Since 2014, sales of products combined with Solution Marketing have tripled, and sales of POSCO’s World Premium Products (WPP) have increased by 56 percent.

It Wasn’t Always Smooth Sailing

When the 2008 global financial crisis hit, the global economy as a whole suffered. The steel industry experienced stagnant growth, even in its subsequent recovery. From 2012 to 2016, annual steel sales remained fixed at 35 million tons.

The 2008 Financial Crisis was felt in markets all over the world. (Source: South China Morning Post)

The main culprit for the slow recovery was overproduction, mostly from the heavily-subsidized Chinese steel industry. Between 2000 and 2014, steel production doubled from 800 million to 1.6 billion tons, exceeding the global demand for steel by 100 million tons.

As a result, steel markets around the world saw prices falling, layoffs and steel mill closures.

SEE ALSO: Asian Steel Watch: Megatrends Shaping the Future of the Steel Industry

A Strategy for Success

In order to stay competitive in a stagnant market, POSCO made the decision to focus on Solution Marketing and the sales of its World Premium Products (WPP) such as POSCO GIGA STEEL for cars and PosMAC for solar panels.

Solution Marketing involves hyper-customization for POSCO’s partners to deliver optimal material solutions for their products. Some notable projects this year have been with automakers GM Korea and Ssangyong Motors for the launch of their new models made of POSCO GIGA STEEL. POSCO gave them full support from development and R&D to testing and post-production evaluations, redefining the role of a steel supplier.

GM Korea and POSCO worked together to incorporate POSCO GIGA STEEL into the 2017 All New Chevy Cruze. (Source: GM Korea)

As a result, POSCO’s operating profit margin (individual basis) was 10.8 percent in 2016, making it one of the highest performing steel companies in the world. Its recovery and growth continued into 2017.

SEE ALSO: 6 Reasons Why POSCO GIGA STEEL is Ideal for Automakers

Cultivating the Industry

Following its continued success with Solution Marketing, POSCO is now determined to share its insights and technology with up and coming small and medium-sized enterprises (SMEs). POSCO has completed 32 shared-growth projects through which they work with SMEs to develop ways to cut costs, improve the quality of their work, provide financial assistance and education and training.

One of the most recent projects for shared growth is a collaborative business model called “System Construction” that provides a framework for effective technical cooperation among POSCO’s partners in the construction industry. The model was developed jointly with NI Steel and entails systemizing composite materials such as beams, floor decks, exterior panels and roofing materials, all based on joint R&D from both parties.

Under System Construction, workers from various sectors come together for joint development.

POSCO is continuing its efforts to advance its competitiveness by providing material and technical solutions to its partners, and along the way, fostering the growth of SMEs in various industries to ensure a more stable and robust economy.

Electrical Steel is used to make electric motors for EVs. (Source: Wonderful Engineering)

According to Markets and Markets, the market for electrical steel is projected to expand from USD 27.84 billion in 2016 to USD 38.98 billion by 2021, at a compound annual growth rate (CAGR) of 7 percent. Electrical steels go through various demanding production processes such as annealing, hot and cold rolling and insulation coating. Having the most advanced production technology is paramount, and choosing the best quality electrical steel will determine the overall performance and efficiency of EVs.

What is Electrical Steel?

Electrical steel, also known as silicon steel, is a steel alloy of iron and silicon used to make the cores of motors, transformers and generators.  This softer type of steel can generate various magnetic properties, has high permeability and low amounts of core loss. It has a small hysteresis curve, meaning reduced magnetic hysteresis as well as iron losses, or energy loss.

There are two kinds of structures for electrical steel; grain-oriented and non-oriented.

Grain-oriented electrical steel sheets are most commonly applied to transformers. (Source: Nikomag)

Grain-oriented electrical steel has a uniform, consistent direction of grains in its structure which allows for greater flux density and magnetic saturation. Most commonly, grain-oriented electrical steel is used for transformers which have a predictable and specific magnetic field direction.

Non-oriented electrical steel plates are traditionally welded together to form electrical motors. (Source: LHD Motor)

A major factor that determines the quality of electrical steel is minimal core loss. Due to the constant change in direction of the magnetic field, the energy that is created can easily be lost in the form of heat. Core loss reduction has to be achieved through high-quality electrical steels that have high flux density and lower levels of core losses.

POSCO’s Hyper NO

POSCO is one of a growing number of companies dedicated to doing its part in creating an environmentally sustainable future. That’s why POSCO has been developing its premium non-oriented electrical steel to provide partners with material solutions for EVs.

Take a look at the video below to see how Hyper NO can increase the performance and efficiency of electric vehicles.

POSCO’s Hyper NO is processed using innovative methods such as the self-bonding technology which replaces traditional welding procedures to improve the core’s bonding force. POSCO also managed to reduce core loss by 5 percent compared to traditional types of non-oriented electrical steel and reduce the motor noise by 5dB with its rolling technology that can process the Hyper NO down to an ultra-thin form of 0/15mm. These technologies, along with the Hyper NO’s high magnetic flux density will increase the efficiency of the motor and improve the overall performance vehicles to which it is applied. Hyper NO is highly sought after by automakers looking for premium-grade electrical steel to apply to their EV motors.    

In February 2017, POSCO expanded its production facilities at Pohang Steel Works to increase its annual production capacity of electrical steel from 80,000 tons to 160,000 tons, enough to produce 2.6 million motors for EVs. The strategic move is in line with POSCO’s commitment towards expanding environmentally-friendly businesses as well as its solution marketing efforts to provide customized material solutions to its partners.

The report outlines POSCO’s overall performance and business activities, as well as the CEO’s message. The activities and performance section contains a review of the safety and health of employees, supply chain management, solution marketing, environmental management and climate change. Unlike previous years, this year’s report includes mid-to-long-term strategies such as securing new, sustainable growth engines for the steel business.

The report also features interviews with POSCO executives and external stakeholders. Highlights include interviews with the COO Oh In-hwan and the heads of three divisions: Steel Production, Technology and Investment and Management Support. They describe key, prospective businesses for 2017 and their means to accomplish those goals. Also, stakeholders reveal their expectations for POSCO and plans for improvement in several interviews throughout.

Samil PwC verified the report based on newly revised international guidelines. Also, the GRI (Global Reporting Initiative) standard and UN SDGs (Sustainable Development Goals) were applied for enhanced credibility and transparency. POSCO not only validated their own data, but also the integrated ESG (Environmental, Social, Governance) data of its key affiliates to augment the report.

In its conclusion, POSCO CEO Kwon Ohjoon emphasizes his message about the importance of the 4 core strategies in laying down the foundation for POSCO’s Next 50 Years. The strategies include enhancement of the steel business, reinforcement of the business structure of the Group, development of future growth engines and the establishment of a flexible and creative corporate culture. He also outlines how he will make efforts to comply with the principles of sustainability that is expected of global enterprises, such as environmental responsibility, human rights, labor rights and anti-corruption, and share the outcomes promptly and transparently with all stakeholders, including investors, customers and local communities.  

The cover of the 2016 POSCO Report features a bumper beam made of “POSCO GIGA STEEL,” POSCO’s World Premium Product.

The 2016 POSCO Report is available in Korean and English. You can download the PDF report from the POSCO website.

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