Prior to the conference, an executive committee was held on October 11. Interested parties from major companies in the steel industry including CEO Ohjoon Kwon; Wolfgang Eder, CEO of voestalpine and President of World Steel Association; Eiji Hayashida, CEO of JFE Steel; Mario Longhi, CEO of United States Steel; and Lakshmi Mittal, CEO of ArcelorMittal attended the committee. In the afternoon, a discussion on the outlook of the manufacturing industry was conducted by Mario Longhi.

At the annual conference on the following day, CEOs of steelmakers from around the world, as well as a number of interested parties, presented and discussed major issues faced by the steel industry, like energy and the environment, in addition to the short-term outlook for the global economy. After presenting the prospects of the economy and steel industry, CEO Kwon participated in the regional CEO discussion as a panel, sharing his diverse opinions.

Later on in the day, CEO Think Tank—a session in which attendees can freely choose and discuss a range of topics—was held so the executives could share their mutual interests related to the steel industry.

On the final day of the conference, the World Steel Association conducted a board meeting to approve major resolutions.

Established in 1967, the World Steel Association, or worldsteel, is the international organization of the highest authority in the steel industry. The association aims to promote steel and the steel industry to consumers, the industry, media and the general public. Founded with 18 members in 11 countries, the World Steel Association now represents approximately 170 steel producers, national and regional steel industry associations, and steel research institutes. Headquartered in Brussels, Belgium, worldsteel members represent around 85 percent of world steel production.

CEO Kwon plans to meet with the Korea-U.S. Business Council which will convene on October 15 in Washington DC, USA, to discuss how to improve economic cooperation between the two countries.

POSCO will be modifying its mid-term strategy in order to achieve “growth with substantiality”. On May 19 at the Korea Exchange in Yeouido, Seoul, POSCO had its first investors forum since CEO Kwon was installed as the new CEO. On this day, new management strategies to restore financial soundness based on a focus on the core steel business, mega growth, and management restructuring for efficiency were announced.

 Pictured here: CEO Ohjoon Kwon, speaking at the POSCO Investors’ Forum

According to the new management strategies, POSCO has plans to strengthen its EBITDA to 8.5 trillion won with Credit A ratings by 2016, to be at the global top standards for financial soundness.  At the same time, POSCO has plans to cultivate its source material and clean energy businesses to promote mega growth.

Pictured here: CEO Ohjoon Kwon, speaking at the POSCO Investors’ Forum

In order to achieve its mid-term management goals, POSCO plans to change from its former ‘Own & Compete’ based M&A strategy to a ‘Connect & Collaborate’ based strategic partnership, with plans to seek a diverse range of domestic and international companies.

POSCO’s business structure will be reformed so that the strategy that previously focused on expanding steel, materials, energy industries will now be focused on the core steel business and promote mega-growth engines in the two sectors of source material and clean energy. The projects nominated for focused development are source material which encompasses lithium, nickel and clean energy which includes fuel cells and clean coal businesses.

Other fields can be subject to subsequent business restructuring if it will increase the company value and meet the following principles:

1)      First, evaluate whether the entity is recognized as top tier in the domestic market or is seen as essential towards strengthening the competitiveness of the core steel business

2)      Second, even if it is a blue-chip affiliate, consider pushing ahead with the sale or IPO of shares that exceed what is necessary to maintain right of management

3)      Third, plan internal restructuring to strengthen efficiency based on business consolidation, divisions or other adjustments

 Pictured here: Attendees at the POSCO Investors’ Forum

The priority will be placed on restructuring that has the most impact and can relatively be done easily. Although specific plans for restructuring have not been confirmed yet, entities that have been selected will promptly push ahead to show results.

The reorganization that emphasizes the steel business will select seven strategic industries including automotive, marine and energy to grow sales and expand the sales percentage of profitable, premium products. In addition, in order to turnaround overseas business to surplus by 2016, POSCO plans to develop high added-value products in a timely matter to meet market demands and also strengthen solution marketing offerings.

The energy business plans to grow the domestic coal power plant market and target emerging markets for overseas growth while also fostering the fuel cell industry. It also has plans to devote initial investment towards securing technologies for the source material business to strengthen competitiveness.  Business entities including E&C, Trading, and ICT will focus on core competencies that will provide profitability and growth for the entire company.

Pictured here: Q&A session during the POSCO Investors’ Forum

If POSCO’s new management strategies run smoothly, POSCO can expect 32 trillion KRW in sales with 3 trillion KRW in operating profit, 9% operating profit margin, on a stand-alone basis.  On a consolidated basis, that would mean 78 trillion KRW in sales with 5 trillion KRW in operating profit, 6% operating profit margin. Debt-to-equity ratio can be expected to be lower as well.

Pictured here: Panel discussion at the POSCO Investors’ Forum

At the investors forum, CEO Kwon announced, “The strategy paradigm will change in order for POSCO to have stable growth and we will focus on strengthening competitiveness and improving profitability.” Moreover, he said, “With drastic restructuring focused on internal efficiency, we will give back to shareholders, investors, customers, partners, employees, local communities and all those who support and love POSCO.”

Pictured here: Ohjoon Kwon, speaking at the POSCO Investors’ Forum

Growth laid on internal strength will allow POSCO to achieve the new vision of ‘POSCO the Great!’

The Background and Story on Solution Marketing

POSCO’s technology-based Solution Marketing blends technology support with marketing activities to solve customer problems which allows customer value to be strengthened. It can be divided into five steps: 1) Industry·Market Analysis, 2) Solution Development & Care, 3) Solution Release & Promotion, 4) Support and Accelerated Sales, 5) Enhanced Customer Relationship Management.

Solutions provided from the steel industry come in the form of a combination of rolled steel (hardware) and utilization technology (software) which can be modified based on market situations and customer demands. By offering such solutions, POSCO is looking towards not only meeting customer demands but also to greater profitability by aggressively expanding sales of high-grade steel.

An Example of Solution Marketing

Until now, POSCO has used EVI to find customer needs first and then sold the appropriate kinds of steel. The new Solution Marketing is not only about finding customer needs, but also proactively finding the necessary technologies and workforce. During an internal presentation for POSCO employees, CEO Kwon used automotive steel sheets as an example of Solution Marketing.

He explained, “Although automotive steel sheets require high strength, if this compromises its formability, auto companies can face difficulties since weldability opportunities for car design decrease. In order to reduce problems that high strength steel used for light weight benefits can create, POSCO is providing molding and welding technologies, as well as, evaluation methods. By supplying more than just the steel hardware, we can provide our customers with optimal solutions. This is Solution Marketing. Instead of limiting to a single product, we must provide a “package” solution for our customers.”

Meeting with Domestic Shipbuilders to put Solution Marketing into Action

POSCO has sought to improve the domestic ship building industry through building trust, sharing visions, and providing win-win technology-based solution marketing to increase value for customers.

In order to strengthen “Solution Marketing” that is mutually beneficial to POSCO and its clients, CEO Kwon has made in-person visits to meet with clients in the shipping building industry including Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering (DSME), in order to promote and underline Solution Marketing.

Make Listening to Client Needs a Priority

On April 4, 2014, CEO Kwon went to Ulsan to meet with the Jaesung Lee, CEO of Hyundai Heavy Industries. After having a meeting and touring the facilities, he made his way to meet with the head of Samsung Heavy Industries to discuss ways to strengthen cooperation.

Pictured here: POSCO’s CEO Ohjoon Kwon listening to a presentation about LNG Vessels by Daeyoung Park, CEO of Samsung Heavy Industries

During these meetings, CEO Kwon was able to listen to client needs and promote POSCO’s Solution Marketing. During his meetings with clients that week, CEO Kwon said, “In order to recover from the global economy downturn, shipbuilding and the steel industry must strengthen mutual trust and cooperate for quick recovery.”

Pictured here: POSCO’s CEO Ohjoon Kwon meeting with Jaesung Lee, CEO of Hyundai Heavy Industries on his visit to Ulsan on April 4, 2014

On April 21, 2014, CEO Kwon went to Geojedo Island which is where one of the dockyards for POSCO’s customer, Daewoo Shipbuilding & Marine Engineering, is located. He met with the Jeho Ko, CEO of DSME, and visited sites just like he had done in Ulsan. On this day CEO Kwon emphasized, “POSCO is focusing on strengthening its competitiveness to be the global top company. Using technology-based Solution Marketing, we hope to substantially contribute to improving value for our customers.”Pictured here: POSCO’s CEO Ohjoon Kwon in Geojedo Island during a visit with DSME on April 21, 2014.

How Solution Marketing fits into the Future for POSCO and Its Customers

Pictured here: Offshore plant utilizing POSCO steel

Daewoo Shipbuilding & Marine Engineering and other Korean shipbuilders are making developments for LNG vessels for polar regions, deep sea offshore plants, eco-friendly and efficient ships. Therefore, it is crucial that POSCO can continuously supply the necessary materials to foster such advancements. In the past, technology advancements were based on meeting client needs. However, in the present, it is important for POSCO to anticipate material developments to grow and make advancements together.

POSCO also plans to reinforce R&D strategies and consolidate strategic partnerships. In addition, POSCO aims to provide materials necessary for individual customer projects. The responsiveness to customer needs in terms of product quality, size and more must be met in order to improve the overall satisfaction of POSCO’s customers. As such, strengthening Solution Marketing will be an important tool to make value-added offerings a reality.

Case Study for Solution Marketing: Fast Response to Steel for Ships and Technology Development

A good case study for Solution Marketing is how POSCO quickly created steel products for shipbuilders to use after the International Association of Classification Societies (IACS) created new regulations to improve ship vessel stability. Soon after the IACS announced these changes, POSCO developed technologies to provide steel products and technology that would meet these new standards. Customers in the shipbuilding industry could utilize POSCO’s solutions to design new ships. The pre-emptive technology development and quick response from POSCO allowed domestic shipbuilders to design and construct ships without delays and helped POSCO customers increase their value.

In the coming months and years, POSCO will continue its efforts to make advancements for customers across various industries by building trust, sharing visions, and cooperation for technology advancement and cooperation. Solution Marketing is a strategy that can help POSCO become “POSCO the Great”.

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.

Pictured here: POSCO’s CEO, Ohjoon Kwon

Direction for POSCO amid Current State of Steel Industry 

In the Financial Times story printed on April 20, CEO Kwon expressed anticipation for POSCO’s future. CEO Kwon, aims to more than double the steelmaker’s operating profit margin to 10 per cent over the next three years. In order to improve profitability and financial strength, CEO Kwon’s goal is to find the most urgent business areas to let go of and to focus on developing technologies to create high-value advanced steel and further invest in core materials business, particularly for lithium and nickel. CEO Kwon elaborated on this during his speech about ‘POSCO the Great’ which you can read about here.

Nickel is an essential component for the production of stainless steel. POSCO is working towards reducing the production costs for nickel by as much as 20 per cent which could in turn reduce costs for stainless steel which is prevalent in every day objects around us including kitchen appliances, medical equipment, exterior walls and roofs and more.

According to the World Steel Association, global steel demand is expected to see lower growth this year. Weak demand and oversupply of steel is an issue that will not disappear any time soon. Demand from China has dropped to 3% from 6.1% last year and it is expected to drop even further to 2.7% in 2015.

Nevertheless, with a strategic focus, CEO Kwon is optimistic for greater performance over the next three years.

Click here to read the full article.

Pictured here: POSCO steel mill employee juxtaposed with steel production

Let’s take a look back at how POSCO came to be the foundation of the nation’s steel industry as well as one of the most respected companies!

 Founding Period: 1965~1969

Pictured here: 1965.12 – Four countries including U.S. & U.K. convene to establish KISA / 1967.7 – Pohang is selected as site for steel mill / 1967.11 – Steel Industry Committee is established

The growth of POSCO happened at the same time as the growth of Korea. The 1960s was a period when poverty and chaos plagued the nation. However, through steadfast hard work and perseverance, steel became the foundation of a strong economy. Just three years after the launch of Korea International Steel Association (KISA), POSCO was born in 1968.

Establishing Pohang: 1970~1981

Pictured here: 1976.5 – Pohang Works under construction / 1978.12 – Phase 3 of Pohang Works construction completed / 1981.2 – Phase 4 of Pohang Works construction completed

Building steel mills was a daunting task but that did not deter POSCO from finishing it. Through four stages of construction, Pohang Works was completed. For more information on Pohang Works check out our previous post

Establishing Gwangyang: 1982~1992

Pictured here: 1985.3 – Beginning of Gwangyang phase 1 construction / 1978.12 – Establishment of Pohang University of Science & Technology / 1987.5 – Phase 1of Gwangyang Works construction completed

Despite the global economic depression of the 1970s, Korea’s economy flourished and steel business boomed. With experience in building Pohang Works, POSCO had the capabilities and know-how to establish Gwangyang Works.

Building on Great History: 1993~

Pictured here: 1994.10 – POSCO listed on the NY stock exchange / 1995.9 – POSCO Center in Seoul Opens / 2000.10 – Privatization of the company

Since its early beginnings, POSCO has come long ways. In efforts to become number one, POSCO has been contributing monumental achievements to the global steel industry.

Pictured here: Molten iron being transformed into high-quality steel

It has been recognized among the Top 100 Davos Forum Global Companies, #1 by Forbes Magazine as the Most Respected Korean Company and #1 Most Competitive Steel Manufacturer by World Steel Dynamics.

Pictured here: Still shots from the POSCO film which portrays steel which surrounds us in everyday products

In celebration of POSCO’s foundation day, we’d like to share a video about the roots of POSCO.

POSCO has made monumental achievements to the global steel industry by creating world’s best, world’s first technologies. Its products are recognized as one of the most competitive in the global market. As the first to develop Automobile PosM Steel technology, POSCO has made advancements in safety and weight reductions in automobiles.

Beyond being the number one steel company, POSCO is also looking towards the future for transformation and growth. POSCO is strategically pursuing opportunities in the energy and integrated materials business. It is also exerting efforts to increase competitiveness and efficiency in the renewable energy sector. POSCO is also gaining ground in the energy market with applicable high-quality products that can withstand extreme environments.

Pictured here: Finished high-quality steel products inside one of POSCO’s steel mills

POSCO’s Focus on Mutual Growth & Coexistence

POSCO understands that we live in an era where sharing and mutual understanding is essential. POSCO’s goal is to flourish with those who have been working with us to create a better world. To do this it has set improving the earth’s environment and giving back to the community as key goals.

We ask for your support as POSCO continues to build upon its rich history. Celebrating POSCO’s 46 years and recent inauguration of CEO Ohjoon Kwon, we are excited to bring “POSCO the Great” to life.

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.

-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.

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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]