① BUSINESS   #WTPProducts #CI2020 #Lighthouse #ClientCompanies #BenefitSharing #INNOVILT #PosART #AffiliatesBusiness

■ POSCO’s Competitiveness — Shining Brighter in the Dark
2019 was a cruel year for steel companies around the globe. POSCO was also under pressure of Roll Margin too. However, POSCO saw a smaller profit decline compared to its major global competitors, thanks to its high value-added World Top Premium (WTP) products. Sales of WTP products increased from 9.61 million tons last year to 10.19 million tons this year, protecting profitability.

Another factor that helped POSCO overcome crisis was cost reduction activities. POSCO has been intensively implementing the Cost Innovation 2020 (CI2020) program — a cost reduction program — across the whole company since January. This resulted in saving 240 billion KRW in the third quarter, exceeding this year’s target of 230 billion KRW. POSCO expects to save more than 300 billion KRW by the end of this year through verification of quarterly results in five areas — Raw materials, Facilities, Processing, Budget, and Smart. This enables cost reduction without compromising employee welfare benefits.

It is estimated that the ‘100 Reform Tasks’, which was launched on the 100th day of POSCO CEO Jeong-Woo Choi’s appointment in November last year, generated a financial value of 1.24 trillion KRW. This achievement is significant in that, other than the 240 billion KRW saved via CI2020, it includes 800 billion KRW obtained from restructuring major businesses like LNG and E&C and the readjustment of long-term underperforming businesses.

With its increased premium product sales and cost reduction efforts, POSCO topped the WSD (World Steel Dynamics) competitiveness ranking for 10 consecutive years. Especially this year, POSCO made it on the ‘Lighthouse Factory’ list, which is announced by the World Economic Forum (WEF). POSCO is the first Korean company to be listed here, recognized for its accomplishment in applying artificial intelligence technology at its Steel Works to improve steel productivity and quality. Among the applied technology is the automatic coating weight control of CGL (Continuous Galvanizing Line) and the Smart Blast Furnace. POSCO has been credited as a pioneer of the manufacturing industry — leading the Fourth Industrial Revolution. (See more about the Lighthouse Factory)

■ POSCO’s Strength for 51 Years — Client Companies ‘With POSCO’
In these dark times, client companies mean a lot more to POSCO. POSCO, celebrating its 51 years in the industry, has broken the one-billion record in crude steel production. Working on strengthening shared growth and win-win cooperation with client companies, POSCO has gone beyond just supplying steel products. POSCO has been devising and providing technical solutions to its client companies as well. This technical solution providing service is called ‘solution marketing’. The number of solution marketing tasks for clients this year is estimated to be 260. Among them, 60 cases of solution marketing tasks were for SME clients, showing a 60% increase compared to 38 cases of last year. To drive the growth of not only large clients, — such as shipbuilding, automobiles, and home appliances — but also of SMEs, POSCO catches the VOCs and needs of clients and then supports in developing products and technology accordingly.

■ Benefit Sharing — Reducing Burden And Enhancing Benefits
There is a saying, “If you want to go far, go together.” To put these words into practice, POSCO introduced ‘Benefit Sharing’ in 2004 for the first time in Korea, and is pursuing shared growth with business suppliers. ‘Benefit Sharing(BS)’ is a win-win system where improvement tasks — such as cost reduction and quality improvement — are performed with suppliers, and the resulting benefits are shared as agreed in advance. This year, POSCO and its suppliers have conducted 175 BS tasks, and the resulting benefits are estimated to be 30 billion KRW. This significant number is due to several measures taken, such as expanding task types and rewarding 50% for tasks that failed as well. These measures helped facilitate the participation of suppliers. The number of days required for administrative processing was reduced from 600 days to 190 days.

Additionally, a new “e-catalog system” was launched, allowing suppliers to promote their products freely. In the past, suppliers had to visit POSCO in-person to promote their products. But now, anyone can register product information on the system for promotion — anytime, anywhere. For those suppliers who want to start their first deal with POSCO, there couldn’t be a better way. POSCO received around 4,600 new product information from 850 suppliers through this e-catalog system and signed with 1,020 of them. Also, thanks to regular supplier sourcing, the number of days required for registering was shortened from 144 days to 23 days.

POSCO’s “Business with POSCO” isn’t just about POSCO thriving alone. Instead, POSCO aims to create value together with its business partners and become a corporate citizen, laying the foundation of each business.

■ “Premium Brand” of Steel Products
An interesting story first! A few weeks ago, POSCO built a house using INNOVILT for Korean YouTube star Pengsoo. INNOVILT is POSCO’s premium brand of construction materials launched this year. Using the best technology and know-how accumulated from other businesses like automotive steel and home appliance steel, POSCO has created a construction material brand that is credible to ordinary consumers. INNOVILT acts as a ‘certificate’ — given only to materials made with 100% high-quality POSCO Steel. (See more about Pengsoo House and INNOVILT)

PosMAC and PosART, used in Pengsoo House, are awaiting evaluation to become INNOVILT products. PosART was awarded ‘Innovation of the year’ from World Steel Association (worldsteel) in October, thus proving its value as a premium material. PosART is a high-resolution inkjet print steel sheet, which is a result of POSCO C&C’s inkjet printing technology combined with POSCO’s steel. PosART is capable of printing full-color images of desired images in desired sizes. Since its commercialization last year, sales have increased 37 times in just one year. (See more about PosART)

■ Rapid Strides in Global Infra and New Growth Businesses
In 2019, the steel business struggled, while other POSCO affiliates — including the Global Infra business — were quite successful. In addition to direct involvement in food production, POSCO INTERNATIONAL established a global grain value chain ranging from processing, storage, transportation, to terminal operations. POSCO INTERNATIONAL holds the largest agricultural trade volume in Korea with grain trading volume expected to reach 5 million tons this year — an increase from last year’s 4.37 million tons. POSCO also completed The Ukraine grain export terminal in September before any other Korean company. The annual capacity of the terminal is 2.5 million tons, which accounts for about 21% of Korean grain demand. Another core business of POSCO INTERNATIONAL, the Myanmar gas field, has increased its production from 144.4 billion ft³ last year to 149.2 billion ft³ Q3 this year, after China’s gas pipeline recovery in November last year.

POSCO CHEMICAL has shown tremendous progress this year. POSCO CHEMICAL was created with the merge of POSCO ESM and POSCO ChemTech originally in charge of cathode and anode businesses. POSCO CHEMICAL is strengthening its competitiveness by improving productivity, reducing costs, and increasing sales. This year, POSCO CHEMICAL cathode production capacity expanded to 15,000 tons, an additional 6,000 tons from last year. The anode production capacity expanded to 44,000 tons and added 20,000 tons to last year’s figure. In addition to the existing Gumi plant, Gwangyang and China plants were established to enable growth in the cathode business. While for the anode business, the first phase of the Sejong’s 2nd plant was completed soon after the 1st plant, driving the secondary battery business.

② SOCIETY   #POSCO1% #Volunteer #POSCOConcert #Venture #YouthEmployment

■ 2019 — A Year ‘Filled’ With ‘Sharing’
POSCO’s 2019 in terms of society could be put into these phrases, “practicing sharing” and “cultivating dreams of the youth”. In 2019, POSCO 1% Foundation was active more than ever. 98% of POSCO executives and employees participated in the POSCO 1% Foundation donation — 44% p higher than last year — and it is expected to raise 9.3 billion won by the end of this year. Founded in 2013, the POSCO 1% Foundation has become a representative employee-participating foundation in Korea. POSCO 1% Foundation is contributing to creating a better world, and this year, it has focused on supporting future generations, multicultural families, and the disabled. Some of the programs that have been under progress are as follows — a participatory art program, ‘1% Art School’ ; A science class with experiments, ‘Science Beyond Imagination’ ; Support for immigrants to visit homelands ; Remodelling of welfare facilities for the disabled, ’Space of Hope’ ; and assist devices support for the disabled, ‘Wings of Hope’.

Volunteer activities, which were like daily routines for employees, were reorganized to become Talent Volunteering, which could be of real help to the community. This action was practiced so that employees could provide more meaningful and rewarding volunteer activities as corporate citizens. In addition to the existing volunteer groups, — such as the Clean Ocean, electric repairing, tutoring, and photo volunteer corps — 25 new talent volunteer groups of various sectors including law, landscaping, cooking, and financial education were established this year. Employees are expected to utilize their talents and job-related knowledge in these groups. There are 23 volunteer groups in Pohang, 19 in Gwangyang, and 12 in Seoul, amounting to a total of 2,762 employees this year, which is an increase of about 1,000 from last year. POSCO’s employees spent about 440,000 hours in volunteer activities this year alone, which equals to 17,000 employees participating more than two hours each month.

Meanwhile, POSCO held free concerts for citizens in Pohang, Gwangyang and Seoul. Under the name of “Corporate Citizen POSCO Culture Concert” this year, diverse music genres such as trot, classical, and opera were selected, and the number of performances increased to once a month. Last October, many popular trot singers — like Ga-In Song and Yeon-Ja Kim — appeared on stage, resulting in intense competition for tickets and huge crowds near the venue. The number of audience at this year’s POSCO concert was 36,114 — recording 10,000 more from last year’s 23,749.

■ Supporting the Dreams of Youths And Ventures
POSCO is also making efforts to realize the dreams of ventures and creating jobs for youths. POSCO established the Industry-Academy-Research Cooperation Office and specified its plan to operate the ‘POSCO Venture Platform’, a large scale investment. Venture Valley, supporting venture development, secures incubation centers in Pohang and Gwangyang based on POSCO’s Industry-Academy-Research infrastructure and helps the start and growth of venture companies. Venture fund supports their growth by investing in the Venture Valley companies and promising ventures.

POSCO’s investment and support for venture companies have been going on for quite a while. In 1997, POSCO established POSTECH Technology Investment (former POSCO Technology Investment) to promote venture companies and has been engaging in mentoring and investment activities through the Idea Marketplace (IMP) since 2011. IMP is a venture development program where POSCO conducts training for startups and venture companies. By 2019, POSCO has fostered 379 venture companies through IMP, including 98 direct investments amounting to 16.9 billion KRW. Some companies that received this direct investment were listed on the KOSDAQ, and some received the Presidential Award at the national startup competition.

Also, POSCO is operating a variety of youth employment programs including the ‘POSCO Youth Dream’, which consists of practical job training, an AI and Big Data academy, and a startup incubating school. The number of participants this year was 1,328, an eight-fold increase from last year. 430 of them were employed, and 39 opened own businesses.

③ PEOPLE   #WorkLifeBalance #8-5 #HarmoniousManagement&Labor #BusinessPartners #Welfare #DayCareCenter

■ Work And Life Balance of POSCO Employees
As “Work and Life Balance” has become a critical condition of a good workplace, POSCO also took an active part in fulfilling employees’ balance. Since November, POSCO has introduced an 8 to 5 work schedule (8-5 system) to allow employees to spend their evenings on self-development or with their families.

The 8-5 system is a result of POSCO’s 2019 wage and group negotiation. In addition, the following measures were carried out as well — Basic wage raise ; Maintenance technology incentive raise to improve the conditions of maintenance workers ; Reorganization of job position ; Extension of infertility treatment leaves from 5 to 10 days per year, and partial cost support for employees who are having difficulty in pregnancy ; and extension of limit in children’s educational expenses to reduce burden of employees with two or more children.

■ The “Expert Young Board”
Another new thing at POSCO this year is the ‘Expert Young Board’. The former Young Board was participated by the heads and managers of each department and research lab, but from this year, it has been expanded to employees working in the field — experts who are in charge of operation and maintenance at steel mills. The age limit has also been greatly reduced. In their first meeting with Chairman Jeong-Woo Choi last September, the Young Board freely discussed issues of the steel mill, including solutions for site safety, activating communication between generations, strengthening the motivation of field workers, and so on. POSCO’s first Expert Young Board is expected to be an important communication channel for expanding communication areas and delivering the opinions of the field to the management.

■ The Best Welfare for Business Partners
2019 was also a year that POSCO showed ‘true partnership’ with business partners. POSCO established an integrated operational system to extend the usage of recreation facilities to business partners. As a result, the annual number of days available to business partners increased significantly from 0.4 days last year to 4.8 days this year. To implement this, POSCO secured 350 additional recreational facilities nationwide, including the “With POSCO Residence”, which was used as accommodation for the press at the time of the Pyeongchang Winter Olympics. POSCO is also working on improving the on-site welfare facilities and office environment of business partners. Following 1,176 locations last year, 786 sites have been further improved this year — all used by POSCO’s business partners.

POSCO is also expanding children’s daycare centers — which is of primary interest for married employees. POSCO plans to build daycare centers that can be used by all employees and business partners from Pohang, Gwangyang, and Seoul. Especially, in 2020, a second daycare center that can accommodate 220 children — 100 more children compared to the first daycare center where 120 children attend — is to be built in Seoul. POSCO has also invested 19 billion KRW in constructing daycare centers in Pohang and Gwangyang for the children of POSCO employees and business partners.

POSCO has also decided to spend 130 billion KRW to renovate dormitories and welfare facilities for employees at the steel mills. It is in consideration that future generations — who will become the main players of the company — must be able to settle more easily. By 2021, the Pohang Works will remodel the welfare center and build a large 700-seat cafeteria. Gwangyang Works plans to build 500 new dormitories and expand the welfare center here. POSCO’s efforts to ensure employees’ work and life balance will continue.

Looking back at 2019, we looked at the achievements that POSCO has made for the year and what meanings these achievements have. POSCO will take strong strides into 2020, creating a better tomorrow and maintaining the harmony of BUSINESS, SOCIETY, and PEOPLE as it always has.

The purpose of this program was to enhance their understanding of artificial intelligence and new steel products in order to improve the competitiveness of overseas subsidiaries by spreading POSCO Smart Solutions.

At first, in the lecture about ‘Smart Technology and Business Model Innovation,’ they learned about the influence of smart technologies, such as the 4th Industrial Revolution, big data and artificial intelligence, on business models, and in the lecture about ‘Big Data and Cases that Can Be Utilized in Manufacturing,’ they reinforced their understanding of big data modeling.

Also, they learned about Smart POSCO, such as the concept of POSCO Smart Solutions, key activities, CES 2018 and smart factory success stories, creating an opportunity to spread it to overseas subsidiaries.

In addition, they gained knowledge of new steel products such as POSCO Magnesium Alloy Coating Product (PosMAC), thick plate product (high manganese steel), automotive steel (giga steel) and electrical steel (Hyper NO), and shared relevant cases to expand solution marketing in overseas markets.

POSCO ICT Head of the New Business Development Team Mi-hwa Park during POSCO Smart Solution and CES 2018 at Songdo Convention Center.

The participants said, “The brief, but well-organized program was quite useful in that we were able to gain a deep understanding of the trends in information technology, POSCO Smart Solutions and our new products, and learn how to apply them to overseas subsidiaries. We will make efforts to spread POSCO Smart Solutions throughout our overseas subsidiaries.”

Meanwhile, POSCO Group University is planning to provide education on Industrial Revolution 4.0 and POSCO Smart Solutions for new local leaders and general managers to disseminate the necessity of Smartization.

Prime Minister Modi revamped India’s economy with his “Make in India” initiative. (Source: LinkedIn)

Most notably, Prime Minister Modi launched the “Make in India” initiative in September 2014, showing his resolve to revamp the manufacturing industry in India. Under the initiative, domestic as well as foreign companies are encouraged to manufacture their goods in India with the goal of increasing the makeup of the manufacturing industry to 25 percent of GDP by 2025.

At the heart of the initiative is the government’s efforts to ignite the steel industry. The National Steel Policy (NSP) 2017 declared that India will become self-sufficient on domestic steel supplies by increasing its steel production capacity from 122 Mt in 2015 to 300 Mt in 2030. However, the steel industry currently only makes up 1.04 percent of the country’s GDP.

Challenges Ahead for India’s Steel Industry

Despite India’s promising potential and robust government support, the steel industry has not met the government’s high expectations and growth has been modest. According to researchers in volume 4 of the Asian Steel Watch, there are deep structural flaws within India’s steel industry that need to be addressed before the country can reach its full potential.

One of the industry’s biggest challenges is its growing debt – In 2016, the steel industry surpassed INR 3 trillion in debt. Most of the country’s steel and infrastructure projects are financed by the government. What India needs is more private sector involvement, but private players are hesitant due to complex regulations, a lack of business models and no guarantee on returns on investment (ROI). The government has also been slow to secure FDI because, over the years, India’s steel industry has displayed poor planning and management of projects as well as a mismanagement of funds.

India’s mining industry will directly affect the success of the steel industry. (Source: Pinterest)

Another major challenge has to do with India’s natural resource management, as mining companies do not have fair access to the country’s abundant resources. The mining industry is subject to heavy tax burdens including the royalty, local area development tax, forest development tax and much more as it is a profitable business for the government. Plus, the costs of meeting international environmental standards are passed directly onto mining companies. Thus, the price of iron ore and other minerals do not reflect the abundant supplies available, and the higher prices ripple into the steel industry.

Moreover, the government regards the steel industry as the backbone of India’s economy, but in reality, the times are changing.

Technological advances in the manufacturing industry is making the steel production process more efficient and less labor intensive. (Source: South China Morning Post)

In the past, 70,000 workers were required to produce 1.5 Mt of steel. Today, it takes about 3,000-4,000 workers to make 5 Mt a year. The steel industry is just not what it used to be in terms of the positive effects it had on the economy as a whole. The industry requires intensive capital and the only way it will survive is with low labor costs and maximum manpower productivity.

India needs to take full advantage of the country’s abundant resources and capitalize on its competitiveness to reach its full potential. In order to do so, India can start by examining other steel industries that served as the main driver for national economic growth, such as Korea’s.

Takeaways from Korea

After the Korean war in 1953, Korea had to build its economy up from scratch. Like India, the government chose to stimulate its steel industry and spent its war reparations payment from Japan to build POSCO’s steel mill in 1969. Since then, the state-led steelmaker has been a primary engine for Korea’s miraculous economic growth.

The construction of POSCO’s headquarters began in May 1968.

So how did Korea manage such growth?

The government allocated much of its resources to infrastructure construction for efficient logistics and implemented policies to support the mutual growth of steel and steel-consuming industries. Moreover, the government practiced protectionist trade policies long enough to get Korea’s steel business on its feet, then supported a market-driven business model.

The government also kept a close watch on supply and demand forecasts and updated its supply policies timely and accordingly. Factors such as demographic changes, industrialization patterns, urbanization and labor costs should be examined holistically to prevent the gap between supply and demand from increasing too much. For example, in 2010, the Korean government implemented capacity expansion policies that resulted in oversupply and a prolonged recession. This was because policymakers failed to diagnose the symptoms of the mid to long-term steel demand forecasts that showed sluggish demand. Since then, Korean policymakers keep close watch on such measures to update the country’s supply policies.

Finally, the Korean steel industry invested heavily in knowledge accumulation and R&D to wean off of Japan’s technical support and become an exporter of steel technology.

POSCO is now a leader in steel production technology.

Compared to Korea, India has an advantage in almost every aspect. The country’s per capita steel consumption is still low and the booming population will drive demand in steel-related industries. With much room for growth, the Indian steel industry can expect to see accelerated growth when paired with the right policies and government support.

They also have every incentive to do so. From 2010 to 2016, the price of wind and solar energy dropped by 60 and 80 percent, respectively. With the global demand for energy projected to rise 30 percent by 2040, green energy producers and related manufacturers will see an increase in business activity, including the steel industry. Steel is used to produce every single type of renewable energy, and demand for high-quality steel is looking to increase.

Take a look at some of the first movers transitioning to renewable energy and the biggest drivers of renewable energy demand in the global market.  

SEE ALSO: Building a Green Energy Future with Steel

Google, the biggest corporate consumer of renewable energy

At the end of 2017, Google purchased 3 gigawatts of renewable energy, enough to power all of its 15 data centers and offices around the world for an entire year. Google started purchasing wind power from a farm in Iowa back in 2010. Today, Google purchases most of its renewable energy from wind and solar energy farms in South Dakota, Oklahoma and Iowa.

Inside Google’s colorful and green data centers. (Source: Business Insider)

What’s significant about Google’s renewable energy consumption is that even if it does not use up all of the energy for its own operations, the company sells it back into the market in regions where they operate. Then, they retire their Renewable Energy Certificates (RECs), meaning it is no longer re-usable or re-issuable. In doing so, it removes energy supplies from the market and forces producers to keep generating new renewable energy supplies, instead of trading existing RECs. Google is fully backing the renewable energy industry, creating more business for generators and materials suppliers such as steel.

SEE ALSO: India: A Rising Sun in the Global Renewable Energy Industry

With the rapid growth of internet-based services, data centers are also increasing, engulfing extensive amounts of energy. Data centers already account for 3 percent of the world’s entire electricity consumption, and 2 percent of total greenhouse gas emissions, equivalent to that of the airline industry. It’s a relief that companies like Google, with a growing reliance on data centers, are finding sustainable ways to fuel their business, and other companies are following suit.

Apple’s green data centers

Apple is another company that is making bold strides toward renewable energy. The company stated all of its data centers run on 100 percent renewable energy and its operations over 23 different countries run on 93 percent renewable energy.

Apple’s data centers run on 100 percent renewable energy. (Source: Digital Trends)

Apple joined RE100 in 2016, but the company is no newcomer to green energy. In 2015, Apple issued USD 1.5 billion in green bonds to finance eco-friendly business endeavors. Then in 2017, Apple issued another USD 1 billion in green bonds in response to U.S. President Donald Trump’s withdrawal from the Paris climate agreement.

In 2017, President Trump shocked the world by withdrawing the U.S. from the Paris climate agreement. (Source: Fortune)

Because Apple’s business also includes manufacturers who do not follow the same sustainable practices, Apple’s next challenge is to filter through their suppliers and select those that are committed to powering their operations with renewable energy. So far, 8 major suppliers have come on board.

Microsoft and Facebook are on their way

Microsoft’s global operations have been fully powered by renewable energy since 2014. This includes manufacturing, licensing and logistics. All of its data centers are 100 percent carbon neutral, but Microsoft is planning a slow but sure transition towards renewable energy. As of now, about 44 percent of the electricity that powers Microsoft data centers come from wind, solar and hydropower, and their first target is to reach 50 percent by the end of this year. They have also stated they will strive for 60 percent in the next 10 years.

Microsoft is building new data centers all over the world, including the UK (pictured), and plans to run them on green energy. (Source: WindowsAble)

Just like Microsoft, Facebook looks to power 50 percent of all its data centers with renewable energy by the end of this year after successfully reaching its 25 percent target back in 2015. Facebook has a large presence all over the globe, and already, their data centers inLuleå, Sweden, Altoona, Iowa, Fort Worth, Texas and their Menlo Park headquarters are running on 100 percent green energy. Moreover, Facebook plans to power their newest data centers to be built in Ireland, Denmark, New Mexico, Nebraska, Ohio and Virginia with renewable energy.

Facebook’s newest data center in Virginia will run on 100 percent renewable energy. (Source: Adweek)

The largest and most influential corporations in the world that operate the ever-growing, energy-extensive data centers are making the switch to green energy. Their changing business practices will further boost the renewable energy industry, create new jobs and open new business opportunities for the steel industry. As steel plays a vital role in supplying parts for renewable energy infrastructure, high-quality steel solutions will be in increasingly high demand.  

Cover photo courtesy of Rambus.

Huayou Cobalt is one of the world’s biggest mining companies that can produce about 50 percent of the cobalt required for manufacturing lithium-ion batteries worldwide. They also have their own nickel mine in addition to a cobalt mine.

The joint venture for precursor production is made up of 60 percent of investments by Huayou Cobalt that can supply cobalt, nickel and manganese, and 40 percent by POSCO. 60 percent of investments for the joint venture for cathode material production comes from POSCO who owns the high-grade cathode material production technology and 40 percent of investments come from Huayou Cobalt. The joint ventures will be operating production lines for 4,600 tons of precursors and cathode materials a year starting from the second half of 2020.

POSCO and Huayou Cobalt sign agreements for joint ventures in cathode material supply and production.

Through these joint ventures, POSCO can now secure its market position in China by directly manufacturing and selling cathode materials locally. In addition, it can gain a competitive edge by securing a stable supply of not only precursors but also materials such as cobalt, nickel and manganese for POSCO ESM’s cathode materials plant in Gumi. Huayou Cobalt can expand its business in manufacturing and sales of cathode materials in addition to that of raw materials.

As the eco-friendly policies of the world continue to be tightened, the demand for electric vehicles, industrial energy storage systems (ESS) and IT bulk batteries has increased rapidly. Thus, the market for cathode materials, which are essential materials for lithium-ion batteries, is also expected to quadruple from 210,000 tons in 2016 to 860,000 tons in 2020.

Accordingly, the price of cobalt, one of the most expensive materials, tripled in the last two years, followed by the price of nickel and manganese. This explains why a stable supply of materials is essential for profitability.

POSCO’s lithium-ion battery material business is headed for future growth, and is expected to gain increased momentum with the joint ventures for precursors and cathode materials. POSCO completed its carbon lithium plant PosLX at Gwangyang Steelworks last year after 7 years of developing its own proprietary technology of directly extracting lithium in 2010. It is currently under commercial production.

With the performance increase in both steel and non-steel businesses in Korea and overseas, operating profit was highest it’s been in the last 6 years, and the operating profit to sales ratio was 7.6 percent. Year-on-year consolidated sales increased by 14.3 percent and operating profit and net profit increased by 62.5 percent and 183.7 percent respectively.

The total operating profit of POSCO’s non-steel businesses, which reached KRW 10 billion last year, also turned into a surplus. There was an overall increase in non-steel businesses including trade, energy, ICT, chemicals and materials, resulting in KRW 1.0927 trillion of profits, up KRW 1.0798 trillion from last year.

This is in line with POSCO CEO Ohjoon Kwon’s strategy to focus on group management by securing future growth engines and reforming non-steel businesses.

※ Total operating profit per sector

Indonesia-based integrated steel mill, PT. KRAKATAU POSCO, also generated a surplus for the first time since operations began in 2014. Mexico-based automotive steel sheet plant, POSCO Mexico, as well as India-based cold rolled steel corporation, POSCO Maharashtra, also achieved their highest operating profit, tripling the total operating profit of overseas steel business.

Moreover, separate sales and operating profit increased year-on-year by 17.4 percent and 10.1 percent respectively to KRW 28.5538 trillion and KRW 2.9025 trillion, and the net profit was KRW 2.5457 trillion.

Production and sales decreased year-on-year due to the repair and facility rationalization of Pohang Blast Furnace No. 3, but the sales ratio of World Premium products with better technology and higher returns increased to 53.4 percent, its higher ever.

Financial soundness was also saw improvements. POSCO’s Consolidated debt ratio decreased by 7.5%p year-on-year to 66.5 percent, the lowest since 2010. Separate debt ratio also decreased by 0.5%p year-on-year to 16.9 percent, constantly renewing the lowest record on a yearly basis.

POSCO also demonstrated a cumulative financial improvement of KRW 7 trillion with 150 cases of restructuring in the last 4 years, reinforcing the business structure as well as financial competency. Accordingly, this year the company expects to make more investments in new growth engines such as lithium and cathode materials as well as energy and construction in addition to renewing the facilities at its steel mills. Thus, there will be a budget of KRW 4.2 trillion for consolidated investment, an increase of KRW 1.6 trillion compared to last year. The consolidated sales target is KRW 61.9 trillion.

※ POSCO’s 2017 business performance

What is the Food Donation Drive?

As part of the company’s efforts to promote volunteer work among employees, POSCO-INDIA (President Mr. Gee-Woong Sung) started the “Food Donation Drive” program in December 2015, in collaboration with Delhi-NCR Foodbank. The second food drive was successfully held between January 18-23 of this year with overwhelming employee participation. The goal of this program is to provide free food to those in need to help eliminate hunger and food insecurity in Delhi-NCR (National Capital Region). It is a small effort towards ending the fight against hunger and malnutrition in India.

Under this program, food collection boxes are placed at the main entrance lobby of POSCO-INDIA and POSCO-IDPC office premises for one week. Employees donate unlimited quantities of non-perishable food items such as rice, wheat flour, sugar and cooking oil. At the end of the week, representatives of Delhi-NCR Foodbank collect the donations. These food items are then used as part of the hot meals that are provided daily to approximately a quarter million vulnerable and homeless residents in Delhi and nearby regions.

A True Internal “Volunteer” Activity

Delhi-NCR Foodbank was first implemented in 2012 and is operated by the Responsenet Development Services (RDS), India. They collect food donations from individuals and corporate organizations, and redistribute them in the form of cooked meals at 30 feeding centers that provide services to the poor, homeless, charitable hospitals and orphanages.

It should be noted that the food drive contributions at POSCO-INDIA are made voluntarily by employees. The volunteering efforts come from inside the company, out of a desire to make a change and create value in the community, as well as nurture a sense of empathy. The importance of eradicating hunger and providing nutrition in India has been reiterated as one of the provisions for CSR (Corporate Social Responsibility) in Schedule VII of Section 135 of the Indian Companies Act 2013. Also, according to Indian law, it is mandatory for companies to set aside 2 percent of their net profits for CSR activities, which is why several Indian companies chose efforts like these as a part of their CSR programs.

Interview with POSCO Employees

We interviewed employees who took part in this program. See what they had to say.

Q. How does it feel to participate in the “Food Donation Drive” program?

 Mr. Pabitra Mohan Swain, Administration Department: “I felt really happy and pleased to be part of a program that helps to fulfill one of the most important basic needs of a human being. The most memorable part for me was the way everyone came forward to help voluntarily.”

Mr. Shreenibasha Mishra, Finance Department: “I was able to share my food with someone who really needs it, which made me feel more motivated about going to work. I love that my company thinks highly enough of its employees and the things we care about to give us time and money to give back to causes we care about.”

Ms. Trupti Ray: “I do feel as if I have something special to offer to a very special cause to help others, to make a small difference in children’s lives. I remembered the gradual filling of the food basket on each day and feel happier thanks to POSCO India’s employees. It’s such a great feeling to be around other people who support the same cause that you feel strongly about.”

Q. As an employee, how do you feel about POSCO-INDIA participating in CSR activities?

Mr. Pabitra Mohan Swain: “As an employee I am proud to be a part of POSCO-India—an organization that always promotes voluntary donations, as per the vision of our Honorable CMD to ‘Donate Voluntarily’ and silently to serve the community. Since joining last year I have seen various CSR activities carried out by POSCO India and POSCO Family companies, which really inspires me as an individual.”

Mr. Shreenibasha Mishra: “Today, being in business for the sake of making profit is not enough. Customers and consumers will continue to expect good quality products and services. To a larger extent than before, people choose to work with or buy from companies that positively impact their community. Therefore, it is important to include CSR in a business’ strategic plans. It is a win-win for all involved—the company, the customers, the community and society.”

Ms. Trupti Ray: “I feel inspired, connected and hopeful working in a company like POSCO India, where employees spend their time and effort doing something good for society, and to make the world a better place.”

Apart from sharing with the underprivileged, POSCO-INDIA employees also nurture an appreciation culture within the organization by adding messages to the “Appreciation Tree” to show appreciation of other employees’ actions and behaviors. This creates a sense of oneness and fun within the workplace.

Since its establishment, POSCO has identified its corporate mission as contributing to the nation’s development, and has carried out various social responsibility activities to do so. Keeping the same spirit, POSCO-INDIA aims “for a better world” together through its small efforts in contributing to India’s society.

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The tradition began when a Parsi banker wanted to have home cooked food regularly delivered to his office and gave the responsibility to the first ever dabbawala. It soon caught on among others and the demand for the meals-on-wheels service soared. 

Steel, the Preferred Metal for Your Meal

While the wala, or carrier, is no doubt the driving force behind the system, the dabba, or lunchbox, is a central component of India’s meal delivery culture. Widely used throughout the subcontinent, these multi-tiered “tiffin” (Indian English for a light midday meal) carriers are generally made from stainless steel and can keep food warm for up to three hours.

In addition to the tiffin boxes’ warming properties, the fact that they are made of steel means they offer plenty of other benefits, too. For one, they don’t leach toxins like plastic, ensuring food is safer, and they’re also more hygienic and easier to clean than those made of other materials—a big plus when it comes to rinsing off curry, vegetable and dal residue. Furthermore, the containers are durable and sustainable, meaning they don’t damage easily and can virtually last a lifetime.

Similar types of lunchboxes are also commonly used in other parts of the world, such as Southwest Asia and Northeast Africa, as well as parts of South America and Europe. Like India, the boxes in these containers hold much more than just food. They often contain mementos—a flower, a movie ticket, an apology note—and more importantly, love from the cooks, who are usually hardworking housewives. But the journey these steel boxes must undergo is a lengthy one—one that takes a dabbawala an entire day to complete. 

A Day in the Life of the Dabbawala

By 9 o’clock every morning, the dabbawala has hit the streets, pedaling his bicycle—one designed with extra iron to withstand a heavier load—through the congested Mumbai traffic to his assigned area. As many older buildings are not equipped with elevators, the dabba climbs up and down the towering residences to collect the tiffin boxes from homes.

By the time he completes the collection, it’s already about 10:30am. He now carries the 30-40 lunchboxes he has accumulated on his bike, undeterred by the poor road conditions, mud, traffic and merciless Mumbai monsoons that plague the region every summer.

He then reaches the nearest railway station where fellow dabbawalas gather and sort the tiffins by destination utilizing a simple but seemingly flawless coding system. By now, most of his tiffins are handed over to other teams dispersing to various parts of the city. He joins one of them, and with his teammates, transfers different tiffin boxes in crates and hastily transports them to the railway platforms on his head.

If a tiffin is on a complex route, it is further sorted on the railway platform where even more dabbawala teams work together to move the wooden crates into the trains. With the boxes put away in the luggage compartments, the men can take a short break before arriving at their assigned stations around noon.

Racing against the clock, the wala rushes out of the station with the lunchboxes atop his head and once again disperses them among other teams. Joining yet a different group, he and the men place the boxes in trollies and dash toward the business centers, the final destinations for the tiffin boxes.

As they do, pedestrians make way for the shouting, pushing dabbawalas, knowing well that they don’t stop for anyone. Each man then takes the responsibility of delivering the lunches to separate buildings, moving up and down the elevators. By 1pm, all are delivered, but the dabbawala’s job is not over yet. After a brief lunch, the dabbawala takes the empty tiffin boxes from the offices and repeats the process until all of the dabbas are returned to their respected homes before 6pm.

The century-old Indian meal delivery system that is powered by teamwork and steel remains incredibly efficient, even in an age where just about everything else is operated using the latest technology. Time will only tell how the process may evolve in the future (registration has recently gone virtual), but it is certain it will continue to serve as a model of service excellence for the entire world.

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