On the morning of July 27, POSCO held a shareholder meeting at the POSCO Center in Gangnam-gu, Seoul where the proposal to appoint Jeong-Woo Choi as the CEO and executive chief director was passed.

POSCO held a board of directors meeting right after the shareholder meeting where he was formally appointed, thus concluding the appointment of the 9th CEO in POSCO.

The new CEO then spoke at the inauguration ceremony at Pohang steel mill among 300 members in the audience including POSCO employees, labor-management councils, labor union representatives, executive council, chief community representatives, representatives of Pohang steel mill employees, representatives of suppliers, and suppliers’ council.

Jeong-Woo Choi, the new CEO giving his inauguration speech

The new CEO underscored the duty of ‘Corporate Citizens’ that fulfills social responsibilities, beyond the economic scope of generating profit.

He continued that POSCO which had previously pressed on vigorously for the past half-century based on the belief of achieving excellence in steelmaking should now implement strategies to pursue harmony and coexistence with society, thus proposing ‘With POSCO’ as the new management mission.

He suggested breaking new ground through Business With POSCO (pursuing mutually beneficial values with customers, suppliers, and business partners), Society With POSCO (creating a better society), and People with POSCO (creating new corporate culture through building trust and cultivating creativity).

Business With POSCO

Society With POSCO

People With POSCO

Choi additionally emphasized the significance of establishing a mature corporate culture as the new branding of POSCO, pursuing harmony as corporate citizens by suggesting detailed plans of action to implement these three major strategies— Seeking substance over formalities, execution over briefing, and profit over justification.

After the inauguration ceremony, the new CEO was then transported to the site of Pohang 2nd blast furnace to encourage field staff. Then on Monday, he visited the Gwangyang steel mill again to greet workers and exchange words of encouragement.

After the inauguration ceremony, the new CEO visits Pohang 2nd blast furnace to greet and encourage field staff.

After entering POSCO in 1983, CEO Jeong-Woo Choi took charge of key positions such as accounting, cost management, audit analysis, auditing, and planning. His work experience spans decades which includes Chief Financial Officer in 2006, Managing Director of POSCO E&C in 2008, Precision Management Managing Director in 2010, its Executive Director in 2012, Vice President of Financial Planning and Management of Daewoo International in 2014, Vice President of Daewoo International in 2015, Vice-President CFO of POSCO in 2016, President CFO in 2017, and CEO of POSCO CHEMTECH in 2018.

Since 2014, POSCO successfully completed 150 cases of restructuring.

Back in the 2000s, POSCO suffered its worst financial crisis due to failed investments in growing businesses. Its consolidated operating profit, which exceeded KRW 7 trillion at one time, recently fell to about KRW 2.5 trillion. POSCO’s cash on hand, which peaked at more than KRW 8 trillion, declined to nearly KRW 5 trillion, and credit ratings worsened as well.

That’s when CEO Kwon implemented the Innovation POSCO (IP) 1.0 and 2.0 projects successively to innovate the company’s financial structure and began broad-based restructuring. CEO Kwon recalls, “POSCO sold its non-core steel business, and merged similar businesses to increase efficiency and eliminate waste. We also liquidated low-yielding substandard businesses to prevent the aggravation of insolvency.”

As a result, the number of POSCO’s domestic affiliates decreased from 71 to 38, and the number of its overseas affiliates declined from 181 to 124. The company also recovered KRW 7 trillion over the 4-year period, and prevented annual losses of about KRW 400 billion.

Moreover, POSCO’s consolidated cash on hand increased to KRW 8.55 trillion at the end of the third quarter, repaid its debts by more than KRW 5 trillion and POSCO’s consolidated debt ratio dwindled to 67.6 percent, the lowest since 2010. Moody’s, an international credit rating agency, recently upgraded the forecast for POSCO’s issuer rating, Baa2, from negative to stable, and then to positive, and predicted that POSCO’s financial health will continue to improve in the next 1-2 years.

POSCO’s Future growth strategy is two-track: smartization and development of new growth engines.

CEO Kwon expressed his vision for the company In 2018 and beyond. He said, “POSCO plans to implement smartization with efforts such as combining ICT with its core businesses, ranging from steel and energy to construction and chemicals to develop newly converged businesses to lead the 4th Industrial Revolution.”

CEO Kwon delivering his new year’s message at the POSCO Family Kick-off Meeting 2018.

SEE ALSO: Building on a Year of Success: POSCO’s Top 9 News of 2017

The company will also accelerate the development of smart factories utilizing big data and artificial intelligence, and further enhance core processes for environmentally-friendly, highly-efficient and future-oriented steel mills.

In addition, CEO Kwon mentioned that POSCO will carry out new growth businesses this year in the energy and materials sectors. In the energy sector, POSCO will work to stabilize its power generation business, and expand its LNG midstream business by developing the Gwangyang LNG Terminal into the energy hub of Northeast Asia. POSCO is also planning to increase investments in renewable energy and seek business opportunities in line with government policies to reduce greenhouse gas emissions.

The company will also work to secure stable supplies of saline water and ores containing lithium in South America and Australia for its lithium business. It also plans to build accompanying infrastructure for mass production.

POSCO will also develop its own manufacturing processes for high-capacity cathode and anode materials used in secondary cells, and work to increase the sales of electric vehicles at home and abroad.

POSCO CEO Kwon Ohjoon greets employees after the kick-off meeting.

To close the event, CEO Kwon remarked, “For the next 50 years, let’s make greater efforts toward our goals with a clear and long-term perspective.”

Consolidated sales slightly increased from the previous quarter while the operating profit ratio increased from 3.1% to 9.1%. Thanks to the increased profits of the steel division, as well as the improved performance of its non-steel divisions, such as trading and engineering & construction (E&C), POSCO’s operating profit increased by 189.4% from the previous quarter.

The aggregate operating profit of the steel division increased by 60.8% to KRW 1.0234 trillion while the aggregate operating profit of the trading division increased by 60% to KRW 126.7 billion. POSCO’s steel subsidiaries saw improved performance, helping overall operating profit. The E&C division also saw profits increase by 26.7% from the previous quarter to KRW 75 billion.

The operating profits of Zhangjiagang Pohang Stainless Steel (ZPSS) in China increased by 41.7% to KRW 52 billion while the operating profits of India POSCO Maharashtra increased by 80% to KRW 38.7 billion. Additionally, operating losses greatly decreased at PT Krakatau POSCO and Vietnam POSCO SS-VINA.

Compared to the previous quarter, the sales profit of POSCO increased by 9.7% to KRW 7.0674 trillion and the operating profit of POSCO increased by 63% to KRW 795.4 billion, resulting in a net profit of KRW 839.6 billion.

Due to the expansion and repair of Pohang blast furnace No. 3, production and sales volume slightly declined from the previous quarter, but the share of sales of its World Premium Products (WPP) increased from 2.4% to 53.4% compared to the previous quarter. Due to increased sales of higher value-added products, reduced costs, continued efforts to improve profitability, and the rise in steel prices, the operating profit ratio increased from 3.7% to 11.3% from the previous quarter.

POSCO’s debt-to-equity ratio has dropped to 17.6% separate and 71% consolidated, a 1.6%  and 6% decrease, respectively, from the previous year.

POSCO has also been moving forward with its restructuring efforts since the inauguration of CEO Ohjoon Kwon and aims to reduce the number of domestic affiliates from 49 to 32 by the end of this year. POSCO plans to secure the future of the company for the next 50 years by laying the groundwork of integrating smart technologies with the core competencies of the Group.  

Don’t miss any of the exciting stories from The Steel Wire – subscribe via email today. 

POSCO Group’s consolidated sales have declined year-on-year due to a sluggish domestic market, unfavorable overseas market conditions, and a decrease in the number of subsidiaries due to group restructuring. However, the group’s consolidated operating profit increased by 18% year-on-year thanks to a significant improvement in profits in the overseas steel sector.

In particular, after POSCO’s overseas steel subsidiaries showed a combined operating deficit of KRW 429.9 billion in 2015, they managed to achieve a combined operating profit of KRW 218.2 billion in 2016 due to increased sales of high value-added products and cost reduction. The performance of POSCO’s major overseas steel subsidiaries has also improved significantly, with Zhangjiagang Pohang Stainless Steel Co., Ltd. and POSCO Maharashtra Steel achieving an operating profit of KRW 107.4 billion and KRW 36 billion respectively.

POSCO’s consolidated net profit was also in the black, from a net loss of KRW 96.2 billion in 2015 to a net profit of KRW 1.482 trillion in 2016.

Separately, POSCO recorded sales of KRW 24.3249 trillion and an operating profit of KRW 2.6353 trillion in 2016. POSCO’s sales fell by 5% year-on-year due to a decline in product prices; however, POSCO’s operating profit grew by 17.7% year-on-year, thanks to the company’s cost reduction efforts and expanded sales of its World Premium (WP) products, which are its proprietary high-value-added products

Although last year saw a depressed market in which the price difference between finished steel products and their raw materials reduced by KRW 1.2 trillion, POSCO managed to increase its operating profit by more than KRW 400 billion compared to 2015 by securing KRW 1.4 trillion with its internal revenue-generation activities alone; KRW 1 trillion through increasing sales of WP products, and KRW 400 billion through cost reduction methods. As a result, the company’s operating margin recovered to a double-digit figure for the first time since 2011 (10.8%).

The sales of POSCO’s WP products reached a record high of 15.973 million tons, up 32.63 million tons compared to the previous year. As a result, POSCO’s sales of WP products reached a share of 47.3% among the company’s total sales. In addition, the company’s solution marketing-linked sales also increased 61% to 3.90 million tons.

POSCO’s financial soundness has also improved dramatically. POSCO lowered its consolidated debt-to-equity ratio to 74% by reducing its net debt by KRW 7.1 trillion in three years since POSCO CEO Ohjoon Kwon’s inauguration. In particular, POSCO’s separate debt ratio stands at 17.4%, the lowest figure since its foundation. The company’s consolidated borrowings also decreased by KRW 2.5152 trillion from the previous year.

The restructuring of the company’s affiliates and assets are also moving forward. 126 of the 149 restructuring targets that the company set in 2014 have been completed, which resulted in a cumulative financial improvement of KRW 5.8 trillion thanks to the acquisition of cash and the reduction of borrowings.

POSCO’s aim is to strengthen its steel earning power, which is one of the best in the world, as well as to complete the restructuring planned in POSCO 2.0 in order to set the foundation for future growth. Most notably, the company plans to increase the share of the sales of its WP products to 52% and to increase the volume of solution-linked sales to more than 4.5 million tons this year, thereby further boosting its competitiveness in the steel industry.

For 2017, POSCO is aiming for sales of KRW 54.8 trillion consolidated and KRW 25.6 trillion separate. In order to secure future competitiveness in an increasingly difficult market environment where you see the global steel industry dealing with oversupply and sluggish demand, the company plans to increase its investment cost by KRW 1 trillion consolidated and KRW 600 billion separate, to KRW 3.5 trillion and KRW 2.6 trillion respectively. At the same time, the company plans to continue reducing its net debt to KRW 1.7 trillion consolidated and KRW 1.3 trillion separate.

Don’t miss any of the exciting stories from The Steel Wire – subscribe via email today.

“POSCO’s ratings outlook was upgraded due to its improved financial soundness from regaining positive results and reducing debt,” remarked Joe Morrison, Vice President of Moody’s. “We anticipated that POSCO will sustain its stability for the next 12 to 18 months.”

Moody’s forecasted that POSCO’s operating profits this year before the upgrade will increase by approximately 25% year on year, and its overall debt will decrease by 14%. Furthermore, the net debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio is expected to be approximately 3.8:1, which indicates a decline compared to last year’s 4.7:1. The times interest earned ratio of EBIT (earnings before interest and tax) is expected to amount to 4.1:1 this year, which is an improvement from 3.2:1 in 2015. Moody’s analyzed that this financial ratio meets the requirements for POSCO’s “Baa2” rating.

This upgrade of ratings was significantly affected by POSCO’s Q3 earning surprise, according to Moody’s. The fact that POSCO’s Q3 operating profit exceeded 1 trillion KRW, due to increased sales of World Premium (WP) products and prices of steel products, had a great influence on the ratings upgrade. The Q3 results show a 58% increase year on year.

Moody’s had previously issued a negative rating to POSCO’s credit ratings outlook in February due to decreased profitability caused by oversupply. POSCO has steadily committed to restructuring since the inauguration of POSCO CEO Ohjoon Kwon in 2014, and recovered the outlook to stable in less than a year.

Global credit ratings consist of credit information provided by specialized credit rating agencies for investors by fairly analyzing and evaluating the management conditions and financial structure of public institutions and private companies worldwide.

POSCO Exceeds KRW 1 Trillion in Operating Profits in Third Quarter of 2016

Be sure you never miss any of the exciting steel stories from The Steel Wire by subscribing to our blog.

Each year for a decade, 100 students from universities around Korea have joined Beyond, looking to make a difference in people’s lives. The Beyond home-building program is called “Steel House.” This summer, following their inauguration ceremony at POSCO Center, the volunteers travelled around Korea to build the innovative steel homes. Dividing into teams of 20 people each, they traveled to Yangpyeong, Pohang, Incheon, Yecheon and Gwangyang, building homes for people in need all over Korea.

Previous home-building typically was done with bricks and mortar as well as wood. But these Beyond-built homes use steel throughout the construction, from foundations to finish.

Steel Creates Stronger, Safer Homes

Steel frames allow homes to be more spacious, as less floor space is taken up by the walls, while the frame allows for better heat and sound insulation. Plus, because these steel homes can be built so much faster than regular homes, it minimizes the resources and pollution needed for construction.

Each house uses the POSCO World Premium product PosMAC, specially adapted for construction to improve its durability. For the exterior, multicolor steel technology from POSCO C&C was combined with ribbed profile extruded panels to produce strong, beautiful homes.

Once each house was finished, the volunteers held a completion ceremony, celebrating their hard work, offering energetic performances and plenty of fun.

“The steel house activity means a lot to me because I can learn the value of working hard together,” said Beyond volunteer Eunji Hwang. “Having a cold glass of water after a long day’s work really felt good.”

The Beyond volunteers intend to take their good works beyond the borders of Korea, too. They’re going to be gathering in Vietnam in January to continue helping others, this time at Vietnam POSCO Village.

Building Bridges Over Troubled Waters

With significant facilities in Vietnam, POSCO has long been active there in lending a helping hand. For example, with the heavy rains Vietnam experiences for six months of the year, people there often have to deal with flooding.

So POSCO Beyond volunteers, together with volunteers from the local POSCO affiliates like POSCO SS VINA and POSCO E&C and local suppliers, came together earlier this year to build a steel bridge for one community.

Large steel bridges, equipped with steel handrails to hold on to, can span longer distances than existing concrete and wooden bridges and are more stable even in the worst flooding conditions. Thanks to POSCO’s bridge, now local children can get to school safely no matter the weather, and villagers can travel safely, too.

To see why steel bridges can be so important to these Vietnamese villages and how they make a difference in so many lives, check out this video:

At POSCO, our offices all over the world remain focused on improving the communities around them. Whether building homes or bridges, these are just a few more examples of the power steel has to better people lives, offering a more secure and happier future.

Discussions with China Iron and Steel Association(CISA) and The Chinese Society For Metals
On September 22nd, CEO Kwon visited the China Iron and Steel Association (CISA) and The Chinese Society for Metals to discuss collaborative development plans between Korea and China`s steel industries and seek ways to develop the future of the Northeast Asia steel industry. At the China Iron and Steel Association, CEO Kwon discussed cooperation plans and exchanged opinions on the recent trends in China`s steel industry. CEO Kwon said at the meeting that he would continue to push ahead with cooperation based on an ‘open innovation’ that promotes sharing and synthesizing. CEO Kwon then met with personnel at The Chinese Society for Metals, where he exchanged opinions on the current challenges facing the China`s steel industry and the R&D trends in steel manufacturing technology. Technology for pollutant emission reduction, such as carbon emission reduction, was discussed in-depth as potential directions for development.

Meeting with POSCO Local Subsidiaries
CEO Kwon hosted a meeting with the presidents of POSCO relate companies, listened to the status of current projects being carried out at local subsidiaries and discussed plans to expand in the Chinese market. CEO Kwon emphasized at the meeting that, ”We must recognize that China will forever be a co-existing competitor and collaborator and carefully consider future business development.” He also reminded the audience that, “Dispatched POSCO employees must always set an example so that locally hired employees can hold the pride and hope that comes with being a POSCO employee.“

Visit to POSCO China Office and The Beijing POSCO Center Construction Site
Afterwards, CEO Kwon visited the POSCO China office to review mid-term management plans. CEO Kwon encouraged employees by saying, “Drive with challenge and purpose to achieve the goal of expanding product sales linking POSCO`s world premium products and solution marketing. POSCO China is the base-level subsidiary of China and must therefore provide high level support in finance, HR, and education for subsidiaries investing in China so that the production subsidiaries and processing centers can focus on their core businesses”.

Before heading back to Seoul, CEO Kwon also visited the Beijing POSCO Center construction site, which is scheduled to be completed this coming December. After examining construction progress, he asked that the construction be safely completed before the scheduled completion date. The POSCO Center, which consists of 2 buildings, with 25 floors and 33 floors, is located in the Wangjing Subdistrict where many Korean people reside and is expected to provide a better business environment for POSCO and group companies in China.

Through CEO Kwon’s visit to China, POSCO expects to contribute to achieving the ‘POSCO the Great’ vision by strengthening its core competitiveness. Also, as more exchanges and communications proceed, we are certain that the Korea-China collaborative development in the steel industry will further enhance and provide positive influences on other industries as well!

Pictured here: POSCO’s CEO, Kwon Ohjoon, visiting Hyundai Heavy Industries on April 4, 2014. Hyundai Heavy Industries’ CEO, Jaesung Lee (left) having a discussion with POSCO’s CEO Kwon Ohjoon (right).

Pictured here: CEO Ohjoon Kwon visiting employees at steel mills after his inauguration on March 14, 2014

Efforts to Create the Best Workplace for Women

the first open conversation session with the CEO invites female executives

In order to achieve ‘POSCO the Great’, CEO Kwon firmly believes in the need for open communication. On this basis, the first open conservation meeting was organized on April 24 to create a space where CEO Kwon could listen to the voices of female executives and hear the company needs while having a casual lunch.

At this particular meeting, seven of POSCO’s female executives gathered to discuss topics pertaining to career advancement for women, work-life balance, how to communicate with colleagues and opinions about childcare benefits.

Pictured here: POSCO female executives gathered together with CEO Ohjoon Kwon

Policies and Direction for Female Employees

Female mentoring, corporate culture changes for better employee benefits, securing female talent

It is very normal for each and every one to worry about something different. During the session, the importance of offering women employees with mentoring opportunities that are appropriate for whatever level they may be at so that their work life feels less stressful was discussed.

In addition, POSCO employees who have children are provided with daycares and women are offered a leave of absence for up to 2 years on top of the given 90 days of maternity leave, before and after giving birth. At the meeting, there was a consensus for this well-designed benefit to be used freely. This is based on the long-term relationship that POSCO hopes for with its employees and how the company sees ‘children of employees as the children of our company’.

CEO Kwon carefully listened to the opinions of the women executives. He said for an efficient and effective system, ‘we need a corporate culture that embraces the maternity, childcare and other needs shared by colleagues and women staff’. He also stressed the need for continuous efforts from leaders to instill a warm corporate culture within the organization.

CEO Kwon ended the meeting on a positive note by expressing his expectation for great things to come from POSCO’s women workforce. He told the attending executives that he hopes they will use their executive positions to be a positive influence and provide guidance for future leaders within the company.

Listen to the Voices of Employees that make ‘POSCO the Great’ 

The open conversation session with CEO Kwon and POSCO’s female executives is only the first of many more sessions to come. In the future there will be more sessions to create opportunities for other employees including human resources, on-site staff, researchers and more to meet with CEO Kwon to have an open, honest communication. Through these proactive initiatives to gain greater insight into the opinions of POSCO employees, POSCO can come one step closer to making “POSCO the Great” a reality.

Following his inauguration, POSCO’s CEO Ohjoon Kwon gave a special lecture on March 22^nd about ‘POSCO the Great’. This special lecture took place at POSCO Center in Seoul and caught the public eye as it was also broadcasted to a total of 32 other locations including Pohang, Gwangyang, Song-do, Pangyo, Changwon and more. Over 2,500 individuals connected to POSCO, including employees, department managers, CEOs of external partners, tuned in to hear CEO Kwon’s speech. Read on for the passionate speech that CEO Kwon gave to elaborate on the new management philosophy of POSCO.

POSCO’s Vision, ‘POSCO the Great’!

New vision of POSCO – ‘POSCO the Great’. How was the vision born? & what does it mean?   

‘POSCO the Great’ was born through careful consideration of keywords that signify POSCO during the CEO selection interview process. At that time, I was reminded Korea’s most respected and famous ruler, ‘Se jong Daewang’ where ‘Daewang’ means “the Great”.  I wanted to apply that same phrase to POSCO as it also got good responses during the interview process. Thus, after becoming CEO, ‘POSCO the Great’ has become incorporated into our vision for the future. This is how ‘POSCO the Great’ came to be and it signifies a revival of past achievements and glorious history to continue moving forward.

Using ‘Innovation POSCO 1.0’ to Implement the ‘POSCO the Great’ Vision

“POSCO family…have pride in leading the steel industry!”

Prior to elaborating on ‘POSCO the Great’, let me say to the POSCO family…have pride in leading the steel industry. In Chinese characters, ‘steel(鐵)’ is constructed by the characters that mean gold(金), king(王) and a particle. So it means “the king of metals”. I believe that even our ancient ancestors acknowledged the wonder of steel and therefore gave the Chinese characters that meaning. As you see, from ancient times, steel has been an integral and essential element of our lives. Moreover, the total GDP of our country made by non-steel materials cannot even reach 1/10^th of the GDP accounted for by steel. So I hope that everyone here takes pride in their association with steel and helps POSCO achieve its vision for the future.

What’s the meaning of ‘Innovation POSCO 1.0’?

After I was elected as the CEO, I established ‘Innovation POSCO 1.0’ as an execution plan for overcoming the current challenges and to revive the glorious past through the vision of ‘POSCO the Great’. Why 1.0 instead of 3.0 or soon-to-be 4.0?

‘1.0’ signifies going forward as one entity, creating a new start based on differentiating ideas, and being number one in technology, sales, quality and all other aspects. I believe that if we can implement ‘Innovation 1.0’, POSCO can once again be great.

Global crisis for the steel industry and future direction for POSCO

Despite the continued crisis for the steel industry, POSCO is striving to overcome it in various ways.

Looking back at the global steel industry, the demand in China has plummeted since the 2000s, causing a huge surplus in production. In the past, POSCO’s operating profit margin reached nearly 20% but now reaches only single digit figures. Despite this difficult operating environment, POSCO has pursued various strategies to overcome this crisis.

POSCO has mobilized its business strategy to increase investments and foster innovation. POSCO has expanded its core business, steel, to cover other areas including renewable energy and also has invested in the materials industry. In addition, POSCO has invested in creating a world-class production system in the Americas, Asia and Korean markets. Furthermore, POSCO has introduced an innovative methodology for work process.

In particular, creating and applying QSS has led to increased profitability and improved performance through development of employees. POSCO has been able to be a well-respected and loved company because of its focus not only on profitability but the growth of its employees and other stakeholders.

Pictured here: CEO Kwon’s speech broadcasted to 32 locations on March 22nd

POSCO to expand abroad.  A new leap through humility, introspection and reflection

Until now POSCO has strived to create good results, however I think now is the time to take a look back at POSCO. First of all, POSCO has ranked 1^st as the world’s top steelmaker for four years in a row. It was also ranked as the most respected company by Fortune and was recognized as a global sustainable leading company for 9 consecutive years in the SAM-Dow Jones Sustainability Indices (SAM-DJSI). It was also included in World Economic Forum’s global 100 group.

On the other hand, the internal rate of return has been low for four consecutive years since 2010 making prospects for a turnaround difficult. Furthermore, market capitalization ranking has fallen from second to third. Operating profit to sales ratio decreased compared to net debt equity ratio rising and credit ratings have fallen as well. All in all, I strongly believe that it is time for POSCO to humbly take a step back to reflect.

I’d like to compare POSCO’s current state to ‘Dong-yi-bul-hwa’ – ‘同而不和’. The meaning behind these Chinese characters is acting in agreement on the outside, but not fully acknowledging on the inside. ‘Too big to fail’ is no longer valid. To rise above the current environment, POSCO must have faith in itself to take on new challenges.

3 Management Ideologies and Agenda behind ‘POSCO the Great’

3 management ideologies behind the vision of ‘POSCO the Great’…

3 management ideologies behind the vision of ‘POSCO the Great’… are One POSCO, Creative POSCO, and Top POSCO.

First of all, One POSCO puts importance on pursing business development based on shared values and seeking shared growth for customers, suppliers and society. This can be achieved through harmonious cooperation and all employees having a sense of ownership.

Creative POSCO means to propose new ideas to create new value. This places importance on going beyond traditional thinking so that new creative ideas can be developed. Through this, better customer services can be delivered to meet customer needs.

In the past Top POSCO may have meant following advanced technologies, but now the goal is to develop products and technologies that do not yet exist. Top management is about seeking success of customers based on the best talent and confidence.

4 innovation agendas based on One POSCO, Creative POSCO, and Top POSCO

‘Innovation POSCO 1.0’ includes the 4 innovation agendas that POSCO must execute in order to fulfill the three management ideologies. Since taking office, I have been emphasizing strengthening the competitiveness of the steel industry, selecting new growth business areas, improving the financial structure and management infrastructure.

Strengthening the competitiveness of the steel industry will be done by innovating value creation, production cost, quality and business structure and global management. We should especially strengthen technology-based solutions with marketing to establish differentiation from competitors and provide products that fit customers’ needs.

Although there have been many new growth businesses, there were unexpected challenges that caused delays and made profit generation difficult. We are planning to refine and strengthen the selection of new business opportunities. We will re-evaluate market attractiveness, technology competitiveness, entry barriers, and evaluation of the value of POSCO’s materials and energy.

Furthermore, the improvement of financial structure has a close association to securing profitability through improving original competitiveness of the steel industry. In terms of financial structure, business restructuring and exchanging certain subsidiaries or selling the equity holdings will help the group’s overall efficiency.

Lastly, we will innovate the management structure to renew the work process and establish a consensus for the current situation. Projects centered around professionals will create results and project team leaders will have more responsibility. Above all, we will motivate the creation of new ideas by rewarding those who propose new projects and put forth new ideas.

Since POSCO began promoting a project-based approach set out by “innovation POSCO 1.0’, 380 projects have been developed and a professional employee system has been implemented. The managing directors have decreased by more than 50%. On one hand, it has created motivation for employees to strive to become directors which will be evaluated on the performance of project-based results.

[box] Last words to share with POSCO Family..!

In order to achieve the vision of ‘POSCO the Great’, I believe that empathy of employees regarding risk is crucial. Going forward I will do my best. The time has come for ‘POSCO the Great’. The POSCO family has the innate DNA to create from nothing. This trait will allow us to begin a renewed 50 years and to continue the history of ‘POSCO the Great’.[/box]

Can you feel the hope and positive energy coming from the words of CEO Ohjoon Kwon? We hope you now have a better understanding of ‘POSCO the Great’ and look forward to your continued interest in POSCO as we set out to fulfill the vision of ‘POSCO the Great’!

]]> https://newsroom.posco.com/en/qa-poscos-newly-elected-chairman-oh-joon-kwon/ Mon, 24 Mar 2014 17:00:11 +0000 On March 14, POSCO’s newly elected Chairman, Ohjoon Kwon, held a media session with 50 reporters to share his feelings on being the new CEO and also his vision for the future of POSCO. On this day, Chairman Kwon announced that “he would improve the financial structure through selective and focused decisions.” Read on to learn insights on Chairman Kwon’s views on the future direction of POSCO, as well as his values and philosophy.

Reorganize POSCO’s Overseas Business to Focus on Steel Business

Pictured here: Chairman Kwon speaking to reporters on March 14

Do you think entering international markets is still valid today considering the delay of establishing an integrated steel plant in India, launching FINEX business in China, and beginning phase 2 construction in Indonesia?

It is true that some of the businesses are delayed. First of all, because India tends to have many decentralized policies, we have had to negotiate with many different bodies regarding business implementation and also had communication difficulties due to the cultural differences. However, the visit of President Geun-hye Park made a lot of improvement in terms of obtaining mineral rights and adjustment of land. Based on this, I think there will be acceleration in administrative implementation.

In China, they are planning to launch FINEX business. FINEX is the unique technology of POSCO and I think it is the core business that needs to be implemented continuously when considering the trend of future technology and ore processes. Therefore, we should continue to take the lead in this area.

In the case of Indonesia, regular operation has been delayed for about 2 months due to the unexpected accident, but it has stabilized again with the last month. It will be difficult to achieve surplus due to the loss of approximate 0.6 million tons of production caused by the accident, but we will do our best to make a gain next year.

Pictured here: Chairman Kwon discussing the future of POSCO at the media session on March 14

Synergy of POSCO’s Technology Buttressed by Marketing

POSCO has been emphasizing improvement of the competitiveness of steel which is its core business. Please elaborate on the improvements in more detail and also explain what the role of the Steel Solution Center will play in the future.

Pictured here: Chairman Kwon holding his first executive meeting on March 18

The core of POSCO is its steel business. Therefore, for POSCO to increase its competitiveness, it should strengthen its role as a leading steelmaker. To achieve this, I am planning to integrate marketing strategies to POSCO’s latest technology to create a synergy effect. The Steel Solution Center was also founded with this purpose in mind. Providing customers with integrated marketing and technology solutions will transform the company into a more customer-oriented company. By combining POSCO’s superior technology with the proper marketing strategies will allow us to fulfill customer demands by offering not only the products and techniques that customers want but a total solution.

Researchers must Understand the Field to Provide Customer-Oriented Solutions

According to the researchers at RIST, Chairman Kwon considers marketing side first when developing technology. What is your philosophy behind technology development and marketing? 

Pictured here: Chairman Kwon visiting Pohang Works to greet  employees right after his inauguration

RIST, as well as, POSCO’s subsidiary technology research centers, all carry out research for POSCO. Basically, I think any research center that belongs to a company should commercialize whatever technology they have to contribute to profit making. The series of EVI activities that POSCO does are an example of this. In order to achieve more practical and value-oriented research, researchers should find answers and be close to the actual sites. Furthermore, a system which allows engineers who are working on site to be able to create and apply their technology should be established. Moreover, communication with marketing staff and customers is very important. No matter how good a product is, if it is not aligned with customer needs, it won’t be sold. Therefore, POSCO is putting researchers in marketing departments to produce solutions that address customer needs.

Evaluation of Internal Competitiveness, Market Attractiveness, Entry Barriers and More

Are there specific plans for improving financial structure against the decline of steel demand and an oversupply caused by the global economic depression?

Pictured here: Chairman Kwon delivering his speech at the 46^th Shareholder’s Meeting on March 14

Presently, the biggest challenge for POSCO is improving financial structure. First of all, some businesses we think have little correlation will be listed on the stock exchange and restructured. Going forward we will try get our business direction aligned with shareholders in order to get more investments and improve debt ratios. We also have plans to re-examine existing businesses. We will consider internal competitiveness, market attractiveness, entry barriers and more to assess the businesses we should focus on and continue.

As the 8^th CEO of POSCO, how will you ensure equality for POSCO’s election & succession process?

Starting this year, a more fair system for CEO succession was performed. Outside directors were the core members of the Succession Council and only one internal director was involved. Chosen outside directors were not influenced by any external stakeholders. In addition, the candidate selection committee was composed of only outside directors to ensure fairness. I also went through a fairly rigorous interview process which made me feel like I was doing college admissions interviews again (laughs).

What are POSCO’s views on the changing domestic steel industry?

Until now, POSCO has been sort of the elder brother of the domestic steel industry. However competition has increased in the domestic market now. While there is no longer a monopoly, the increase in competition has helped Korean steel business become more advanced. Through healthy competition, the domestic steel industry has been able to grow. Cooperation and healthy domestic competition will help Korean companies become more globally competitive. Furthermore, cooperation and involvement in Steel Associations is integral to addressing environmental issues such as carbon emissions.