation and involvement in Steel Associations is integral to addressing environmental issues such as carbon emissions.