However, due to the successful management of POSCO’s overseas subsidiaries, the combined performance of the group improved significantly. By focusing on sales of high value-added products based on solution marketing, engaging in extensive cost-saving efforts, and generating revenues via the “Innovation POSCO Project”, POSCO was able to deliver a two-digit profit margin and a more than 50-percent jump in stock value.

By continuing this work in 2017, POSCO is determined to maintain its position as a leader in the global steel industry.

POSCO’s Vision for 2017

In 2017, further improvements in the global steel market are likely as the global economy continues its recovery. Also, improvements are expected in the supply-demand imbalance as China is expected to slightly reduce steel production.

In 2017, POSCO plans to further the success seen in 2016 and continue to lead the steel industry through innovation and continuous improvements of its World Premium Products.

However, the spread of trade protectionism across developed and developing countries alike, is expected to create potential barriers for POSCO’s export environment. Moreover, competing mills have been accelerating consolidation and expansion to maintain their dominance in their respective local markets while also focusing on the development of high-end products. All of these factors point to ever intensifying competition both in terms of quantity and quality.

To remain competitive with other leading global players in 2017, POSCO plans to solidify its profitability by completing its restructuring process as part of Innovation POSCO 2.0 and strengthening its foundation for future growth.

In CEO Ohjoon Kwon’s 2017 New Year’s message, he marked the steps that must be taken in 2017 to accomplish these goals. First, POSCO must continue upgrading its steel business with proprietary technologies. Second, the business structure of POSCO Group should be continuously restructured to improve efficiencies in low-profit businesses. Third, future growth must be ensured by strengthening competencies based on “Smart Solutions.” And lastly, POSCO must continue its work to establish a flexible and creative corporate culture that excels in the 21^st century.

Despite all of the aforementioned challenges facing the steel industry, POSCO has continued to be a leader. Through innovation and a strong focus on improving the quality of its World Premium Products, POSCO is again well-positioned to lead the industry in 2017 – and in the years to come.

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/inauguration-oh-joon-kwon-vision-posco-great/ Mon, 17 Mar 2014 11:46:35 +0000 -Proposed departure from pride and appearances to return to ‘innovation POSCO 1.0’ roots

-Declared the 4 part innovation agenda that includes enhancement of steel competitiveness and financial structure to address crisis management

-Headed to steel plant immediately after inauguration ordering “world’s best products with competitive costs and quality”

Pictured here: POSCO’s Chairman, Ohjoon Kwon giving his inauguration speech at the Pohang headquarters on March 14^th

POSCO’s Chairman, Ohjoon Kwon has officially been inaugurated. On March 14, POSCO held its annual meeting of shareholders and board of directors to install Ohjoon Kwon as the 8^th Chairman & CEO. Following the shareholders meeting, he attended an inauguration ceremony at the Pohang headquarters wearing a Steel plant uniform and stated, “Oversupply in the global steel market puts a significant risk to POSCO’s competitive advantage” and therefore, “We need to regain our steel competitiveness based on the differentiated technology and a financial and organizational structure reform  to once again become the world’s leading steel company.”

Pictured here: POSCO’s Chairman, Ohjoon Kwon giving his inauguration speech at the Pohang headquarters on March 14^th

At the inauguration, CEO Kwon unveiled the new vision ‘POSCO the Great’ and stated that to achieve this, the ‘innovation POSCO 1.0’ would be actively promoted. ‘POSCO the Great’ implies ‘Let’s create a great POSCO’ and signals that the company will continue to contribute to the national economic development and create values for the world in order to become the most respected company nationally as well as globally. Reflecting Chairman Kwon’s philosophy and volition, POSCO 1.0 proposes a departure from pride and appearances and a return back to basics to regain unity and be the forerunner again. The goal is to become the world’s best in all business divisions by creating customer value through new ideas and unifying all employees under one vision.  Chairman Kwon announced a four part innovation agenda in order to quickly overcome the current crisis situation and prepare for the next 50 years of POSCO.

Pictured here: POSCO’s Chairman, Ohjoon  Kwon at the inauguration with ‘POSCO the Great’ and ‘innovation 4.0’ banners in the back ground

The first priority on the innovation agenda is to enhance the competitiveness of the steel industry. Its main focus is to create new, differentiating customer value through the combination of technology and marketing. The Company will create a Steel Solutions Center within the steel business division  to provide proactive response to customer needs and, also it will increase the sales of strategic products such as marine energy steel, high performance steel plates to cement its market position as a leading global steel company.

The second priority is to focus on the selection and concentration of plans that promote future growth. POSCO has been pushing ahead in materials, energy and other diverse new businesses, however going forward it will analyze business fit, core competencies, and market attractiveness to boldly determine whether to stop, sell or merge businesses for those businesses that are not globally competitive.  It will concentrate its growth energy in developing materials such as lithium and nickel that are essential for the future high-tech industry, as well as eco-friendly chemicals such as fuel cells and clean coal that are core of the clean energy business.

The third priority is to streamline the business structure and to dramatically improve the financial structure. For the time being, investment strategy will be focused on value-added growth rather than new investments for qualitative growth. Furthermore, at the appropriate time, it will list on the stock exchange certain subsidiaries that meet the IPO requirements or sell the equity holdings in order to maximize liquidity.

Finally, the management infrastructure will be reformed in areas such as internal organization, processes, and corporate culture . The current six divisions will be minimized to four for greater efficiency and to streamline decision-making hierarchy within the company. Furthermore, the number of executives in the supporting divisions will be reduced by 40% and transferred to marketing, steel mills, overseas offices and other divisions in order to boost performance. Especially, in order to promote strong performing organizational structure, individuals that hold expertise and experience will be appointed as expert executives and will be assigned to individual project with appropriate accountability and performance evaluations.

Pictured here: POSCO’s Chairman Kwon shaking hands with employees on the day of his inauguration

Shortly after the inauguration, Chairman Kwon paid a visit to #3 steelmaking plant in Pohang and encouraged employees with an indication of his management priority in the job sites. Steel plant furnaces are the heart of steelmaking companies as the filtered impurities from molten metal are transformed into high quality, top grade steel. On this day, Chairman Kwon announced, “POSCO will continue to invest in innovation in order for Pohang and Gwangyang Steelworks to once again produce the world’s best products with competitive costs and quality.”

 Pictured here: POSCO’s Chairman, Ohjoon Kwon visited workers at #3 steelmaking plant in Pohang shortly after the inauguration to reassure employees that he would help make POSCO the world’s best

Earlier, at the annual meeting of shareholders and board of directors, candidate Jinil Kim was appointed as in-house director and president of steel manufacturing, and Dongjoon Yoon and Younghoon Lee were both appointed as vice president in-house directors. Moreover, Ilsup Kim, President of Seoul School of Integrated Sciences & Technologies, Youngsun Woo, Executive Partner at law firm Seah, and Donghyun Ahn, Professor of Economics at Seoul National University were appointed as outside directors. Ilsup Kim and  Youngsun Woo will also assume the responsibility over the Audit Committee members.

See below for the full inaugural speech that Chairman Kwon gave.

[box]Fellow colleagues,

Valued shareholders, customers, stakeholders,

Ladies and gentlemen,

I am truly honored and thrilled to stand here today as the 8th CEO of POSCO. In my excitement, I also acknowledge the large responsibility I have to follow in the great success of POSCO’s past generations.

[showhide type=”post” more_text=”Show less…” less_text=”Show more…”]

Looking back to previous years, I can see the noble vision of the founders of POSCO. The first generation of this outstanding company strived to make something out of nothing, to build a solid foundation for our company in accordance with the direction of this nation.

Moreover, the following generations, armed with a passion for technology development and innovation, contributed to POSCO becoming one of the most globally competitive steelmakers in the shortest time in history.

With our unmatched commitment to staying competitive, POSCO has continued to create sound profits and consistent value. Furthermore, in the spirit of mutual partnership, we have shared growth with our various stakeholders. Such efforts have boosted Korea`s economic development, and have been praised by the Korean people.

Members of POSCO!

POSCO, once the pride of the nation, is now in the midst of unprecedented challenges. With credit ratings being downgraded and share prices being weakened, “expansion” may no longer be our highest priority. At its worst, survival of the company itself could be threatened.

As I begin my term at this important juncture, I ask a few questions to both myself and to all POSCO employees.

Do we still have the same passion and sense of duty that we used to have toward the nation’s economic development?

Do we still have our spirit of embracing challenge, embodied in our slogan “Resources Are Limited, Creativity Is Unlimited”?

Is our spirit of self-sacrifice still alive in placing our company and our country before ourselves?

Fellow colleagues,

As members of POSCO sharing the same fate, none of us are free from the current crisis. We all have to avoid living off of past glory. We must now dedicate ourselves to a fresh start and a new direction.

As of now, there are a number of urgent issues that we must resolve.

While the global economy is expected to remain stagnant for the time being, the steel market has long suffered from serious oversupply. Under such circumstances, we can no longer resort to our traditional competitive edge.

Meanwhile, our global expansion projects, once enthusiastically promoted, have yet to be settled. What concerns me even more is these projects may become a burden to the company depending on how the market unfolds.

Members of POSCO,

I would like to take today`s inauguration ceremony as an opportunity to declare our new corporate vision, “POSCO the Great.”

“POSCO the Great” refers to a POSCO that continuously contributes to the country`s economic development and is ultimately loved by the Korean people. We can achieve this goal through the following three values – Creativity, Harmony, and Top class management.

“POSCO the Great” also refers to a POSCO respected internationally by consistently creating new customer value and growth engines based on steel, POSCO’s core strength.

Today, I propose the key program of “Innovation POSCO 1.0” that will drive our corporate vision of “POSCO the Great.” The “1.0”  in “Innovation POSCO 1.0” represents being New, being Unified, and being No. 1.

“Innovation POSCO 1.0” aims to create customer value through “New” ideas, “Unifying” all of its members under the same vision, and with POSCO being the world’s “No. 1” company in all its business sectors.

Respected members of POSCO!

“Innovation POSCO 1.0” is an urgent plan to swiftly overcome the current crisis, but more importantly, it is a plan to prepare for the 50 years ahead of us.

Under the “Innovation POSCO 1.0” program, we have four initiatives.

First, we will fundamentally strengthen the core competitiveness of the steel business through technology-based solution marketing.

We will launch a Product Solution Center within the Steel Business Division to preemptively respond to potential needs of our customers.

We will fortify our status as the global top supplier in our seven key product domains which include steel products used in the energy industry; this emulates our past achievement of securing global leadership in the ultra-light automotive steel business.

We will transform Pohang and Gwangyang Steel Works into the world’s most competitive manufacturing sites by further intensifying our unique innovation capabilities and rooting out all the safety and environmental risks.

Overseas steel projects in regions such as India and Indonesia will be stabilized as early as possible by actively cooperating with partnering companies based on our spirit of shared growth and prosperity.

Second, we will nurture future mega-growth engines through strict selection and concentration among our non-steel business segments.

New projects currently being pursued in the fields of materials, energy, and other various areas will undergo a rigorous process of re-evaluation.

Our business feasibility assessment based on technology and market competitiveness yielded the tentative result of  “core materials” and “clean energy” as our potential mega-growth engines.

“Core materials” are essential ingredients for future high-tech industries, with Nickel and Lithium as promising candidates.

In the area of “clean energy”, technology in response to global warming, fuel cells and clean coal chemicals are promising candidates.

Just as we used steel, “the Rice of Industry”, to lead the economic development of Korea, we will usher in the new era of “Creative Economy” by generating more jobs in the sectors of “core materials” and “clean energy.”

Third, we will streamline our business structure and significantly improve the financial soundness of POSCO.

To maximize the synergy in each business segment, we will manage our key subsidiaries more effectively while massively trimming out non-core businesses.

Rather than pursuing expansion-oriented investments, we will adhere to high value-add investments, which will have a profound positive impact on our enterprise value.

We will move to lower the risk on our ongoing investments by inviting and cooperating with strategic and financial investors.

As for the suitable subsidiaries, we will file for an IPO at an appropriate time depending on the capital market situation. Our equity holdings in subsidiaries could be reduced to secure sufficient liquidity.

Furthermore, we will strengthen our communication with the capital market so that we can earn trust from investors.

Fourth, we will overhaul our management infrastructure such as organization, systems, processes, and corporate culture.

We will ensure that our organization will function more efficiently by downsizing the current six divisions into four divisions and simplify organizational hierarchy to streamline the decision making process.

In addition, we will curtail the number of executives in supporting departments, and some of the back office employees will be relocated into the value creating front line such as marketing, production and overseas sites, thereby producing higher financial outcomes.

Any employee who has generated additional profits by proposing and completing a challenging project will be given corresponding incentives.

We will also discard the “insider-only” practice and “the sense of superiority” that have been prevalent in POSCO as remnants from the legacy of a steel monopoly.

Meanwhile, we plan to further upgrade POSCO’s proud tradition of sharing activities so that we can fulfill our responsibility as a corporate citizen.

Fellow colleagues!

We are about to embark on a grand journey toward “POSCO the Great.”

Although we are facing a steep cliff to our rear and a fierce storm to our front, we do not have the luxury of hesitation because time is not on our side.

Fortunately, the path ahead of us is not all too unfamiliar to us.

Engrained deep within our DNA are the memories of great achievements during the days where we thrived without any capital, technology, and experience.

For the future of a reunified Korea and for another 50 years of POSCO, let us fortify the stepping-stones so that our next generation can continue to build upon the history of “POSCO the Great.”

When “POSCO the Great” is finally realized where POSCO is loved by the Korean people and respected by the citizens of the world, we will later look back to the cliff and storm of today and see that these were only part of a short-lived prelude to the great achievement of our vision for the future of POSCO.

Let us embark this new journey together for our greater POSCO.

I express my deep gratitude to the members of POSCO who have dedicated themselves in our operations, with their trust in management. I pay tribute to your loyalty to the company.

Whenever we have faced difficult times throughout our 45-year history, our management and employees have fought together, in unity, to sail through each and every hardship. I am strongly convinced that we can overcome today`s crisis based on our triumphs of the past.

Last but not least,

I give you my firm commitment.

To our customers, suppliers, and partners, we will bring you mutual growth in return for your steadfast support.

To the shareholders and investors, we will reply with higher profits in return for your unwavering trust.

To the communities and the Korean people, we will respond to your warm encouragement by making POSCO your pride and joy.

Thank you. (End) [/showhide] [/box]