Malcolm Mclean was an American truck driver who invented container shipping and revolutionized the logistics industry. (Source: Will Box)

Now, at the onset of the Fourth Industrial Revolution, container shipping is undergoing a smart makeover to become more efficient, environmentally friendly and cost-effective. Major shipping companies and ports around the world are adopting smart technologies such as Blockchain, Big Data and IoT to automate operations. For example, the world’s largest container shipping company, Maersk is operating on IBM’s  blockchain-like system to cut out additional paperwork and conduct efficient, transparent operations. Major ports now have smart sensors and artificial intelligence (AI) to collect data about the environment and respond to changes in real-time. Finally, to keep up with all the new technology, new infrastructure is outfitting the smart ports of tomorrow.

So, here’s a glimpse into some of the most advanced ports around the world and what the future of container shipping holds.

SEE ALSO: The Changing Waves of the Shipping Industry

Port of Rotterdam

The Port of Rotterdam is Europe’s largest port with more than 461 million tons of cargo and 140,000 vessels passing through it every year. In January 2018, the Port of Rotterdam Authority and IBM announced they will collaborate on a digital transformation project to turn the Port of Rotterdam into a smart, connected port of the future. Already, there are sensors being applied across the span of 42 kilometers of the port both on land and in the sea to collect data about the port’s surroundings.

The Port of Rotterdam is the largest port in Europe and on route to becoming a smart, connected port. (Source: Port of Rotterdam)

Most importantly, the new port will have a central dashboard which will act as the brain of the entire port. The sensors will collect data and send it to the central dashboard where it will be processed in real-time via IBM’s IoT technology. Compared to the traditional radio communications among operators, the new system will drastically cut down the time it takes to communicate and manage traffic as well as prevent or respond to accidents. Operators will be able to oversee all operations of the port at once, and the new, efficient process is projected to save shipping companies up to an hour in berthing time, which translates to a cost savings of about USD 80,000 per hour.

Port of San Diego

The entire city of San Diego has been working to become a smart city and a leader in the movement towards net-zero energy consumption. The city’s port is no different. In 2013, it adopted the Climate Action Plan (CAP) under which the port has pledged to reduce greenhouse gas emissions by 10 percent by 2020 and 25 percent by 2035.

The Port of San Diego uses smart technology to reduce its carbon footprint. (Source: Cleantech San Diego)

As such, the city worked with various software companies led by Cleantech San Diego to develop a smart building project. The project’s smart technology uses sensors, Big Data and IoT to monitor energy levels across the city and provides real-time data upon which places like the city’s port can operate. Essentially, the data allows port operators to identify patterns in energy consumption as well as abnormalities to respond to in real time.

This year, the Port of San Diego and the state of California will undergo a USD 24 million modernization project with the goal of implementing zero-emission freight equipment over the next 20 years, and further incorporate smart technologies to reduce pollution.

SEE ALSO: Clear Skies Ahead: Clean Fuel for Green Shipping

Port of Singapore

Singapore is the trade hub of Asia and home to one of the busiest ports in the world. Every year, 130,000 cargo ships pass through its waters, but the number looks to increase with the growth of the e-commerce industry.

The Port of Singapore is en route to becoming one of the smartest ports in the world. (Source: Singapore Ministry of Transport)

Starting last September, the Maritime and Port Authority of Singapore (MPA) and IBM jointly implemented Project SAFER (sense-making analytics for maritime event recognition) to the port of Singapore. SAFER consists of new technologies to automate port operations, manage traffic and optimize the use of the port’s resources. With the new automation technology, the port can now enforce regulations automatically and monitor all vessel movements within the port at once in real time. Not only that, SAFER makes maritime operations much safer for operators and employees on the docks with the help of AI sensors for accident prevention. For continued development, the Maritime and Port Authority of Singapore held the Smart Port Challenge 2017 to foster startups in developing next-generation technology for enhanced and sustainable maritime operations.

As the ports mentioned above show, the global cargo shipping industry is headed towards vast change. New technologies such as blockchain, IoT and AI will greatly enhance transportation and handling efficiency and lead to greener practices. Traditional steel containers, on the other hand, will continue to be used in immense volumes for its 100 percent recyclability, lightweight and high-strength properties.

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.

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.

The fourth industrial revolution is heralded by big data, the internet of things, artificial intelligence, virtual reality and augmented reality, 3D printing and other technological innovations. It’s happening at rapid speed. The steel industry needs to keep up and take advantage of all that this revolution has to offer.

However, the industrial revolution did not happen overnight, and advancements in human development traces back to the Iron Age.  

The Iron Age and How it Impacted Civilization

After the Bronze Age was the Iron Age. People started using iron and steel for tools. This was a huge shift for the world, and helped improve nearly all spheres of life from the spread of written language to more effective agricultural practices. Iron offered more choice. People could forge this material into whatever they needed for tools, weapons, or ornaments and decor.

Blacksmiths would have used tools like this during the Iron Age.

Tools and weapons created during this era often used steel, which was a vast improvement on the bronze items from the previous age. Items made from steel were just as light as bronze, but stronger, so users were able to get more out of each item they created. The strength of these tools made it possible for farmers to plant and harvest more land, faster. It enabled people to sell or trade for livelihood.

The Iron Age is a great example of how the right materials can make life better for everyone.

The New Structure of Steel

As the world moves through the fourth industrial revolution, it is evident the same thing is happening. Instead of improvements in specific materials and tools, however, technology is changing things.

The steel production process can be completed autonomously if the fourth industrial revolution continues the way it is going. This means that manufacturers will be able to have very detailed and thorough control over production, using smart technology that will factor in every element from the surrounding environment to minute details of the material itself. The steel production process will be able to use real-time data to optimize every facet of operations, saving money and time.

Robot arms with artificial intelligence take part in the steel production process. (Source: Telenor Connexion)

The steel value chain is affected by changes in the provision of after-sales service, owing to new technology. Manufacturers can use smart technology to track how users interact with their completed products and offer better customer service as a result.

Again, real-time information comes into play, allowing steel companies to see exactly how orders are being created, fulfilled and used, as it is happening. Customer needs are met with ease and speed, all tracked and analyzed digitally.

Competition in the steel industry will be affected by this revolution, too. Competitors can see how other companies are using big data and automation to save money and offer a better customer experience, and use those details to revolutionize their offerings. Online steel transaction platforms make this transparency even more accessible, for companies and clients alike.

Implications on the Steel Industry

To keep up with this revolution, and make the most of it, steel companies need to understand the implications on the industry and plan for the future. New technology is only going to become more widespread, more common, and more advanced. Companies need to be ready to react.

Integrating technology and smart software is the ideal way for steel companies, and the industry at large, to take advantage of this new revolution and use it to create better products and better customer relationships.

To get an idea of how to best integrate new tech into existing steel practices, POSCO’s smart steel factory is a prime example, currently being tested at the Gwangyang Steel Mill. POSCO’s smart factories will collect and analyze all of the microdata generated in the steel production process, to determine the cause of every event that impacts quality or production in general.

An image of how POSCO’s Smart Factory will be run.

From facilities to energy and environment, to safety and conditions, the smart factory will monitor everything. And it will respond accordingly to make the best quality steel possible.

Self-learning artificial intelligence ensures that the process of steelmaking is carefully controlled, with adjustments made in real-time to directly and positively impact the result. The smart factories will use technology to fill the gaps where human capabilities are simply no match for software.

The world has come a long way since the Iron Age and through the various industrial revolutions. In the current fourth industrial revolution, steel companies have to take advantage of new technology and innovations by figuring out ways to apply them to steelmaking processes. POSCO has made this a top priority as it continues to research, educate and implement smart technologies to its production processes and materials and will lead the way for steel companies to follow through the fourth industrial revolution.   

Cover photo courtesy of Manufacturing Global.

The Steelmaking Process

So, what does a blast furnace do in the steelmaking process? There are 4 main parts to the process of making steel, and in each process, the accompanying production equipment is as vital as the materials that make steel. Each batch of steel starts off with iron, molten iron to be exact, and the blast furnace is what transforms raw materials into molten iron.

Molten iron leaves through the bottom of a blast furnace

Molten iron comes from two raw materials; iron ore and coal. First, iron ore is converted into sinter ore in a sintering plant and coal is converted into raw coke using a coke oven. The processed materials are then poured into a blast furnace through the top opening. Hot air reaching 1200℃ is blown in from the bottom through tuyeres and chemically reacts with the materials as they fall to the bottom of the blast furnace. This process oxidizes the coke and reduces the sintered ore, creating molten iron. The molten iron is then further processed to make steel.

The Importance of the Blast Furnace

The Blast furnace is one of the oldest and most significant equipment in the steelmaking process. The average lifespan of a blast furnace is about 15 years before it needs to be replaced or refurbished.

The Pohang No.1 blast furnace

POSCO is a few months shy of its 50th anniversary, and the Pohang No.1 blast furnace has been in operation for 45 of those years. Interestingly, the blast furnace has never broken down or gone out of service. With an annual capacity of 1.3 million tons, it helped establish Korea as the top-5 steelmaker in the world and was even named Korea’s Economic National Treasure No.1.

A New Technology from an Old Furnace        

In the beginning of 2017, POSCO decided to shut down the Pohang No.1 blast furnace for good in response to the slowing steel market and put the national treasure in a museum instead. It seemed the oldest operating blast furnace in Korea would finally retire.

However, just before pulling the plug, engineers used the Pohang No.1 blast furnace in a pilot operation program using low-grade raw materials such as soft coke and low-cost iron ore to produce molten iron. To everyone’s astonishment, it succeeded, and with lower charter costs than the larger blast furnaces that have 3 times the production capacity.

As it turns out, because of its smaller size, the blast furnace can operate with low-grade raw materials such as soft coke and low-cost iron ore, and can flexibly adapt to fluctuations in operations. Employees further developed the technology and as a result, Pohang No.1 blast furnace recorded the lowest charter costs of all POSCO blast furnaces in April this year.

Thanks to the new-found technology, the legacy of the Pohang No.1 blast furnace will continue.

What’s the Secret to Longevity?

Usually, a blast furnace needs to be sprayed down every 6 months so that it does not get damaged from temperatures that can reach up to 2000℃. The bottom of the blast furnace is where the heat is concentrated, thus most susceptible to damage. Furthermore, fluctuations of the internal gas composition can lead to explosions. To solve this problem, POSCO’s technicians developed a technique to lower the coke to below the tuyere and repair the bottom of the blast furnace. This technology was applied to other furnaces and maintenance systems and is still in use today.

The Pohang No.1 blast furnace’s TFT during maintenance

To add, the Pohang No.1 blast furnace even has its own voluntary task force team (TFT) to care for and maintain the blast furnace called “Love for the blast furnace, love for POSCO.” The team of 15 not only makes sure the blast furnace is operating smoothly, they also continually research new technologies to prevent malfunctions and enhance the blast furnace.          

In a matter of months, the furnace went from almost becoming an artifact to a central part of POSCO’s competitiveness. This blast furnace’s long history in itself is impressive, but with its recent transformation, there is no telling what greater innovations and technology POSCO will achieve.

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Read how these megatrends and the expansion of the four largest steel-consuming industries have driven the growth of the steel industry from the last fifty years and will continue to play a crucial role.

Megatrends and their impact on the steel industry

Future Cities and Changes in Steel Materials

Urbanization is a key driver in the development of the global construction industry and will further accelerate in the future with rapid industrialization in developing countries and the shift to a knowledge economy in advanced countries.

Within the overall shift toward urbanization, many countries are actively crafting policies to develop their cities as globally competitive megacities. There is an increasing number of megacities with over 10 million inhabitants as the competition paradigm shifts from competition among countries to competition among cities.

Also, with a growing sense of urgency in improving the environment in terms of ozone depletion, climate change and energy and resource exhaustion, eco-friendly, green cities are emerging as a new trend.

Lastly, smart cities, characterized by digital transformation and energy revolution, will rapidly expand in the future drawing on the Fourth Industrial Revolution.

Following the ongoing and emerging trends of urbanization and future cities, new advanced steel materials are required to accompany emerging trends and accelerate the development of megatall, eco-friendly and smart products. Conventional steel materials for construction, such as steel bar and section, will improve in functionality with higher strength, thermal conductivity and better sound isolation. They will also be developed as composite materials and new materials such as carbon nanotubes and shape memory alloys will be widely deployed in construction processes. However, as construction costs (labor costs and the use of high-strength steel materials, for example), increase, steel content per unit of construction investment is expected to decline.

A New Mobility Paradigm

Led by high-income earners, lower car prices and improved road infrastructure, the key trend for the automotive industry is motorization. Today, automobiles are no longer just a means of transportation but becoming a major arena for IT competition with the rise of electric vehicles, robotic vehicles and new mobility services.

As a response to global warming, electric vehicles and energy-efficient self-driving cars are becoming increasingly widespread along with the rise of new innovative mobility services, such as robo-taxis and self-driving mini-buses.

In the case of EVs, less auto parts will be required as metal parts such as powertrain components – the engine, vehicle intake and exhaust system, and transmission – will be replaced by batteries, motors, and electronic parts. As cars are made lighter to improve driving range, alternative materials such as aluminum and CFRP are being used in some luxury lineups.

In order to retain its competitiveness and also meet increasingly strict environmental regulations, the steel industry is developing lighter and stronger steel materials such as advanced high-strength steel (AHSS) to replace traditional steel products. Steel, a strong and economically competitive material, remains an attractive choice for both EVs and self-driving cars.

Recovery of the Shipbuilding Industry

Technological advancement as a result of the Fourth Industrial Revolution and changing environmental regulations will bring considerable changes to the shipbuilding industry.

The shipbuilding industry, which boomed in the 2000’s, experienced a downturn after the 2008-09 financial crisis. Although the oversupply will linger until 2025, the shipbuilding market will then turn to an upswing with increasing growing global trade and rising demand for ship replacement.

With the development of ultra-large container ships, LNG-fueled ships, electric ships, CO₂ carriers, polar ships, and environmentally–friendly equipment, high-strength steel for ultra-large and lighter ships and high-strength low-alloy steel for safe and affordable LNG and CO₂ storage tanks are required.

As vessels become larger and lighter, the steel intensity of ship’s tonnage will fall. Steel intensity is expected to decline due to larger and lighter vessels.

Global Climate Action and Energy Transition

As a response to global warming, renewable energy is increasingly in demand. In fact, it is no longer being referred to as “alternative” energy but “mainstream”. The International Energy Agency (IEA) has predicted that the share of renewables within global power generation is expected to rise from 23 percent in 2014 to 37 percent by 2040.

The renewable energy sector is also adopting various types of steel products. The tube tower, which accounts for 65% of the weight of a wind turbine, is made mainly of steel, while thin stainless steel sheets and frames are required for solar panels. This wide application of steel products offers additional business opportunities to steel companies.

Meanwhile, the share of fossil fuels within primary energy consumption will fall from 81 percent to 74 percent over this span. However, the decline will be gradual due to population and economic growth in emerging countries and fossil fuels will continue to play a dominant role in the energy sector in terms of quantity of consumption.

Steel companies must target new markets by developing innovative steel products for the microgrids and energy storage systems which will grow alongside renewable energy.

The Steel Industry Over the Next Two Decades

Over the next two decades, the steel industry will face the following four challenges: slowing steel demand due to decreased steel intensity across major steel-consuming industries; a need for more advanced steel products; upgrading to eco-friendly and smart steelmaking processes; and changes in manufacturing based on the Fourth Industrial Revolution.

Accordingly, it is imperative that the steel industry boost its capabilities for continues product and process innovation and build a sound steel ecosystem through partnerships with steel-consuming industries.

To this end, POSCO is not only investing in the development of an eco-friendly rolling process but also in sustainable development including energy conservation and recycling technologies. In addition to factory automation based on IoT, big data and AI, POSCO is working to increase the application of smart technology internally as well as externally with its partners and affiliates.

It is an exciting time for the steel industry as it continues to transform along with the ongoing and emerging megatrends.

Download the full version of POSRI’s Asian Steel Watch journal for more at POSRI’s official website.

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As many as 700 people attended the forum including POSCO Group affiliate employees, as well as those of POSCO’s major suppliers, outsourcing partners and AI-related professors. Notably, employees from Nastech and Korinox, where POSCO is carrying out smart factory support projects, participated as well.

POSCO CEO Ohjoon Kwon watching a presentation at the forum

“POSCO must continue to take up the challenge of implementing a smart POSCO in preparation for the dawning of the 4th Industrial Revolution. We will apply smart technologies to all processes of the steel mills, as well as to management areas such as finance, HR and purchasing to realize the concept of smart management,” stated POSCO CEO Ohjoon Kwon. “We will actively share the results of POSCO’s smartization process with our group affiliates and customers.”

Mi-hwa Park, head of the POSCO Information Planning Department added, “To realize a smart POSCO, we started the Smart Solution Council headed by our CEO last year, and identified 141 smart projects which applied Big Data and AI to solve practical problems. Approximately 600 employees participated in the projects and reduced costs by KRW 15.7 billion.” She added, “We will develop a POSCO-style SME smart factory model to support innovations for the manufacturing sites of our SME customers and suppliers. Furthermore, we will contribute to fostering SMEs and creating jobs by providing a lighter version of the PosFrame, developed by POSCO, as a customized smart platform for SMEs.”

POSCO CEO Ohjoon Kwon with the excellence award recipients

POSCO also recognized projects that applied Big Data and AI, for excellence in the steel production category. Out of the four, one improved the flatness of steel sheets and another provided improved technology for slab production. The “3D-based design/construction quality improvement” project that uses POSCO E&C’s Virtual Construction to predict risks, and the “power generation output through condenser performance diagnostics” project that can accurately detect errors in POSCO Energy’s power plants were also among those selected.

Forum participants were given an opportunity to experience POSCO’s smart solution platform PosFrame firsthand. PosFrame combines operational insights and IT technology to collect Big Data as well as process and monitor data in a way that allows participants to experience the reality of “Smart POSCO.” It was one of the most popular features of the forum among participants.

POSCO CEO Ohjoon Kwon looking at a PosFrame platform

POSCO also announced its plan to standardize the technologies and processes developed through smart projects, turn them into a technical package and actively incorporate them into its “Smart Solution” business to create added value.

Ki-won Na, CEO of Shinheung Automotive Co., Ltd., an automotive parts maker, said, “We received a lot of ideas applicable to our operations from the case studies presented today, and if we learn about POSCO’s Big Data analysis and utilization techniques in more detail and apply them, I expect it will greatly contribute to improving our productivity.”

POSCO joined hands with POSTECH to launch an advanced AI course earlier this year and is currently training 25 internal AI experts so that they can apply their AI knowledge in their field to solve problems and thus lead the way for a smart POSCO.

Also, POSCO has begun providing free AI education to young, underprivileged jobseekers in July and is now training 100 youths per year on both theoretical and practical knowledge. POSCO is also planning to support the customized SME smart talent development project, including practical education on AI and Big Data skills, for its customers and suppliers.

POSCO is actively planning to complete its smartization, meaning it will apply its “Smart Factory” to all processes of the steel mills, and carry out its “Smart Solution” business, which combines POSCO’s product technologies and services with smart technologies.

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With the emergence of the 4th industrial revolution as a hot topic of the world economy, AI is expected to drive manufacturing innovation by providing breakthroughs in smart factories.

POSCO Smart factory in Gwangyang

In his recent POSCO Issue Report, Kim Ho-In, a senior researcher at POSRI, examined what innovations AI can bring to the upgrowth of smart factories, and identified key issues related to such technological introductions.

Smart Factory Takes Wing with AI

Kim looked at how AI will provide breakthroughs in areas of manufacturing, such as preventive system maintenance, process control, expert process control and robot automation, and how AI  will make smart factories more efficient, less wasteful and more productive.

Traditional stock, inventory and statistical analysis provided insufficient information for preventing factory defaults, and made certain failures inevitable. With AI, however, factories can predict quality deficiency, gather and analyze complex data and improve equipment reliability. Also, by integrating such intelligence with robots, there are now self-learning, versatile beings that can automatically overhaul and optimize system defaults.

Thus the ability to self-teach, analyze and create will lead to a more comprehensive statistical analysis and achieve positive results in preventive maintenance.

The Right Kind of Smart

The different innovative tools in smart factories, however, may have distinct values depending on its application for the industry in question, so while such technological advances may be a breakthrough for manufacturing, companies must apply the tools that are most effective for their field and industry.

AI that can self-teach, analyze and create in a smart factory

For instance, the technology required for “smartization” is entirely different for assembly process industries such as parts production, automotive and electronics, than from mechanisms industries such as metals, chemicals and energy.

In the assembly process industries, customizing production, cutting labor costs and responding to the fast life cycle of products are the major areas for innovation. AI applications like robot automation can guarantee positive results because many production processes can be replaced with robots, resulting in minimized labor costs.

In the process equipment industries, however, improving productivity through optimal control of core processes, controlling the linkage between processes and maintaining the facility are the major issues. The loss of data can be extremely critical in the case of a core facility failure, so preventive equipment maintenance would have a greater impact than robot automation.

The investment size and outcome value for implementation and innovation of smart factories will differ by industry. Thus it is necessary to build up strategies on technologies that are most suitable for each required field.

Smart Reconstruction

Recently, the world’s fifth largest blast furnace located in Pohang Works, went through major renovations to “go smart”. The Pohang Blast Furnace No.3 was first fired up in 1978 with an internal volume of 3795㎥, and was repaired in 1989, 2006 and finally in 2017, when it leaped toward POSCO’s vision of “smartization”.

After a 102-day repair period, the furnace volume expanded to 5600㎥, and the site is now fully equipped with AI to precisely monitor the condition of the blast furnace.

The Blast Furnace No.3 dismantled at the start of the repairing process

Engineers, including Gi Wan Son, Blast Furnace No.3 Repair Quality PJT team leader, worked on all three renovations and provided exceptional knowledge based on more than 40 years of experience with the Blast Furnace No.3. According to Son, the main focus was to build a smart technology infrastructure that utilizes AI and collects big data.

POSCO added smart sensors that automatically monitor the internal state of the blast furnace such as raw material quality and ventilator status. Both measures are expected to help forecast and extend the lifespan of the blast furnace to longer than the average period of 15 years.

[clickToTweet tweet=”POSCO Blast Furnace No.3 will lead the future of  blast furnaces for another 50 years if we incorporate POSCO’s advanced technologies” – Gi Wan Son, Blast Furnace No.3 Repair Quality PJT team leader” quote=”POSCO Blast Furnace No.3 will lead the future of  blast furnaces for another 50 years if we incorporate POSCO’s advanced technologies” – Gi Wan Son, Blast Furnace No.3 Repair Quality PJT team leader” theme=”style6″]

Though in its early stages, AI has already had a significant impact on smart factories and further innovations are expected. The manufacturing industry needs to pay close attention to the future scope of AI development and how it will allow them to overcome existing challenges and open doors to a limitless future.

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POSCO CEO Kwon Ohjoon is seen firing up Pohang Blast Furnace No. 3 at the ceremony held on June 6 in Pohang, Korea

Renovations for the blast furnace began on February 24 when POSCO added automated monitoring technology to control the internal state of the blast furnace, a measure expected to help forecast and extend its lifespan. This led POSCO to develop an infrastructure that utilizes artificial intelligence and collect big data from early stages of operation, bringing it one step closer to becoming a “smart blast furnace.”  

Distinguished guests, including POSCO CEO Kwon Ohjoon, are seen powering on the blower switch in the operating room of Pohang Blast Furnace No. 3

In addition to incorporating smart technology, the internal volume of Pohang Blast Furnace No. 3 was expanded from 4350㎥ to 5600㎥, making it the 5th largest in the world, with a capacity to produce 15,000 tons of molten steel in a single day. POSCO now operates 5 of the 14 super-sized blast furnaces in the world, including the world’s largest Gwangyang Blast Furnace No. 1 (6000㎥), Pohang Blast Furnaces No. 3 and 4 (5600㎥) and Gwangyang Blast Furnaces No. 4 and 5 (5500㎥). The remaining blast furnaces are in Japan (four), China (three), Russia (one), and Germany (one).

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POSCO has been ranked as the world’s most competitive steelmaker for seven years in a row. It has remained competitive in part by focusing on its World Premium Products, which offer advanced steel solutions for their customers. POSCO has also put extensive effort into maximizing its non-steel technologies and products to find new growth in non-steel sectors. In addition, POSCO has been a leader in innovating its own manufacturing processes, incorporating advanced AI and IoT technologies into its smart factories. POSCO has also remained committed to not only growing its non-steel secondary businesses, but advancing upon existing technologies to create new and eco-friendly production methods.  Below we take a closer look at how POSCO has continued its work to innovate and stay competitive.

POSCO Expands Lithium Manufacturing Business

Amid the rising demand for rechargeable lithium-ion batteries used in smartphones, laptops, and electric vehicles, POSCO has been working on proprietary technology for lithium extraction. Earlier this year, POSCO opened Korea’s first lithium plant, PosLX, and commercialized the production of lithium carbonate from rechargeable batteries after 7 years of development.

From left to right: Jae-chun Song, chairman of Gwangyang City Council, Hyun-bok Jeong, mayor of Gwangyang, Gi-jong Woo, deputy governor of South Jeolla Province, POSCO CEO Ohjoon Kwon, Ung-beom Lee, president of LG Chem and Nam-seong Cho, president of Samsung SDI who can be seen pressing symbolic buzzers to show that the plant is now online.

The PosLX Plant is expected to produce 2,500 tons of lithium carbonate per year using a new eco-friendly technology, which is enough to manufacture about 70 million laptop batteries. This output will supply POSCO’s battery making partners LG Chem and Samsung SDI, as well as POSCO ESM, a subsidiary that produces cathodes for secondary batteries.

POSCO incorporates AI into Smart Factories

POSCO is also breaking through technical barriers by designing smart factories connected through IoT technology and artificial intelligence (AI) that produce higher quality products with less waste. POSCO has also begun incorporating advanced AI technology into its smart factories in order to more efficiently manufacture automotive steel.

Smart factories operate autonomously as the machines talk to each other through sensors – reducing faulty products and waste.

In particular, the ‘Smart Solution for Coating Weight Control Based on AI‘ technology uses an automated control technology that predicts the coating weight in real time and accurately meets the target coating weight. When coating weight is controlled manually, quality deviates depending on the skill level of the worker, which inevitably results in significant amounts of wasted zinc. However, when it is automatically controlled by AI, the quality of POSCO’s automotive coated steel can be enhanced while production costs are decreased. These new automated processes have also helped increase work efficiency and productivity with workers.

Also, CEO Ohjoon Kwon recently visited Siemens in Germany and GE in the U.S., both of which are known to have successfully operated advanced smart factories to observe how other companies have implemented highly sophisticated smart factory models. Through close cooperation with POSCO’s major affiliates such as POSCO E&C, POSCO Energy, and POSCO ICT, Kwon aims to embrace smart technology and reorganize POSCO’s entire business structure (Smart Factory, Smart Buildings & Cities, and Smart Energy).

POSCO’s Thailand CGL, Southeast Asia’s First Automotive Steel Sheet Plant

Faced with sluggish growth due to the oversupply from China and a decline in steel demand, POSCO has been looking to expand sales in new markets. In a bid to become the world’s largest steel provider for automobiles, POSCO completed its Thailand CGL (Continuous Galvanizing Line) in 2016. The plant has an annual production capacity of 450,000 tons and incorporates some of the most advanced AI technologies in its smart factory system.

In addition to being one of the strongest automotive production bases in Asia, Thailand is also the center of the consumer-electronics industry in Southeast Asia.

With the newly established automotive steel plate plant in Thailand, POSCO’s global volume will reach over 9 million tons in 2017 and more than 10 million tons per year starting in 2018. The automotive steel sheets manufactured by the facility will be supplied to global auto parts companies and carmakers operating in Thailand including Toyota, Nissan, and Ford. Despite the increase in competition from other steelmakers, POSCO aims to become a market leader through building strategic partnerships with global automakers operating in the country.

POSCO CEO Ohjoon Kwon and Deputy Prime Minister and Minister for Foreign Affairs Tanasak Patimaprakorn shake hands at hands at Thailand CGL.

As cities around the world get more crowded, urban dwellers are facing more and noisier neighbors. To help combat this problem, POSCO introduced PosCozy in 2016, a unique flooring system that combines manganese (Mn) Z-clips with continuous galvanized steel plates that greatly reduce impact noise, save space, and lower costs (product video).  

Unlike conventional flooring that uses non-steel materials such as styrofoam insulators and rubber buffer materials, POSCO’s floor plates are developed by combining high Mn steel Z clips – a material that is 4 times more vibration-resistant than general steel – giving it the ability to reduce noise between floors. PosCozy is able to reduce the sound of typical walking from 50dB to just 40dB, while impact sounds are lowered from 58dB to 38dB.

PosCozy is the world’s first high manganese steel floor plate with first-class floor noise reduction.

PosCozy is the world’s first high manganese steel floor plate with top quality floor noise reduction. It is also the first flooring system to receive the highest rating in sound insulation from Korea’s industrial rating agency.  Due to its unique and superior qualities, PosCozy won the prestigious Jang Young Sil Award in 2016.

POSCO’s High Manganese Steel Used in the World’s Largest LNG-Fueled Bulk Carrier

Due to the rising number of shipbuilding orders for large-sized liquefied natural gas (LNG) carriers, there has been a shortage of nickel,  requiring new and innovative solutions to construct LNG-fueled ships. In order to address these issues, POSCO developed a new type of high-performance manganese steel and announced in 2016 that it would be applied to the LNG-fueled bulk carrier built by Hyundai Mipo Dockyard.

Developed independently by POSCO, this high manganese steel contains an Mn content of 20%. Compared to traditional materials, it boasts improved performance through unique properties that include high strength, low-temperature toughness, wear resistance, non-magnetic, and damping properties.

It is the first time a bulk carrier will have been constructed to include an LNG-fueled system and a fuel tank made of high manganese steel.  Its higher strength, ability to withstand an extremely low temperature (-162℃), and cost competitiveness make it superior to the nickel and aluminum alloys that are typically used in tanks. The ship, which will be the world’s largest LNG-fueled bulk carrier, is expected to have a capacity of 50,000 tons, seven times more than previous ships.

POSCO’s high-performance manganese steel will be applied to the world’s largest LNG-fueled bulk carrier built by Hyundai Mipo Dockyard.

POSCO has been able to overcome immense barriers, from the nickel scarcity in the LNG market to the oversupply of steel from China. POSCO strives to be a pioneer across all industries with its innovative products and will continue to do so in the years to come.

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