POSCO Group to co-invest in Hyundai Motor Group’s Louisiana steel mill in the US, securing a marketing foothold for North American automotive customers

Leveraging POSCO Group’s secondary battery materials business competitiveness to strengthen cooperation in establishing stable supply chains and developing next-generation materials

Evolving the 50-year partnership of ‘steel and automotive’ into a sustainable strategic relationship centered on ‘low-carbon steel and future mobility’

POSCO Group and Hyundai Motor Group, representing South Korea’s manufacturing industry, have joined hands to secure a leading position in the global future mobility materials market.

On April 21, POSCO Group held a signing ceremony for a ‘Memorandum of Understanding for Mutual Cooperation in Steel and Secondary Battery Fields’ with Hyundai Motor Group at Hyundai’s Gangnam-daero headquarters, agreeing to create sustainable synergy in low-carbon steel and secondary battery markets amid global economic blocks and rapidly changing trade environments.

With this MOU, POSCO Group aims to establish itself as a global top-tier supplier of future mobility steel and secondary battery materials. In contrast, as a worldwide top 3 automaker, Hyundai Motor Group aims to lead the future automobile market by stably procuring customized premium materials.

The two companies will cooperate in global joint ventures to overcome trade environment challenges to effective carbon-neutral transitions for low-carbon steel production in the steel sector. As the first fruit of this cooperation, POSCO Group will participate in Hyundai Motor Group’s recently announced US steel investment as part of its end-to-end localization strategy for the steel business. This will allow POSCO Group to secure a foothold in the North American steel market, which has been restricted by protectionist trade barriers for the past decade.

POSCO, the steel business company, will be able to establish a flexible global production and sales system through this joint investment in a Louisiana steel mill, enabling smooth material supply to the US and Mexico regions. POSCO currently operates steel processing centers in North America (US/Mexico), including its automotive steel plant (POSCO-Mexico), serving various automakers as customers.

In the secondary battery materials sector, POSCO Group’s strategy is actively responding to the global electric vehicle market post-Chasm by establishing a stable supply chain with Hyundai Motor Group, a global top 3 automaker. In particular, the two companies plan to find sustainable collaboration points in supply chain establishment and next-generation materials development, creating synergy between POSCO Group’s competitiveness on secondary battery materials business, from lithium to cathode and anode materials, and Hyundai Motor Group’s eco-friendly future mobility technology.

This strategic alliance has been under discussion between the two companies since last year as part of Chairman In-hwa Chang’s focus on strengthening POSCO Group’s position in overseas high-growth, high-profit steel markets through the ‘end-to-end localization strategy’ and flexibly responding to changes in the secondary battery materials market to prepare for the post-Chasm era.

The MOU signing was attended by Seok-won Han, Senior Executive Vice President and Head of Planning & Coordination Division at Hyundai Motor Group, Ju-tae Lee, Head of Future Strategy Division at POSCO Holdings, and executives from both companies.

Ju-tae Lee, President of POSCO Holdings, said, “Based on the synergy between the two companies, we will be able to find solutions for sustainable growth across the group’s businesses, including steel and secondary battery materials, amid global trade pressures and paradigm shifts.”

Hyundai Motor Group and POSCO Group have grown into global leaders in the steel and automotive industries beyond the domestic market through their partnership, which has continued for over 50 years since 1973. With this strategic alliance as a stepping stone, the two companies expect to create synergy for sustainable growth through ‘low-carbon steel and eco-friendly mobility’ amid global industry restructuring and paradigm shifts.

Meanwhile, POSCO Group is reorganizing its business around steel, energy materials, and new businesses under ‘2 Core + New Engine,’ focusing on strengthening its fundamental competitiveness to build a long-term growth structure. In particular, POSCO Group is building a portfolio of steel materials for future mobility, including ‘GIGA Steel’ for automotive steel plates that leverages high strength and lightweight advantages, as well as battery packs and electric vehicle motor materials, along with a secondary battery materials value chain equipped with cathode and anode material production and recycling capabilities based on global lithium salt lakes and mines.

▲POSCO Group and Hyundai Motor Group signed a ‘Memorandum of Understanding for Mutual Cooperation in Steel and Secondary Battery Fields’ at Hyundai’s Gangnam-daero headquarters on April 21. Attendees included (from left) Seok-won Han, Senior Vice President and Head of Planning & Coordination Division at Hyundai Motor Group, and Ju-tae Lee, President and Head of Future Strategy Division at POSCO Holdings.

POSCO’s smart safety features

As a steelmaking company, POSCO has been working towards becoming a “Smart POSCO”, or incorporating the implementation of AI into their production practices. In 2016, POSCO established a Smart Solution Council to research AI, big data and IoT applications. To date, the company has achieved a cost reduction of USD 14 million with the new technology. Even as one of the first steel producers in the world to implement a smart factory for production, the road ahead is a long one. Members of the discussion panel at the 2017 Smart POSCO Forum offered their expert opinions on how companies should move forward with AI research and applications.

Problem Mining

“One of the biggest difficulties in applying AI to manufacturing companies is problem mining. The only way to solve a problem is to find it and define it.” Kim Byung-In, a professor at the POSTECH Department of Industrial and Management Engineering, started off discussions and added, “Along with problem mining, people can learn from the past with reinforcement learning. Reinforcement learning means learning through similar tasks from the past to apply to new assignments. Defining problems and solutions more precisely and systematically managing related keywords can be useful for future tasks.”

Professor Zhang Byoung Tak, an AI professor at Seoul National University and a distinguished professor for POSCO added, “Traditionally, people solve problems, but in the generation of AI, AI will be able to solve problems for us… People now have to focus on defining problems, implementing systems and getting the right kind of data.”

Cooperative Research and Investment

Along with defining the exact problems that AI can provide solutions for, the implementation of AI will also call for a new working culture for companies and industries.

Tech company VUNO CTO Jung Gyuhwan stated, “Each company has its own production or operation method, and different data formats and protocols, but product inspection and screen UI (User Interface) are common areas. If we can find such common areas that can be commercialized and continue to research ways to expand AI applications to different sectors, we can achieve meaningful results together.”

Researchers developing programming and coding technologies

Jung went on to highlight that most AI personnel are unfamiliar with manufacturing. In particular, steel production terms are so difficult that it takes a considerable amount of time to share and understand information. There are also numerous obstacles and obligations for startups entering an unfamiliar development environment full of regulations and restrictions on things like the use of codes.

“In other words, task efficiency is a trade off with information security. I believe that if there is such a process in POSCO where the risk of technology leakage is not high, it will speed up results through collaboration with start-ups. POSCO ICT in Pangyo is a good place for startup employees to work. If we can take advantage of the POSCO ICT databases, collaboration with start-up companies will be easier. As of now, there are not many AI companies in Korea that specialize in manufacturing. Most people don’t even know that there is a lot of data available in the manufacturing industry. That’s why fostering start-up companies specializing in manufacturing now, is a good idea.”

Google’s Fei-Fei Li announces Google’s acquisition of Kaggle. (Source: Venture Beat)

According to CB Insights, M&A (mergers and acquisitions) of AI startups have increased 700 percent since 2011, because they are more efficient and often more insightful when it comes to AI research. Besides investing in existing startups, members of the panel agreed that collaborative competitions such as Kaggle, a contest platform where data scientists from around the world participate in solving problems in industry and society, are a great place to find talent and foster them as start-up companies.

Tackling New Challenges

The flurry of activity around AI research shows just how new the sector really is. People are still finding ways to apply AI across different sectors and industries. In such a volatile environment, how do companies and researchers navigate their way forward?

According to Choi Heeyoul, a professor of computer science at Handong Global University, companies need to “start where the people, problem definition and data are ready. Whether it is in production, sales, distribution, etc., if there is the will to solve problems, then results will follow. Especially when collecting data, you need the help of data analysts. For example, classification data for different types of steel can only be analyzed if the history of the classification criteria is recorded. Speech recognition is not any better for AI application than other fields, yet the most active and productive research has been completed in this sector. This is attributable to the will to apply AI, the abundance of accurate data and close cooperation with data analysts.”

Obtaining accurate data is vital for AI research

Professor Zhang Byung-Tak had another approach to offer. “I hope people will boldly take on challenges. The dramatic increase in computing power can now enable attempts that were previously considered reckless…No matter how much data we gather, it will never be enough. We need to approach problems as experiments and just start. One way to go about it is to work in reverse instead of waiting for data to be accumulated. You can start the task to define the data that is needed and determine the coherence of the data to the task.”

Lee Jong-Seok, a Professor at Sungkyunkwan University added, “When we are defining problems, we need to separate them into ones that can be solved in the short term and ones that require long term solutions. Some problems can be solved with minor improvements, while other problems will persist. For the latter, it is important to have patience and invest in a solution over a long term.”

That’s exactly what manufacturing companies are doing. They are collecting data every stage of production all the way to sales and administration. Big data is now available to study and apply to boost companies’ efficiency, sustainability and performance. Those who come up with the optimal software and modeling systems for data analytics will win the competitive edge early on.

UNIST professor Choi Jaesik echoed the panel’s sentiment, in closing, saying, “It’s very uncommon for a manufacturing company to hold AI courses for all their employees. I think POSCO can take pride that…POSCO is a great place to apply AI and achieve results. There is already plenty of data on site and employees are continuously working to obtain more accurate data. I look forward to seeing what POSCO will bring to the advancement of AI.”

POSCO CEO Kwon Ohjoon plans on doing exactly that, by increasing investment in research and implementing AI technology where applicable. Read more on POSCO’s smartization efforts here.

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The findings were based on an analysis of some 5,200 comments posted between January 1 and June 30 by employees of the top 10 Korean conglomerates in terms of total assets. The total score was calculated by looking at five categories: welfare and wages, promotion opportunities and possibilities, work-life balance, workplace culture and management leadership.

POSCO scored 63.48 out of 100, good enough for second place, following Hyundai Motor Group.

POSCO runs a fair personnel system along with systematic human resource (HR) training. In addition, the company supports its employees both at home and work through introducing an array of family-friendly systems, including operating the POSCO Childcare Center.

Most notably, in 2011 POSCO adopted a system that allows up to two years of childcare leave, twice Korea’s legally guaranteed period of one year. The company also runs a childcare system that automatically links maternity leave to childcare leave once the maternity leave is completed. Spousal leave, which allows employees to accompany their spouse assigned to an overseas office if the spouse is also a member of POSCO Group, has also increased employee satisfaction.

POSCO also ranked second in Job Planet’s 2015 Best Places to Work, released in June last year. In that survey, the company ranked first in promotion opportunities and possibilities, and second for work-life balance, recognizing POSCO’s efforts to create a workplace that provides happiness both at home and work.

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