POSCO is accepting applicants for the fourth round, offering free education courses on artificial intelligence, big data, and IoT for job seekers as well as the public.

Last year, POSCO along with Pohang University of Science and Technology (POSTEC) created education programs on AI, big data, and IoT in the form of basic online and advanced offline courses. The program comes as part of the company’s social contribution efforts offered free of charge to encourage these skills and broaden job opportunities.

Application for basic online courses are available for everyone until September 2 through POSTEC website. Upon completion of basic online courses, advanced offline courses are open to selected individuals for 10 weeks from September 3 through October 24 at POSTEC. To promote the offline program that provides intensive training in a short period of time, POSCO plans to actively promote these efforts in domestic universities and online communities for job seekers.

The four-month program is designed and carried out by POSTEC professors while equipment expenses are provided by POSCO. Basic online courses started out with six in the first round expanded to 13 this year. The first round of courses have ended on September 2. Over 6,000 students have completed basic knowledge on AI, machine learning, computational intelligence and more. POSTEC plans to take previous feedback into account to further enhance the quality of the courses.

The online programs on AI, big data and IoT were completed by 26,494 students thus far. The advanced offline courses completed by 49 students have successfully entered the domestic workforce  such as interns at POSTEC, regular employees at LG CNS, Kakao, and SK Innovation. POSCO plans to further advance the courses such as blockchain, cryptocurrency, and computer vision for students interested in even more specialized fields.

Meanwhile, Jeong-Woo Choi, who was elected as the 9th CEO of POSCO on July 27, presented ‘With POSCO(Building a better future together as corporate citizens)’ as a new vision at the inauguration ceremony, expressing his aspirations to create a better society through contribution. This program represents POSCO’s major social contribution activity, aimed at increasing job opportunities while enriching the country’s competency in the fourth industrial revolution.

It’s a common theme, and the images that pop into mind may be of early humans during the Iron Age.

But according to Professor Seohyung Kim of Inha University, the history of iron precedes the history of life, and so historians need to look back to the beginning of the universe to fully understand the way iron has shaped humankind and its environment. She gave a special lecture called “History of Iron: Universe, Life and Human,” as part of the exhibition on October 13. Professor Kim studies history from a Big History perspective, or a multi-disciplinary approach to the study of the past that combines science, geology, human history and more to get a better, bigger picture of the past, present and future.

So here’s a look back, way back, into history to see what iron has to do with the history of man.

Stars Exploded and then Iron Existed

Where did iron come from? The stars. To be exact, large, dying stars. In the beginning of the universe, there were only 2 elements in existence- helium and hydrogen. New elements are only created when protons and neutrons fuse together and this requires a lot of heat.

The temperature of a star rises when it uses up all of its hydrogen atoms, and when it uses up all of its helium atoms, it collapses, emitting even more heat. This cycle repeats itself, creating new elements in the process until finally, iron in created. Elements with greater mass than iron are created in a supernova, or the death of a really, really big star.

A piece of meteoric iron formed by the heating and collapsing of a star sits on display at the National Museum of Korea.

So, why is this important?

The variety of elements created by exploding stars are what planets are made of, including earth, and iron makes up 35 percent of the earth’s entire mass.

Humans and their Complex Brains

After the formation of the earth, simple life forms appeared, and then eventually primates and homo sapiens. Humans are the most powerful species on earth, largely due to their complex brains that allowed for the development of language and through it, collective learning.

Iron-rich red meat was an important factor in human-brain development. (Source: Omicrono)

What’s interesting is that around 2.5 million years ago, humans started eating meat rich in iron and calories. Before this change in diet, early humans spent most of their scarce energy on chewing and digesting large amounts of vegetation. With the introduction of meat, their brains got larger as it is a muscle that requires 20 times more energy than muscles in other parts of the body. When humans started cooking meat with fire around 500,000 years ago, they consumed even greater amounts of meat, meaning humans could meet their dietary iron needs, and put their larger brains to use for things like agriculture.

Agriculture and Civilization

Collective learning led to some of the most critical developments is history, including agriculture, which developed after the end of the last ice age about 11,700 years ago, as human populations increased due to the fact that they were able to cook and consume meat. Further advancements in farming tools during the Iron Age led to an abundance of food and massive civilizations.

Some iron tools that made farming easier are on display at the National Museum of Korea.

Weapons Made Stronger with Iron

However, farming tools were not the only places where iron was applied. As communities developed around abundant agricultural centers, people decided they wanted more land, labor and power. So, cities waged war on one another with iron tools and armor that were fatally strong.

The Iron Age brought forth improvements in soldiers’ armor, and can be seen at the National Museum of Korea.

One vital invention in the evolution of weapons and tools alike was the wheel. The oldest artifact of the wheel is a potter’s wheel found in Mesopotamia and dates back to about 3500 BC. Then came the wooden wheel that were attached to chariots for effective warfare. Then finally, the Celtics applied iron rims on their chariots for added strength, durability and speed. Paired with iron swords and armor, wars became vastly efficient.

Iron wheels, like this one on display at the National Museum of Korea, enhanced existing wooden wheels.

After many years, the Chinese invented gunpowder triggering a new era of warfare. Iron was used to make rifles, cannons and other gunpowder machines to wipe out massive amounts of people at a time.

The invention of gunpowder led to new weapons such as these Iron rifles on display at the National Museum of Korea.

From Iron to Steel

After centuries of iron spearheading the development of new technologies and civilizations alike, a man named Henry Bessemer introduced a process to produce pure iron with a converter in 1856, known as the Bessemer Process. This invention would lead the way to the commercialization of steel and then eventually the industrial revolution near the end of the 18th century.

The steel industry was met with a rampant rise in steel demand during the second industrial revolution nearly a century later, with the introduction of electricity, gas and oil. Steel consumption continued to thrive into the third industrial revolution as it served the foundations for electronics, computers and automated production systems. As the world enters the fourth industrial revolution, steel will continue to be the bedrock of leading innovation and technology including electric vehicles, sustainable energy facilities and smart manufacturing factories.

Automated robots are part of what workplaces will look like in the fourth industrial revolution. (Source: Business Insider)

Looking back on history, the role and value of iron and steel in human development is indisputable. And to think, it all started with the death of a star.

Cover photo courtesy of BBC.

The fourth industrial revolution is heralded by big data, the internet of things, artificial intelligence, virtual reality and augmented reality, 3D printing and other technological innovations. It’s happening at rapid speed. The steel industry needs to keep up and take advantage of all that this revolution has to offer.

However, the industrial revolution did not happen overnight, and advancements in human development traces back to the Iron Age.  

The Iron Age and How it Impacted Civilization

After the Bronze Age was the Iron Age. People started using iron and steel for tools. This was a huge shift for the world, and helped improve nearly all spheres of life from the spread of written language to more effective agricultural practices. Iron offered more choice. People could forge this material into whatever they needed for tools, weapons, or ornaments and decor.

Blacksmiths would have used tools like this during the Iron Age.

Tools and weapons created during this era often used steel, which was a vast improvement on the bronze items from the previous age. Items made from steel were just as light as bronze, but stronger, so users were able to get more out of each item they created. The strength of these tools made it possible for farmers to plant and harvest more land, faster. It enabled people to sell or trade for livelihood.

The Iron Age is a great example of how the right materials can make life better for everyone.

The New Structure of Steel

As the world moves through the fourth industrial revolution, it is evident the same thing is happening. Instead of improvements in specific materials and tools, however, technology is changing things.

The steel production process can be completed autonomously if the fourth industrial revolution continues the way it is going. This means that manufacturers will be able to have very detailed and thorough control over production, using smart technology that will factor in every element from the surrounding environment to minute details of the material itself. The steel production process will be able to use real-time data to optimize every facet of operations, saving money and time.

Robot arms with artificial intelligence take part in the steel production process. (Source: Telenor Connexion)

The steel value chain is affected by changes in the provision of after-sales service, owing to new technology. Manufacturers can use smart technology to track how users interact with their completed products and offer better customer service as a result.

Again, real-time information comes into play, allowing steel companies to see exactly how orders are being created, fulfilled and used, as it is happening. Customer needs are met with ease and speed, all tracked and analyzed digitally.

Competition in the steel industry will be affected by this revolution, too. Competitors can see how other companies are using big data and automation to save money and offer a better customer experience, and use those details to revolutionize their offerings. Online steel transaction platforms make this transparency even more accessible, for companies and clients alike.

Implications on the Steel Industry

To keep up with this revolution, and make the most of it, steel companies need to understand the implications on the industry and plan for the future. New technology is only going to become more widespread, more common, and more advanced. Companies need to be ready to react.

Integrating technology and smart software is the ideal way for steel companies, and the industry at large, to take advantage of this new revolution and use it to create better products and better customer relationships.

To get an idea of how to best integrate new tech into existing steel practices, POSCO’s smart steel factory is a prime example, currently being tested at the Gwangyang Steel Mill. POSCO’s smart factories will collect and analyze all of the microdata generated in the steel production process, to determine the cause of every event that impacts quality or production in general.

An image of how POSCO’s Smart Factory will be run.

From facilities to energy and environment, to safety and conditions, the smart factory will monitor everything. And it will respond accordingly to make the best quality steel possible.

Self-learning artificial intelligence ensures that the process of steelmaking is carefully controlled, with adjustments made in real-time to directly and positively impact the result. The smart factories will use technology to fill the gaps where human capabilities are simply no match for software.

The world has come a long way since the Iron Age and through the various industrial revolutions. In the current fourth industrial revolution, steel companies have to take advantage of new technology and innovations by figuring out ways to apply them to steelmaking processes. POSCO has made this a top priority as it continues to research, educate and implement smart technologies to its production processes and materials and will lead the way for steel companies to follow through the fourth industrial revolution.   

Cover photo courtesy of Manufacturing Global.

Read how these megatrends and the expansion of the four largest steel-consuming industries have driven the growth of the steel industry from the last fifty years and will continue to play a crucial role.

Megatrends and their impact on the steel industry

Future Cities and Changes in Steel Materials

Urbanization is a key driver in the development of the global construction industry and will further accelerate in the future with rapid industrialization in developing countries and the shift to a knowledge economy in advanced countries.

Within the overall shift toward urbanization, many countries are actively crafting policies to develop their cities as globally competitive megacities. There is an increasing number of megacities with over 10 million inhabitants as the competition paradigm shifts from competition among countries to competition among cities.

Also, with a growing sense of urgency in improving the environment in terms of ozone depletion, climate change and energy and resource exhaustion, eco-friendly, green cities are emerging as a new trend.

Lastly, smart cities, characterized by digital transformation and energy revolution, will rapidly expand in the future drawing on the Fourth Industrial Revolution.

Following the ongoing and emerging trends of urbanization and future cities, new advanced steel materials are required to accompany emerging trends and accelerate the development of megatall, eco-friendly and smart products. Conventional steel materials for construction, such as steel bar and section, will improve in functionality with higher strength, thermal conductivity and better sound isolation. They will also be developed as composite materials and new materials such as carbon nanotubes and shape memory alloys will be widely deployed in construction processes. However, as construction costs (labor costs and the use of high-strength steel materials, for example), increase, steel content per unit of construction investment is expected to decline.

A New Mobility Paradigm

Led by high-income earners, lower car prices and improved road infrastructure, the key trend for the automotive industry is motorization. Today, automobiles are no longer just a means of transportation but becoming a major arena for IT competition with the rise of electric vehicles, robotic vehicles and new mobility services.

As a response to global warming, electric vehicles and energy-efficient self-driving cars are becoming increasingly widespread along with the rise of new innovative mobility services, such as robo-taxis and self-driving mini-buses.

In the case of EVs, less auto parts will be required as metal parts such as powertrain components – the engine, vehicle intake and exhaust system, and transmission – will be replaced by batteries, motors, and electronic parts. As cars are made lighter to improve driving range, alternative materials such as aluminum and CFRP are being used in some luxury lineups.

In order to retain its competitiveness and also meet increasingly strict environmental regulations, the steel industry is developing lighter and stronger steel materials such as advanced high-strength steel (AHSS) to replace traditional steel products. Steel, a strong and economically competitive material, remains an attractive choice for both EVs and self-driving cars.

Recovery of the Shipbuilding Industry

Technological advancement as a result of the Fourth Industrial Revolution and changing environmental regulations will bring considerable changes to the shipbuilding industry.

The shipbuilding industry, which boomed in the 2000’s, experienced a downturn after the 2008-09 financial crisis. Although the oversupply will linger until 2025, the shipbuilding market will then turn to an upswing with increasing growing global trade and rising demand for ship replacement.

With the development of ultra-large container ships, LNG-fueled ships, electric ships, CO₂ carriers, polar ships, and environmentally–friendly equipment, high-strength steel for ultra-large and lighter ships and high-strength low-alloy steel for safe and affordable LNG and CO₂ storage tanks are required.

As vessels become larger and lighter, the steel intensity of ship’s tonnage will fall. Steel intensity is expected to decline due to larger and lighter vessels.

Global Climate Action and Energy Transition

As a response to global warming, renewable energy is increasingly in demand. In fact, it is no longer being referred to as “alternative” energy but “mainstream”. The International Energy Agency (IEA) has predicted that the share of renewables within global power generation is expected to rise from 23 percent in 2014 to 37 percent by 2040.

The renewable energy sector is also adopting various types of steel products. The tube tower, which accounts for 65% of the weight of a wind turbine, is made mainly of steel, while thin stainless steel sheets and frames are required for solar panels. This wide application of steel products offers additional business opportunities to steel companies.

Meanwhile, the share of fossil fuels within primary energy consumption will fall from 81 percent to 74 percent over this span. However, the decline will be gradual due to population and economic growth in emerging countries and fossil fuels will continue to play a dominant role in the energy sector in terms of quantity of consumption.

Steel companies must target new markets by developing innovative steel products for the microgrids and energy storage systems which will grow alongside renewable energy.

The Steel Industry Over the Next Two Decades

Over the next two decades, the steel industry will face the following four challenges: slowing steel demand due to decreased steel intensity across major steel-consuming industries; a need for more advanced steel products; upgrading to eco-friendly and smart steelmaking processes; and changes in manufacturing based on the Fourth Industrial Revolution.

Accordingly, it is imperative that the steel industry boost its capabilities for continues product and process innovation and build a sound steel ecosystem through partnerships with steel-consuming industries.

To this end, POSCO is not only investing in the development of an eco-friendly rolling process but also in sustainable development including energy conservation and recycling technologies. In addition to factory automation based on IoT, big data and AI, POSCO is working to increase the application of smart technology internally as well as externally with its partners and affiliates.

It is an exciting time for the steel industry as it continues to transform along with the ongoing and emerging megatrends.

Download the full version of POSRI’s Asian Steel Watch journal for more at POSRI’s official website.

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We are entering a new era of manufacturing, one in which computers and machines are coming together to perform automated actions. Even more impressive, they are able to do this with less and less human involvement, learning from their mistakes and teaching themselves to constantly perform better.

Smart factories operate autonomously as the machines talk to each other through sensors – reducing faulty products and waste.

This new era, what is being called Industry 4.0, is one in which manufacturing moves beyond some of its former limitations by becoming more efficient, less wasteful, and much more productive. Corporations like Siemens, BASF, GE, and POSCO are leading the way by designing smart factories connected through IoT technology and artificial intelligence that produce higher quality products with less waste.

Industry 4.0 and the Smart Factory

The First Industrial Revolution marked the movement from pure human labor to using machines. Steam engines also appeared helping move things along further and more quickly. Next came electricity, and with it, mass production. The Third Industrial Revolution saw the rise of computers, more automation, and the replacement of some human labor. Now, we are entering the Fourth Industrial Revolution, or Industry 4.0, in which these machines interact and learn from each other with little to no human interference.

(Infographic courtesy of Christoph Roser)

With Industry 4.0 we are seeing the smart factory. A smart factory is a physical manufacturing system connected by AI, IoT, and tons of data in the cloud that teach the systems to work by themselves and make improvements without human involvement.

Bernard Marr says that for a factory to be considered Industry 4.0, it must include:

• Interoperability — machines, devices, sensors and people that connect and communicate with one another.
• Information transparency — the systems create a virtual copy of the physical world through sensor data in order to contextualize information.
• Technical assistance — both the ability of the systems to support humans in making decisions and solving problems and the ability to assist humans with tasks that are too difficult or unsafe for humans.
• Decentralized decision-making — the ability of cyber-physical systems to make simple decisions on their own and become as autonomous as possible.

In the examples below, we can see how three corporations are bringing these pieces together to advance smart factory production. Siemens, GE, and BASF have all utilized this technology to build a more efficient production system, and POSCO is doing the same in its steel production line.

Siemens, GE, and BASF – Case Studies in Smart Manufacturing

Siemens

The Siemens AG plant in Amberg, Germany, is unique in that it not only produces automated machines to be used in other industrial factories, but that it does so using fully automated machines in its fully connected smart factory. With over 1,000 manufacturing units connected via the web across 100,000 square feet, each step of the manufacturing process is automated and programmed to make customized products immediately.

The plant, established in 1989, is currently operated with around 1,200 employees and about 75% of operations are automated. The plant manufactures more than 12 million programmable logic controls (PLCs) that are used to automate cruise ships, automobile production lines, and ski lifts to name a few. With production quality at an impressive 99.99885%, an inspector would be hard pressed to find any defective products.

While Siemens has largely automated the production process, workers are still needed in the beginning to place the circuit board on the production line and supervise it through its production cycle. Producing more than 1,000 product variants for over 60,000 customers worldwide, Siemens has developed a model smart factory with automated systems creating nearly perfect products with less waste.

BASF

At BASF, the chemical giant incorporated a smart factory system so that it could manufacture fully customizable soaps and shampoos. When an order is placed, the automated factory line adjusts its protocols to make the unique product and packaging that was ordered by the customer. The set up is automatic and the quality is near perfect.

At its smart pilot plant in Kaiserslautern, Germany, once an order is placed for a personally customized soap or shampoo, radio-frequency ID tags that are attached to the soap containers send out wireless signals. These wireless signals tell the machines on the production line about the customized order.

The setup and manufacturing process is automated, exact, and with near perfect quality control.

GE

At GE’s Advanced Manufacturing Works in Greenville, South Carolina, engineers are working on new ways to streamline smart factories using AI and IoT technology. This $75 million plant sits next to where GE makes the world’s largest gas turbines – products manufactured on a huge scale with incredibly intricate pieces. They have introduced smart factory systems into this factory and are working to provide more to its other plants around the globe.

Staffed with 80 engineers, PhDs, and machinists with decades of experience – they will use the Advanced Manufacturing Works to try new manufacturing and design ideas in order to streamline the production processes of other factories.

POSCO Implements AI Into Its Smart Factories

POSCO CEO Ohjoon Kwon recently visited Siemens and GE to compare their work in smart factory systems with POSCO’s. All three of them are working on vastly different products; however, the ideas behind the technology are similar.

At POSCO’s Gwangyang Works, they have installed a data integration infrastructure that encompasses all of its operations and facilities. This technology uses an automated control technology that predicts the coating weight of zinc in automotive steel in real time to precisely control the Continuous Galvanizing Line (CGL), the primary technology used in automotive steel sheet production. In combination with the coating weight system, they have also created a data pre-analysis system that can preemptively detect abnormalities.

POSCO’s smart factory systems have improved quality and reduced waste

Coating weight control is a highly-sophisticated technology that keeps the thickness of the coating layer consistent – even when operating conditions change suddenly. When coating weight is controlled manually, quality deviates depending on the skill level of the worker, inevitably resulting in significant amounts of wasted zinc. However, the plating process is now automatically controlled by artificial intelligence, increasing the quality of POSCO’s automotive coated steel while decreasing production costs.

Also, in order to apply smart technologies more quickly, POSCO Group University is partnering with POSTECH (Pohang University of Science and Technology) to build an AI ecosystem that nurtures AI specialists and fosters advanced research. POSCO Group University will be in charge of launching related training programs POSCO and its subsidiaries, while POSTECH Information Research Laboratories (PIRL) will be in charge of developing content for basic and advanced courses to increase people’s understanding of AI, big data, programming, pattern recognition, machine learning, natural language processing, and computer vision. This partnership will serve as a significant milestone in expanding cooperation between companies and academic institutions, a fitting move in the era of the Fourth Industrial Revolution.

POSCO, Siemens, GE, and BASF are all utilizing the connected technologies of Industry 4.0 to move their industries forward. GE recently estimated there will be over “50 billion connected devices by 2020 and that the Industrial Internet could add $15 trillion to global GDP in productivity gains over the next 20 years.” Despite the industry barriers facing steel companies, POSCO is leading the industry in implementing connected technologies that will help them build the smart factories of the future and remain competitive for years to come.

To combat these issues, each country is expanding into the global market with differentiated export strategies in order to increase their shares. China is diversifying export items and destinations for its bulk supply of steel products. Japan & Korea are moving forward with investment in high-quality steel production, and Korea is also gearing up to meet demand through overseas downstream investments in Southeast Asia, Mexico, USA, and India. In addition, in order to stay competitive, companies are adapting to the technological changes of the Fourth Industrial Revolution – integrating AI, IoT, and smart factory solutions to create stronger products.

Following the rise of China, the global steel trade market entered a period of structural transition in the 2000s. China used to be a net importer of steel and a “key market” for global steelmakers, but they have now become its leading producer. (Data courtesy of World Steel Association)

Below we outline some of the problems facing the Northeast Asian region and what they are doing to overcome them and remain competitive among these changing conditions of the last two decades.

Capacity of  the Chinese Steel Market

Roughly half of all steel production takes place in China. China’s rapid economic growth created conditions that led to the increased development of its steel industry, many of which were led through policy-driven investments by the Chinese government. From 1990 to 2016, the Chinese government introduced more than 320 policies and measures to regulate the steel industry. Of these, nearly half (49%) were issued to control the capacity of steel expansion. Despite recent capacity-related policies being introduced by the State Council, some industry observers doubt the potential of their effectiveness, which calls for a 100-150 Mt capacity reduction by 2020.

Edwin Basson, Director General of World Steel Association, believes that China reached peak steel at a rather earlier stage of its economic development compared with the experiences of other developed economies as it has accomplished a very condensed development in a relatively short time period. China is now seeing decreased demand for steel despite maintaining a high 6% GDP growth rate. Basson noted, “the largest and most difficult [challenge facing China] is probably the rebalancing between investment and consumption in the economy.” Because steel is so intricately integrated with all other parts of the economy, structural changes are forcing the steel industry to change as well. What has been a predominantly investment-led system is now shifting to a demand-led system.

Frank Zhong, from the Beijing office of the World Steel Association, recommended six directions for the Chinese government to take in its restructuring of the domestic steel market (download PDF).

• The government’s role should be gradually overtaken by market forces.
• The steel industry should be consolidated to generate better synergy in the industry, in particular in market development and R&D.
• A joint fund should be initiated to support the restructuring.
• Reform of state-owned steel enterprises (SOE’s) should be accelerated, the sooner the better.
• Steel companies should be more integrated into the global steel industry.
• Steel companies’ human resources system should be more open.

Because China seems to have already reached peak capacity, we should expect to see long term decline. While some markets have been able to recover to peak periods after the decline (see Germany and Japan), it is difficult to see how China recovers to its 2013 peak levels. However, the future development of Western China, the continued capability of China as a competitive manufacturing base, and its geographical location could contribute to renewed growth in steel demand.

Solutions to Overcapacity

Reducing excess capacity is not an easy task, largely because of the many hidden barriers. Capacity reduction can have a significant impact on the balance sheets of operating companies and are never popular with investors. With the determination of the current government to tackle overcapacity and environmental protection, China has publically announced a reduction of up to 150 million tons over a five year period.

World Steel Association members have urged that restructuring takes place based on fair and similar principles across all markets. Member groups recently agreed to the following principles:

• Governments should promote a swift and timely restructuring of the steel industry by advancing policies that ensure market forces play a decisive role in determining the future of the industry.
• Market-oriented approaches should ensure the survival of the fittest producers. Inefficient producers should not be subsidized to remain in operation.
• Barriers that delay restructuring should be removed in an orderly and timely way.
• Develop safety net support that mitigates the consequences of restructuring.
• Commitments to adjust the steel industry structure should be made known and tracked until finalization.

Because China represents such a large portion of the global market, any increase or reduction in capacity will have major implications for other countries. Finding a solution to China’s overcapacity is critical to the sustainability of the industry in the region and other nations have been pushing for decreased capacity.

Japan has been pushing for lower production volume out of China – especially as demand has peaked. In Korea’s case, China’s production capacity has forced steel manufacturers into business and financial restructuring due to slowed growth. In order to set themselves apart, companies like POSCO have refined their product line-up to offer more advanced, customized solutions that cannot be provided by high volume producing competitors.

Despite pledges to cut steel capacity, recent reports from the Financial Times suggested that China’s capacity actually rose in 2016.

The global steel export market is riding a wave of change in the face of surprisingly high growth in the Chinese steel industry. Japan used to be the world’s top steel exporting country, but it was overtaken by China in 2006. (Data courtesy of World Steel Association)

Aging Populations and Decreased Demand for Steel

Changes in working-age populations are directly related to steel demand because they are the main consumer group of homes and vehicles – two of the key industries that control steel demand. Therefore, the aging of working-age populations will continue to have a negative impact on economic growth and steel consumption in Japan, Korea, and China.

Learning lessons from advanced countries about the experience of aging populations, below are some shared characteristics:

• Decreases in manufacturing coincide with increases in service.  
• After reaching peak production, steel consumption typically declines.
• Changes in working-age populations have a strong correlation with changes in steel-consuming industries and steel consumption.

The decrease in working-age populations in Korea, China, and Japan, which have led the growth of the global steel industry, are expected to have a negative impact on global steel demand in the medium to long term. While demand is expected to increase in the ASEAN region and in India, it is unlikely that they will grow fast enough to offset the decline in steel demand in the three East Asian countries.

To confront this structural shift, steelmakers must begin to improve upon their already advanced products. Aging populations have less total demand, so competition from the steel manufacturers will likely come through the technological advancement and customized solutions being seen in the Fourth Industrial Revolution.

Influence of the Fourth Industrial Revolution on the Steel Industry

As Northeast Asia faces many structural changes that are having a depressive impact on the steel industry, they are taking the necessary steps to stay ahead. The region has long been a leader in technological adaptation and product innovation. Recent efforts to produce higher-value, customized steel have also coincided with improvements in the production processes.

POSCO’s Smart Factory houses rolling mills with IoT sensors attached, which collect data for analysis.

The industry is already extremely efficient in iron and steel making, as well as processing. Within this environment, the Fourth Industrial Revolution could continue to play an important role. It is unclear how much progress will be made as the industry has already achieved a relatively high level of technological advancement. Companies like POSCO are introducing technology to create smart factories that streamline production, reduce waste, and increase safety.

In China, their “Made in China 2025” and “Internet Plus” initiatives plan to integrate mobile, cloud computing, big data and the IoT with manufacturing – all in order to help develop e-commerce, industry networks and the international presence of Chinese companies. In Japan, their “New Robot Strategy” is being developed to position Japan as a robotics superpower in order to create streamlined and automated systems.

POSCO is working to build steel plants that can sense, analyze, and control its conditions, just as a human can feel, think, and respond. POSCO’s smart factory project, currently taking place at Gwangyang plate plant, will gradually be extended to all production areas.

In addition, apart from making advancements in the actual production of steel, it is expected that the industry will have a stronger indirect influence through changing the manufacturing process and product design of items requiring steel as an input.

With its Smart Factory, POSCO is able to identify any defects during the production process prior to the final stages of the operation.

Economic, demographic, and structural shifts are having long term effects on the steel industry in the Northeast Asian region. As the largest global producer, China’s steel production capacity and efforts to curb its oversupply affect not only investors in China but also steel makers in every other region around the world. Also, due to a slowing economy and aging population, regional demand is expected to experience an extended decline in the coming years.

To offset these negative impacts, technological advances continue to define the industry as companies like POSCO introduce AI into their smart factory systems. These advancements have led to improvements in quality, reduction in waste, and increased safety for workers. As the Fourth Industrial Revolution expands, steel companies must adapt in order to face the pressures facing the industry as a whole.    

In order to bridge this gap, POSCO Group University and POSTECH (Pohang University of Science and Technology) will set out to build an AI ecosystem by nurturing AI specialists and conducting joint research. On February 28, POSCO Group University and POSTECH Information Research Laboratories (PIRL) signed an agreement to work on building a training program for in-house AI specialists in POSCO Group and to promote overall collaboration. Young-joo Seo, the head of PIRL, said, “We will invite the best in AI to train researchers at corporations and produce AI specialists within a short period of time. This will hopefully strengthen the competitiveness of companies and of this country.”

Sun-hee Yoo, director of POSCO Group University Global Leadership Center (left), and Young-joo Seo, head of PIRL, signed an agreement on February 28 to create training programs for AI specialists in POSCO Group.

PIRL was founded in 1991 to conduct research on cutting-edge information and communications technology (ICT). It opened an office in Pangyo last October to conduct research and begin the commercialization of AI and big data; it has also successfully supported startups in related fields.

POSTECH has been a leader in research by showcasing its strengths in AI and big data. It is expected to lead innovation in Korea’s industrial circles by developing AI-based technologies, conducting research, nurturing AI specialists, and making full use of and applying other related technologies in the field. Aside from POSCO Group, POSTECH has also worked with other companies to train specialists and conduct joint research. It plans to create and provide customized training programs for each corporation.

With this agreement, POSCO Group University will be in charge of launching related training programs and beginner courses for POSCO Group and its affiliates, while PIRL will be in charge of developing content for basic and advanced courses to increase people’s understanding of AI, big data, programming, pattern recognition, machine learning, natural language processing, and computer vision. It is the first time that a university in Korea is providing a program to train AI specialists, especially for corporations, and will serve as a significant milestone in expanding cooperation between companies and academic institutions, a fitting move in the era of the Fourth Industrial Revolution.

Currently, 59 people have completed the beginner course with the POSCO AI program. For the basic and advanced course, 15 employees from POSCO and 10 employees from POSCO affiliates will be selected to participate. If participants successfully pass the four-month group training, task performance course, and six-month advanced course, they will be selected as AI specialists and experience a chance to work in the field.

In order to better equip POSCO Group employees to respond to changes at the group level and increase their awareness on AI, POSCO Group University will add a three-session beginner course. In addition, an AI training course will be available for POSCO executives during the first half of this year.

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Automotive coated steel, one of POSCO’s World Premium Products (WPP), is a high-grade product that requires a high level of sophisticated technology. Only 20 out of 800 steel companies in the world can produce it at this time. Last year, POSCO sold approximately 9 million tons of automotive steel sheets, accounting for 10% of the global automotive steel sheet market.

The ‘Smart Solution for Coating Weight Control Based on AI‘ is a technology that drastically reduces the deviation of coating weight by using artificial intelligence to precisely control the Continuous Galvanizing Line (CGL), the primary technology used in automotive steel sheet production.

In particular, this technology uses an automated control technology that predicts the coating weight in real time and accurately meets the target coating weight by combining the coating weight production model of the artificial intelligence technique with the control model of the optimization technique.

A developer and worker are seen in the operating room monitoring the optimal coating weight predicted through artificial intelligence. POSCO succeeded in developing the ‘Smart Solution for Coating Weight Control Based on AI‘ through a joint industry-university effort, and applied it to POSCO 3CGL last January. With artificial intelligence, it is now possible to collect hundreds of different types of data in real time, as well as accurately predict and control target coating weights.

Coating weight control is a highly-sophisticated technology that keeps the thickness of the coating layer consistent even when operating conditions change at the request of automakers. When coating weight is controlled manually, quality deviates depending on the skill level of the worker, inevitably resulting in significant amounts of wasted zinc. However, the plating process is now automatically controlled by artificial intelligence, increasing the quality of POSCO’s automotive coated steel while decreasing production costs. These new automated processes have also helped to increase work efficiency and productivity with workers.

Since the inauguration of CEO Ohjoon Kwon in 2014, POSCO has been preparing to take the lead in smart solutions by integrating AI into its smart factories. Last June, POSCO Technical Research Laboratories identified the need for an automated coating weight control system and collected the relevant data after discussing with several departments. POSCO worked with Prof. Jon-seok Lee of the Department of Systems Management Engineering at Sungkyunkwan University in Seoul, Korea, to develop the artificial intelligence coating weight prediction model algorithm. Prof. Lee is an expert in statistics, data mining, machine learning and optimization methodologies. He collaborated with POSCO researchers to develop the coating weight prediction program after analysis of the plating process.

Starting in July 2016, a beta program was introduced for two months. After successful completion of the beta test, POSCO Technical Research Laboratories added an additional program to ensure quality control even under changing operating conditions.

The core AI technology that was applied to the coating weight control automation is a self-learning software that utilizes big data deep learning techniques. This method operates in real time allowing the AI program to stay up-to-date by analyzing hundreds of different types of data generated during the plating process. It can accurately predict and control coating weight through real-time, even if equipment has been replaced or operating conditions have changed.

The completed coating weight control automation solution was applied to POSCO’s 3CGL line in Gwangyang on a trial basis for approximately 2 months, enhancing accuracy and stability. Normally, when operating manually, deviations in the coating weight can extend up to 7g per m², but with POSCO’s AI-based technology, this number is reduced to 0.5g per m². After a technical verification process, the technology was incorporated into the 3CGL line on January 5.

To maintain its position as a global leader in automotive coated steel technology, POSCO is planning to apply this coating weight control automation solution to other CGLs at home and abroad, like the recently opened Thailand CGL. POSCO is also taking steps to introduce artificial intelligence technology to the manufacturing processes of other steel products while also continuing to build smart factories that can help POSCO continue to be a leader in the steel industry.

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In response, China’s government and industries are turning to the Fourth Industrial Revolution, seeing the increased integration of information technology, big data and the internet as the key to revive its manufacturing sector and create new opportunities for growth.

How is China preparing for the Fourth Industrial Revolution? And how will that affect their steel industry? Those are the topics explored by Dr. Chang-do Kim, senior principal researcher at POSCO Research Institute (POSRI), in the most recent issue of POSRI’s Asian Steel Watch.

China’s Approach to the Fourth Industrial Revolution

The Fourth Industrial Revolution refers to the combining of the Internet of Things (IoT), big data, artificial intelligence (AI), cloud computers and all the other emerging smart IT technologies to create a faster and more powerful industrial system that blurs the boundaries between the physical, digital and biological. In Germany, “Industry 4.0” is the official approach to this new era, while in the United States, officials talk about the “Industrial Internet.”

In China, there are two complementary government policies for the Fourth Industrial Revolution: “Made in China 2025” and “Internet Plus.” Internet Plus was introduced in March 2015, featuring an action plan of integrating mobile, cloud computing, big data and the IoT with manufacturing to help develop e-commerce, industry networks and the international presence of Chinese companies.

Made in China 2025 is even larger in scope, with five “basic directions”, four “guiding principles,” nine “objectives”, five “key projects”, 10 “priority sectors” and eight “actions for policy improvement” from 2015 to 2025. But the main emphasis of these many plans and aims is clear: innovation.

Made in China 2025 is also just the first step in a three-stage plan to boost China’s manufacturing and innovative capabilities over 35 years. The point of the ambitious, long-term strategy is to make China a world-leader. At the moment, China sees the world’s top manufacturers divided into three tiers, with the United States at the top, and Japan and Germany in the second tier. China considers itself to be third-tier now, but plans on becoming second-tier by 2025 and the leader of the second tier by 2035, finally becoming top tier by 2049. And at the heart of all those manufacturing plan is the Fourth Industrial Revolution.

The Potential of Smart Factories in China

A big part of modernizing industry involves building smart factories – factories that have been transformed through sensors, programmable logic controllers and other control systems, along with advanced manufacturing applications. And at the heart of smart factories is cyber-physical systems (CPS), which integrate the physical side of manufacturing with the digital.

One market research company predicts that between 2014 and 2020, the world market for smart factories will grow at 5.4 percent CAGR, rising from US$41.3 billion to an estimated US$56.6 billion.

China has been the world’s biggest manufacturer since 2010, which gives it a significant advantage in moving toward the future, especially in compiling big data. Having a government willing to provide such heavy support is also a great boom to industries.

However, China also faces significant challenges. Manufacturers around China have greatly different levels of development, with most falling between Industry 2.0 and Industry 3.0 these days. Many analysts think it is more important to get most manufacturers up to Industry 3.0 before pushing onward to Industry 4.0.

Others point out that China is lacking the experts needed to implement smart factories properly. Without the ability to build and analyze big data and CPS, becoming a next-generation leader will be extremely difficult.

However, the Chinese government is already aware of this problem, and is trying to create a phased introduction for smart factories, adding more sophisticated advances as its domestic industry becomes able to handle them.

How Smart Factories Are Transforming China’s Steel Industry

These days, China’s steel manufacturers are facing major challenges to profitability due to overcapacity, environmental regulations, rising costs and other factors. So there is much optimism that introducing smart factories will prove to be quite helpful for the steel industry.

The Baosteel Group’s subsidiary Shanghai Meishan Iron and Steel is already implementing smart manufacturing into its development strategies. Baosteel is also looking to introduce an e-commerce platform, and make other IT advances.

But with the different levels of development among China’s various steelmakers, experts think phased implementation of smart factories will be needed in this sector, too, along with a selection and concentration of companies. For small- and medium-sized steelmakers, the emphasis should be on the early stages of automation and management, looking at such areas as manufacturing records and defect logs.

For larger manufacturers, the focus should be on creating real-time systems that connect the automation control of their factories. And for the largest steelmakers, they can work on multifunctional intelligence, wired and wireless communication with AI and autonomous productions of facilities and systems.

In China, as in the rest of the world, the challenges presented by the Fourth Industrial Revolution are forcing manufactures to move their capabilities swiftly into the future. And for China’s steel industry, that future is beginning to take shape now. Just as China shocked the world with its rapid rise into a manufacturing powerhouse, now it looks to lead the way with Industry 4.0.

Indeed, this topic is so pressing that the theme of January’s World Economic Forum in Davos, Switzerland, was “Mastering the Fourth Industrial Revolution.” Big data, artificial intelligence (AI), virtual reality (VR), 3D printing and the Internet of Things (IoT) are combining to create seismic changes to industry – including to the world of steel.

Just what we mean by the Fourth Industrial Revolution and how that is changing steel were the focus of “The Fourth Industrial Revolution: The Winds of Change Are Blowing in the Steel Industry,” an in-depth essay by Jeho Cheong, senior principal researcher at POSCO Research Institute (POSRI), in the latest issue of POSRI’s Asian Steel Watch.

What Is the Fourth Industrial Revolution?

Industry experts and historians have commonly divided up the rise of modern business in industry into a series of significant eras. The original Industrial Revolution refers to the rise of mechanization, most notably the creation of the steam engine.

About a hundred years after that, the spread of electrical power and related technologies (like the conveyor belt) led to the Second Industrial Revolution: mass production. The Third Industrial Revolution appeared in the late-20^th century with the rise of computers and the internet, leading to informatization and automation.

The Fourth Industrial Revolution builds on the third, but building in speed, scope and impact to blur the boundaries between the physical, digital and biological. All aspects of knowledge and creation are being combined the smart IT technology to become something exponentially more useful and powerful.

A New Paradigm for Industry

The rise of the Fourth Industrial Revolution is having widespread impact on business, turning many assumptions and practices upside-down. For one thing, the increasing effectiveness of AI technology is threatening many jobs, like in journalism and the financial sectors, where repetitive reports can often be composed by smart algorithms.

This new industrial era also is causing the breakdown of many longstanding business structures. Smart technology is changing how we use energy, how our cars operate and are maintained, and how we pay for goods and services.

But perhaps the biggest change being caused by the Fourth Industrial Revolution is how it is changing value – destroying many traditional sources of value and replacing them with data-driven value. For instance, in the automobile industry, the data about how we drive – where, when, how, etc. – could surpass the value of the cars themselves.

Instead of the economy being primarily about goods, it is becoming about data, and intangible value is exceeding the tangible. The growth of companies like Google, Amazon, and Facebook – modern giants built primarily on data – is a clear sign of how the Fourth Industrial Revolution is changing our world.

What the Fourth Industrial Revolution Means for Business

All over the world, governments are teaming up with industry an in attempt to come to terms with these changes. In Germany, they call it “Industry 4.0,” in the United States it is “Advance Manufacturing Partnership,” in China the approaches are “Made in China 2025” and “Internet Plus,” while in Japan it is part of the “New Robot Strategy.”

The nuances and emphases of these approaches are slightly different, but the general idea is the same: to help industry deal with a new, information-based era.

What this means for consumers is increasing customization and personalization. People no longer are content to be part of a large trend. Now they want styles and technologies that work just the way they want to use them. In the past, customization meant huge cost increases, but not anymore.

This in turn is forcing manufacturers to change their entire approach to automation. Instead of central controls and fixed products, now industry is expected to produce dynamic products, constantly reacting to changing situations. Business logistics and manufacturing logistics need to be tightly integrated, to minimize waste and time to market.

Finally, this expansion of value-chains and transformation of manufacturing is changing the nature of service. Where once service was a cost to corporations, today, thanks to better information collection and knowledge of usage patterns, it is becoming a significant revenue source. By using big data, businesses can create valuable information for their customers, which can be monetized and sold.

What the Fourth Industrial Revolution Means for Steel

What do these changes mean for steel? After all, the steel industry is very different than most manufacturing processes: steel requires continuous processing, with liquid steel kept at high temperatures, moving at high speeds. In addition, in the steel-making process, labor is a relatively low cost, so there is little room for automation to bring savings.

But in fact the Fourth Industrial Revolution is bringing big changes to steel, too. These new technologies are allowing steel companies to reduce inventory and grow more flexible and responsive to customer needs. It is possible that all information related to steel supply and demand could become available to all producers and consumers, leading to unprecedented transparency and efficiency.

And at POSCO, the aim is even higher: the creation of a “digital genome map.” Just as the Human Genome Project is sequencing the billions of chemical base pairs that make up the human DNA in order to better diagnose and treat diseases, so too is POSCO working on collecting all microdata about every aspect of steel production.

POSCO is looking to create a steel plant that can track every aspect, including production, energy usage, safety, and quality, constantly sensing and responding to inputs. In fact, POSCO’s Gwangyang plate plant is already being turned into a Fourth Industrial Revolution smart factory, and plans are to extend this to all production areas.

The future is just around the corner, and at POSCO, that dedication to innovation is helping to realize the awesome potential of the Fourth Industrial Revolution for the steel industry.