CEO Kwon explores CES 2018

As such, CEO Kwon made his first official visit to the 2018 Consumer Electronics Show (CES) in Las Vegas earlier this month to stay on top of the latest trends in connectivity and smart solutions that can be applied to the manufacturing process in smart factories.

SEE ALSO: POSCO CEO Ohjoon Kwon Visits CES 2018

Ultimately, a smart factory for POSCO would entail using smart sensors to pick up data, smart analysis through AI and automated production processes. Moreover, the smart factory would store and analyze its big data and apply it to make future improvements and prevent malfunctions. Aligned with many of POSCO’s business growth engines, major topics and themes at CES 2018 included smart homes, smart cities, autonomous cars and AI, and more than 3,900 companies put forth their best innovations.

Smart Connectivity

As more and more cities undergo smart transformations, the next big trend will be data collection and analysis through 5G connectivity. It was no surprise to see numerous innovations in smart transportation, smart grid, public safety, healthcare, data analytics and more at CES 2018. Moreover, city officials from early-adapting cities such as Kansas City, Miami and Las Vegas took to the stage to discuss their cities’ smartization plans. Some of the topics discussed included using GIS mapping software, smart construction, inclusive technology and autonomous transportation to enhance citizens’ productivity, efficiency, safety and well-being.

CES 2018 was a platform for smart city discussion. (Source: Bosch)

CEO Kwon visited related booths to learn about new technologies POSCO could apply to its businesses. Currently, POSCO’s smart factories are run by POSCO ICT’s smart platform called PosFrame, which allows the factory to apply a digital genome map to operations via data collection, instantly convert smart factory initiatives in domains, act as a common platform for new technologies and apply the same, standardize smart factory model to other facilities through reusable software.

Also at this year’s CES, POSCO ICT signed an MOU with DPR Construction, a leading smart construction company to apply PosFrame to construction sites for more efficient, cost-effective and smarter construction processes.

Smart Transportation

Another major theme at this year’s CES was mobility. Namely, autonomous and electric mobility. Companies from all across the board from traditional car manufacturers and software companies to gaming companies lined up to showcase their new innovations.

Even as the market for sustainable EVs and autonomous EVs look to expand in 2018 and beyond, EVs only make up about 1 percent of the global fleet of cars and there’s still a ways to go before EVs become the norm. Drivers need to feel safe in their EVs or autonomous EVs, want greater range on a single charge and need to see more charging infrastructure in their communities before making the switch.

SEE ALSO: Ask an Expert: Electric Vehicles and the Future of the Automotive Market

What’s more is that just because a vehicle runs on electric batteries, it doesn’t automatically mean the vehicle is eco-friendly or transmits less harmful emissions. Manufacturers and consumers alike have to take a lifecycle approach to assess the car’s impact on the environment from production to end of life recycling.

POSCO works with numerous partners to develop leading solutions for electric vehicles.

That’s why POSCO is working with automakers to come up with vital solutions in the auto industry for a greener future. It supplies partners with an advanced high-strength steel (AHSS) called POSCO GIGA STEEL that is both lightweight and super strong, allowing cars to travel with less energy without compromising passenger safety.

POSCO is also a lithium provider and has developed an innovative technology to speed up the extraction process, saving time, costs and damage to the environment. It also works with car makers to apply premium electric steel to partners’ electric motors to increase efficiency and cut costs.

With so many exciting new innovations and technologies surrounding EVs, POSCO will undoubtedly play a significant role in ensuring automakers have the tools they need to realize a green future.  POSCO will work to stay ahead of newly emerging technologies to enhance the efficiency, sustainability and performance of all of its solutions.

Since last February, CEO Kwon has visited Siemens, GE and other businesses in Silicon Valley to explore new technologies and expand POSCO Group’s smartization plan. At CES 2018, CEO Kwon saw first-hand the latest smart technologies and plans to implement them to all of POSCO’s core businesses including steel, construction, IT and energy. He also met officials from leading smart companies such as GE and DPR Construction, and examined possibilities for cooperation over commercializing POSCO’s smart solutions.

POSCO Kwon met Heilmann Matthias, President and CEO of Digital Solutions at Baker Hughes General Electric (BHGE). Matthias oversees the digital solution business of GE Group, and the two discussed the development of PosFrame, POSCO’s proprietary smart platform, its compatibility with Predix, GE’s smart platform, as well as the possibility for joint commercialization.

In particular, POSCO ICT is planning to sign an MOU with DPR Construction, the world leader in Smart Construction, to collaborate on smart projects and find opportunities to apply new ICT technologies to construction. Through this MOU, the two companies will cooperate on projects such as constructing and operating highly-efficient, low-cost data centers and smart factories controlled by PosFrame.

CEO Kwon also visited the automobiles, home appliances, smart city and smart home exhibition booths. He examined the latest tech trends of IT utilization in steel-consuming industries to develop compatible materials and steel solutions.

He also made sure to explore electric vehicle (EV) batteries and new IT technologies surrounding EVs, as lithium materials are the new growth engine of the company. CEO Kwon also evaluated the possibility of securing new markets for the group’s construction business at home and abroad.

POSCO Group plans to continue searching for new, innovative solutions to apply to its smartization efforts and actively develop domestic and overseas data centers and smart factory markets.

Cover photo courtesy of BGR.

1. #Winning – competitiveness and sustainability

POSCO was recently named the world’s most competitive steelmaker for the eighth consecutive year by World Steel Dynamics (WSD). POSCO again took home the gold with the highest scores in five categories including innovative technology, cost reduction, skill level of labor, restructuring and investment environment.

POSCO is the world’s most competitive steelmaker.

Not only did POSCO come out on top for competitiveness, the company was ranked 35th among the “Global 100 Most Sustainable Corporations in the World in 2017,” by Toronto-based magazine and research firm Corporate Knights. The list was announced in early 2017 at the World Economic Forum in Davos, Switzerland. This is the third consecutive year POSCO made the list with outstanding scores in safety, environment and the salary levels of employees.

2. Joining the trillion club

POSCO entered the trillion club twice in 2017 as it recorded USD 1.283 billion (KRW 1.365 trillion) of operating profits in the first quarter, and USD 1.0581 billion (KRW 1.1257 trillion) in the third quarter based on its consolidated operating profit. Even in the midst of global oversupply and governments opting for protectionist policies, POSCO’s profits were unscathed. Much of the credit is owed to the company’s steel and non-steel affiliates overseas with strong sales performances. The consolidated debt-to-equity ratio was the lowest since 2010 and the non-consolidated debt-to-equity ratio was at its lowest ever.

POSCO recorded an operating profit over KRW 1 trillion in the first and third quarter of 2017.

To add, international credit rating agency S&P upgraded POSCO’s BBB-plus credit rating outlook to “stable” last February, and Moody’s also upgraded POSCO’s long-term corporate credit rating outlook to “positive” on October 26.

3. Everything’s bigger in…POSCO

Last June, after 102 days of repair, Pohang Blast Furnace No.3 became the world’s fifth-largest blast furnace. Its internal volume expanded from 4350㎥ to 5600㎥, allowing the super-sized blast furnace to put out 15,000 tons of molten metal daily. POSCO currently operates five super-sized blast furnaces, or blast furnaces sized 5500㎥ or larger.

Pohang Blast Furnace No. 3 under construction.

POSCO further upgraded Pohang Blast Furnace No.3 by adding in AI capabilities. It is now equipped with smart technology that can control the internal state of the blast furnace automatically, and smart sensors can now predict accidents before they happen, extending the lifespan of the furnace. Furthermore, POSCO plans to collect big data from the blast furnace and use it to develop fully smart blast furnaces in the future.

4. The smarter the better

Since his taking up the CEO position in 2014, POSCO CEO Ohjoon Kwon has repeatedly expressed his vision for securing future competitiveness through smart solutions. The company even started a smartization training course for employees and held the Smart POSCO Forum 2017 last July to share its insights and progress with clients and affiliates.

POSCO is gaining a competitive edge through smart solutions. (Source: Global Trade Magazine)

Moreover, POSCO also supported a smart talent training project customized for SMEs. The program included job training for AI and big data application technologies. Going forward, POSCO plans to build a “Smart Industry” to increase steel competitiveness and create new business opportunities with new, smart technologies.

SEE ALSO: How Factories Produce Steel- the Smart Way

5. Getting in on electric vehicles

The market for electric vehicles (EVs) is an exciting one with so many companies investing in new technologies. POSCO also hopes to extend its customized material and technology solutions to EV manufacturers. Last October, the company held the Global EV Materials Forum to showcase four of its core business areas: lightweight bodies, batteries, motors and charging infrastructure. More than 380 clients took part in the forum to learn about emerging trends and POSCO’s products and services including POSCO GIGA STEEL and commercially produced lithium batteries for EVs.

POSCO is a solutions provider for EV manufacturers. (Source: Bloomberg)

6. POSCO’s new marketing approach

For the first time ever, POSCO created and aired a TV commercial highlighting a specific product, instead of its corporate brand. This marks POSCO’s first B2C marketing effort and features the company’s innovative auto steel, POSCO GIGA STEEL. The commercial compares POSCO GIGA STEEL to aluminum, another widely-used lightweight material in a visual demonstration so that everyday drivers can better understand the benefits of a stronger yet lighter material.

7. Going for 10 million tons of automotive steel

On April 26, POSCO completed 7CGL, a new steel production facility in Gwangyang, Korea, designed exclusively for the production of POSCO GIGA STEEL. 7CGL has an annual capacity of 500,000 tons and is the world’s first plant capable of producing both 1.5 giga-level galva-annealed (GA) and galvanized (GI) steel sheets.

POSCO Completed 7CGL on April 26, 2017. (Source: Business Korea)

In addition, POSCO managed to reduce investment funds and secure cost competitiveness by designing and constructing 7CGL’s core facilities based on accumulated facility technologies and operating know-how. The 7CGL is POSCO’s 12th plant exclusively for automotive steel sheets, and POSCO aims to sell 10 million tons of automotive steel in 2018 globally.  

8. Setting new records with high manganese

POSCO became the first company in the world to commercialize the technology for producing high manganese using fusible ferroalloys. The technology took KRW 5.5 billion of research and development costs and four years to complete.

POSCO is the first company in the world to commercialize its high manganese production technology. (Source: Eramet)

The core part of POSCO’s high manganese production process is PosLM (POSCO Liquid Manganese), a special holding furnace that stores manganese ferroalloys in a fusible state. POSCO’s technology reduces the production time for high manganese steel by more than 50 percent as well as increases slab production efficiency. PosLM was jointly researched and developed by the Institute of Technology and POSCO M-tech.

9. Bringing home the lithium

On February 7, POSCO opened its PosLX (POSCO Lithium Extraction) plant with an annual capacity of 2,500 tons. The plant is the first plant in Korea capable of commercial lithium production. The technology took 7 years to perfect, but it was well worth it. The production process for high purity lithium now takes just 3 months, compared to the previous 12 to 18 months.

POSCO is making lithium extraction more efficient and sustainable. (Source: Mining)

In the past, Korean manufacturers imported the entire quantity of lithium they needed. With POSCO’s PosLX plant, partners now have access to a local supply of lithium. Moreover, POSCO plans to use lithium phosphate extracted from wasted secondary batteries as raw materials, in keeping with the company’s sustainability standards.

POSCO will continue building on a successful 2017 in the new year, by tackling new challenges and continuing to provide its partners with customized and optimal solutions in all business areas.

Cover photo courtesy of Hitech Building Solutions.

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.”

Smart factories are bringing AI, IoT and Big Data to the manufacturing industry.

#1 How Smart Factories are Changing the Manufacturing Industry

The Fourth Industrial Revolution is bringing AI, IoT and other automated technologies into people’s lives and changing the way they live and interact with one another. It is also bringing about change in the manufacturing industry as more companies embrace smart factories to further enhance efficiency, performance and safety. Take a deeper look at how smart factories are reinventing the manufacturing industry.

SEE ALSO: How Factories Produce Steel- the Smart Way

POSCO GIGA STEEL also offers electric vehicle manufacturers a lightweight material solution.

#2 POSCO GIGA STEEL Increases Strength, Improves Safety in Autos

This year, POSCO GIGA STEEL set a new, industry standard for strength and formability for auto steel. The advanced high-strength steel (AHSS) is an automaker’s dream come true as it falls into the strongest category of steel commercially available today. Plus, its lightweight property makes it the perfect solution for manufacturers trying to design safe, high-performing and sustainable vehicles.

SEE ALSO: Ask an Expert: Has Steel Achieved Its Peak in Lightweighting?

Lithium-ion batteries are found in some of the most popular devices available today. (Source: BGR)

#3 POSCO’s Innovation Shapes the Ever-Growing Lithium Market

POSCO is the world’s 5th largest steel producer, but it’s got more up its sleeves than just steel. This year, POSCO developed game-changing technology that extracts lithium from water in just 8 hours to one month. Traditionally the task takes anywhere from 12 to 18 months. To add, the new technology can achieve a purity rate of 99.9 percent and increases the lithium recovery rate to over 80 percent.

Lithium is a central component in rechargeable batteries for electronics such as smartphones, laptops and most importantly, electric vehicles (EVs). Heading into 2018, POSCO is well-positioned to be an industry leader in a rapidly-growing market for EV batteries.

SEE ALSO: The Fuel of Tomorrow: Mining Lithium for Tomorrow’s Cars

POSCO CEO Kwon Ohjoon fires up Pohang Blast Furnace No.3

#4 POSCO Gets “Smart” with Pohang Blast Furnace No.3

In June, one of POSCO’s oldest and the world’s 5th largest blast furnace got a makeover with some added AI. After undergoing 102 days of repairs, Pohang Blast Furnace No.3 came back much bigger with an expanded furnace volume of 5600㎥, compared to its original volume of 3795㎥ from its beginnings in 1978. Plus, Pohang Blast Furnace No.3 now has smart sensors to monitor operations and detect malfunctions or accidents before they happen.

SEE ALSO: How to Make Steel with an Old(ie but Goodie) Blast Furnace

Ajay Telrandhe in Quality Assurance and Manish Kochar & Chetan Waghchoure in Sales talk to the Steel Wire.

#5 Ask an Expert: POSCO Leads India’s Growing Automotive Steel Market

POSCO Maharashtra is POSCO’s leading subsidiary. Three of their employees gave the Steel Wire an insider’s look into the company’s success, despite a challenging market environment and government restrictions. The team in India implemented positive changes in the company’s steel quality, production processes and customer service to become a leading solution-provider for their automotive partners.

SEE ALSO: Revving Up for Growth: India’s Automotive Market is In Full Gear

EVs, autonomous vehicles and shared mobility will drastically change the auto industry. (Source: Electrek)

#6 Ask an Expert: Electric Vehicles and the Future of the Automotive Market

Stephen Zoepf, executive director at the Center for Automotive Research at Stanford University, was the first speaker at POSCO’s 2017 Global EV Materials Forum. Zoepf shared his vision of what the future automotive market will look like and its implications for car manufacturers, suppliers and drivers. According to research, 60 percent of the cars in the U.S. will be running on electric batteries by 2030, and those cars will mostly be part of a shared mobility service. Traditional ways of car production, distribution and consumption will undergo massive change and companies will have to find ways to stay competitive in the new market dynamics.

SEE ALSO: The Forgotten Fleet: Looking Back on Early Electric Vehicles for a Better Future

Steel dresses from Naim Josefi’s 2017 F/W GANGS collection. (Source: Naim Josefi)

#7 Ask an Expert: Fashion Forward with Steel

Fashion designer Naim Josefi opened new possibilities for steel application with his 2017 F/W GANGS collection which included dresses made of elaborate steel sequins and laser-printed jeans. He is also known for his 3D-printed high heels that provide the perfect fit. The artist has a passion for fusing technology into his work and finding more sustainable ways to create beautiful clothes and says he will continue to use steel as a high-tech, fashion material.

Heading into a new year in 2018, the Steel Wire promises to be the best source of steel industry news and continue to provide exclusive, insightful and interesting stories.

What’s more, manufacturing is no longer a rigid industry that produces uniform, one-sided goods. There is constant communication between customers and businesses for hyper-customization. Not only that, machines and products communicate within a smart factory, and factories exchange data with other factories. Manufacturing is no longer limited to production plants. Moreover, the data generated in the manufacturing process is combined with customer information, and a new service can be created. This combination of manufacturing and services is resulting in creation of added value. In the midst of such drastic change, how can companies stay competitive?

Staying Competitive Through Connection and Convergence

Global manufacturing companies are at the forefront of the 4th Industrial Revolution, as evident in their smart factories. A smart factory collects data generated from the production process using ICT technology, and the system controls all processes from material input to the final product. This has led to flexible production systems with the ability to make various products in one factory or to expand the range of products on the basis of connectivity. Typically, when a company builds a smart factory, it can improve productivity by 20 to 30 percent. A 20 percent improvement in efficiency in the manufacturing sector is a significant, outright increase in global competitiveness.

SEE ALSO: How Smart Factories are Changing the Manufacturing Industry

Siemens Electronics Manufacturing Plant incorporates robotics, AI and IoT to its production processes. (Source: Zawya)

If the productivity of a plant can be improved through smartization, it is important to also think about connectivity with the ecosystem that exists outside of the plant. Once a smart factory is built, all the data from customer orders to production and delivery are collected in a system via sensors. The customer, product and production data create meaningful connections with each other and provide extensive insight. Examples of added value creation through meaningful connections include hyper-customized goods, data-driven after-sales services to customers and collaboration among companies connected within the smart factory’s external ecosystem. Such advancements will lead greater product quality, production stability as well as shortened delivery times between value chain suppliers.

The Adidas Speed Factory and GE Brilliant Factory are examples of successful smart factories. Adidas customers choose the materials, colors and design of their sneakers, and have them manufactured and shipped within 24 hours in an automated factory.

GE has built a system that can produce all of their widely-diverse products in one factory. When the factory receives customer orders, it operates in a flexible production system which starts with the necessary raw materials, inputted by the automated scheduling system that controls the entire production process, including the final distribution system.

The Future of Manufacturing

Overall, the adoption of innovative changes in the manufacturing sector is likely to progress from lighter industries to the heavy industries, from B2C to B2B sectors. Small plants, quick manufacturing and B2C companies can more readily adapt to rapid technological and market changes. On the other hand, heavy industries like steel and B2B companies with continuous and heavy manufacturing, large production volume and numerous linked companies are likely to be slower to adapt to changes.

It is much more difficult for traditional, heavy industries to adapt to changes. (Source: Live Mint)

For example, adapting to the changes of the 4th Industrial Revolution in the steel industry may be slow, but it is inevitable. What’s more, the long-term adaptation process is more likely to be systematic and deliberate.

As a leading company in the global steel industry, POSCO is pursuing a long-term, systematic “Grand Design” to reinvent its systems to align with the changes of the 4th Industrial Revolution.

First, POSCO built a pilot smart factory in their steel mill, Gwangyang Steelworks, in 2015 that is currently in operation. The company used IoT to collect big data on site, analyze it in real time and build a smart factory that enables optimal control through AI and self-learning. As a result, the Gwangyang Steelworks is reaping the benefits of a smart factory not only in cost reduction but also in improved steel quality, minimized malfunctions and a safe and stable production environment. This year, POSCO plans to expand and apply smart factories to all of its production processes.

POSCO built a smart factory in Gwangyang Steel Mill.

Smart factory application throughout the entire steel mill will improve overall efficiency through a flexible production system. In addition, the factory will be able to respond directly to various customers in real time based on platform construction with customers within the connected ecosystem. The customized characteristics and design of the steel grade for each customer can be applied to production in real time.

SEE ALSO: How Factories Produce Steel – the Smart Way

Ultimately, a smart ecosystem that links manufacturing, processing and distribution with customer input will lead to a new, innovative ecosystem within the steel industry. In Europe, some companies are experimenting with material libraries and steel distribution platforms. The material library displays a variety of materials for customers to see, touch and test the workability and performance of the materials, and get information about the characteristics, design and delivery times through the order platform. Customers can designate the shipment date on the spot. This will be one of the new promising business models that steel and other material companies will strive towards in the coming future.

POSCO’s Grand Design includes a step-by-step approach to smart factories to expand the use of IoT, AI and Big Data in its production systems. To this end, POSCO ICT has developed PosFrame, a standard software platform that collects basic data of production processes and collectively manages, controls and analyzes the information.

POSCO uses its software platform, PosFrame, for data collection and analysis.

When the software becomes standardized and reliable enough to extend to other sectors, it will be applied to other business areas such as energy and construction, as well as to POSCO’s affiliates.

Manufacturers will have to take into account the heavy production environment, the slow industrial change cycle and the complexity of related industries and affiliates to implement the most effective, long-term, systematic upgrades to its production systems. This will result in a brand-new production and business model for manufacturing companies that will align with the new environment of the 4th Industrial Revolution.

Cover photo courtesy of Sputnik International.

The Demographic Cliff

Economic forecaster and author of “The Demographic Cliff,” Harry Dent, says people between the ages of 45 and 49 are typically the heads of families and spend the most money on things like housing, cars and appliances. As populations age, fewer people will make up the prime spending age group of 45 to 49, and there will be a drop in consumption. Dent calls this the “demographic cliff,” or the “consumption cliff”. The world has seen proof of this theory in places like Japan, Western Europe and the U.S., where economic downturn has come at times of a population downturn.

The Japanese stock market crashed in the early 90s, and they have yet to fully recover. (Source: Huffington Post)

Japan, for example, was one of the first nations to experience a demographic cliff in the early 90s. It was also the time when its stocks and real estate prices fell 60 percent. Those prices never rebounded. Since then, the country has spiraled into debt (the world’s highest at 246 percent of GDP) with an increasingly aging workforce and stagnant economy. From 2010 to 2015, Japan’s population decreased by almost 1 million people, and the government is working to prevent the population from falling below 100 million by 2060.

The U.S. 2008 Financial Crisis came shortly after its demographic cliff. (Source: Reuters)

Dent also argued that the American baby boomers of the early 60s peaked in 2007, at their highest spending age, and then the economy experienced a downturn, in the form of the 2008 financial crisis. Since then, the U.S. government has added USD 8.4 trillion in debt. Although the reasons for the 2008 crisis are complex, Dent does prove a point: demographics have a huge impact on economics.

Falling Steel Consumption

As it was with Japan and the U.S., consumption will decrease in industries critical to the steel market. In Japan, steel consumption decreased 81 percent from 1995. According to a report by POSCO Research Institute, construction accounts for 42 percent of total steel demand and the auto industry accounts for 18.5 percent. Decreased spending on homes and cars due to the demographic cliff will have a significant impact on the steel industry. Decreased demand in other industries such as machinery and home appliances will also affect steel demand.

The construction industry will be the hardest-hit by a demographic cliff. (Source: CNBC)

Moreover, manufacturers will be faced with the problem of a shrinking workforce. Those entering the workforce will do so with the burden of sustaining government programs with a larger portion of their paychecks, and employers will start to notice the gaps not only in age but experience and skill as well. With fewer people entering the workforce, employers will be forced to outsource jobs and governments may factor in more lenient immigration policies to fill the gaps.

How can Steelmakers Prepare for the Future?

Although there is no quick solution to the aging population and low birthrates, steelmakers can start preparing for a demographic cliff in two ways. Enter markets with growing populations and introduce smart technology to fill the human labor gap.

In developing countries in Asia and Africa, there are little signs of population and economic stagnation. As those countries invest in their infrastructure and start to consume more homes, cars and appliances, steel will be in high demand, more than those countries can produce domestically.

India’s solar energy industry will lead to an increase in demand for steel. (Source: WLE)

India is one of the countries with a growing population. The government is undergoing numerous projects to boost its economy and prepare for growth, including the project to boost its solar energy market. The Indian government has plans to invest USD 100 billion and 100 gigawatts (GW) of solar capacity for the country by 2022. Steel is a vital part of solar panels and suppliers like POSCO are already partnering with Indian firms to provide the leading material and technology for India to meet its growing renewable energy demand. POSCO also has partnerships in the U.S., Bangladesh, Myanmar, Uzbekistan and more to help each country fill their supply gaps.

In order to fill the domestic labor shortage, POSCO is incorporating leading AI technology, IoT and big data to its smart factories.

It is true that today’s developed nations have reached, or are heading towards a demographic cliff. Japan is a classic example of how detrimental a shrinking and aging population can be for a country’s economy. Governments and industries have to start factoring in demographics to their long-term strategies and plan for a changing future.     

Cover photo courtesy of 24×7 Daily.

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

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

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

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

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

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

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

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

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

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

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