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The 2019 POSCO Road


2019 is coming to an end. It’s the time of the year everyone takes a look at the new year calendar and set goals or plans for the coming year. Sometimes people look back on the road they have been walking for the past year. How was 2019 for POSCO? Under the management philosophy of ‘Corporate Citizenship: Building a Better Future Together’, POSCO conducted various activities in each area of Business, Society, and People. POSCO Newsroom summarizes the 2019 POSCO road with #keywords.

① BUSINESS   #WTPProducts #CI2020 #Lighthouse #ClientCompanies #BenefitSharing #INNOVILT #PosART #AffiliatesBusiness

■ POSCO’s Competitiveness — Shining Brighter in the Dark
2019 was a cruel year for steel companies around the globe. POSCO was also under pressure of Roll Margin too. However, POSCO saw a smaller profit decline compared to its major global competitors, thanks to its high value-added World Top Premium (WTP) products. Sales of WTP products increased from 9.61 million tons last year to 10.19 million tons this year, protecting profitability.

Another factor that helped POSCO overcome crisis was cost reduction activities. POSCO has been intensively implementing the Cost Innovation 2020 (CI2020) program — a cost reduction program — across the whole company since January. This resulted in saving 240 billion KRW in the third quarter, exceeding this year’s target of 230 billion KRW. POSCO expects to save more than 300 billion KRW by the end of this year through verification of quarterly results in five areas — Raw materials, Facilities, Processing, Budget, and Smart. This enables cost reduction without compromising employee welfare benefits.

It is estimated that the ‘100 Reform Tasks’, which was launched on the 100th day of POSCO CEO Jeong-Woo Choi’s appointment in November last year, generated a financial value of 1.24 trillion KRW. This achievement is significant in that, other than the 240 billion KRW saved via CI2020, it includes 800 billion KRW obtained from restructuring major businesses like LNG and E&C and the readjustment of long-term underperforming businesses.

With its increased premium product sales and cost reduction efforts, POSCO topped the WSD (World Steel Dynamics) competitiveness ranking for 10 consecutive years. Especially this year, POSCO made it on the ‘Lighthouse Factory’ list, which is announced by the World Economic Forum (WEF). POSCO is the first Korean company to be listed here, recognized for its accomplishment in applying artificial intelligence technology at its Steel Works to improve steel productivity and quality. Among the applied technology is the automatic coating weight control of CGL (Continuous Galvanizing Line) and the Smart Blast Furnace. POSCO has been credited as a pioneer of the manufacturing industry — leading the Fourth Industrial Revolution. (See more about the Lighthouse Factory)

■ POSCO’s Strength for 51 Years — Client Companies ‘With POSCO’
In these dark times, client companies mean a lot more to POSCO. POSCO, celebrating its 51 years in the industry, has broken the one-billion record in crude steel production. Working on strengthening shared growth and win-win cooperation with client companies, POSCO has gone beyond just supplying steel products. POSCO has been devising and providing technical solutions to its client companies as well. This technical solution providing service is called ‘solution marketing’. The number of solution marketing tasks for clients this year is estimated to be 260. Among them, 60 cases of solution marketing tasks were for SME clients, showing a 60% increase compared to 38 cases of last year. To drive the growth of not only large clients, — such as shipbuilding, automobiles, and home appliances — but also of SMEs, POSCO catches the VOCs and needs of clients and then supports in developing products and technology accordingly.

■ Benefit Sharing — Reducing Burden And Enhancing Benefits
There is a saying, “If you want to go far, go together.” To put these words into practice, POSCO introduced ‘Benefit Sharing’ in 2004 for the first time in Korea, and is pursuing shared growth with business suppliers. ‘Benefit Sharing(BS)’ is a win-win system where improvement tasks — such as cost reduction and quality improvement — are performed with suppliers, and the resulting benefits are shared as agreed in advance. This year, POSCO and its suppliers have conducted 175 BS tasks, and the resulting benefits are estimated to be 30 billion KRW. This significant number is due to several measures taken, such as expanding task types and rewarding 50% for tasks that failed as well. These measures helped facilitate the participation of suppliers. The number of days required for administrative processing was reduced from 600 days to 190 days.

Additionally, a new “e-catalog system” was launched, allowing suppliers to promote their products freely. In the past, suppliers had to visit POSCO in-person to promote their products. But now, anyone can register product information on the system for promotion — anytime, anywhere. For those suppliers who want to start their first deal with POSCO, there couldn’t be a better way. POSCO received around 4,600 new product information from 850 suppliers through this e-catalog system and signed with 1,020 of them. Also, thanks to regular supplier sourcing, the number of days required for registering was shortened from 144 days to 23 days.

POSCO’s “Business with POSCO” isn’t just about POSCO thriving alone. Instead, POSCO aims to create value together with its business partners and become a corporate citizen, laying the foundation of each business.

■ “Premium Brand” of Steel Products
An interesting story first! A few weeks ago, POSCO built a house using INNOVILT for Korean YouTube star Pengsoo. INNOVILT is POSCO’s premium brand of construction materials launched this year. Using the best technology and know-how accumulated from other businesses like automotive steel and home appliance steel, POSCO has created a construction material brand that is credible to ordinary consumers. INNOVILT acts as a ‘certificate’ — given only to materials made with 100% high-quality POSCO Steel. (See more about Pengsoo House and INNOVILT)

PosMAC and PosART, used in Pengsoo House, are awaiting evaluation to become INNOVILT products. PosART was awarded ‘Innovation of the year’ from World Steel Association (worldsteel) in October, thus proving its value as a premium material. PosART is a high-resolution inkjet print steel sheet, which is a result of POSCO C&C’s inkjet printing technology combined with POSCO’s steel. PosART is capable of printing full-color images of desired images in desired sizes. Since its commercialization last year, sales have increased 37 times in just one year. (See more about PosART)

■ Rapid Strides in Global Infra and New Growth Businesses
In 2019, the steel business struggled, while other POSCO affiliates — including the Global Infra business — were quite successful. In addition to direct involvement in food production, POSCO INTERNATIONAL established a global grain value chain ranging from processing, storage, transportation, to terminal operations. POSCO INTERNATIONAL holds the largest agricultural trade volume in Korea with grain trading volume expected to reach 5 million tons this year — an increase from last year’s 4.37 million tons. POSCO also completed The Ukraine grain export terminal in September before any other Korean company. The annual capacity of the terminal is 2.5 million tons, which accounts for about 21% of Korean grain demand. Another core business of POSCO INTERNATIONAL, the Myanmar gas field, has increased its production from 144.4 billion ft3 last year to 149.2 billion ft3 Q3 this year, after China’s gas pipeline recovery in November last year.

POSCO CHEMICAL has shown tremendous progress this year. POSCO CHEMICAL was created with the merge of POSCO ESM and POSCO ChemTech originally in charge of cathode and anode businesses. POSCO CHEMICAL is strengthening its competitiveness by improving productivity, reducing costs, and increasing sales. This year, POSCO CHEMICAL cathode production capacity expanded to 15,000 tons, an additional 6,000 tons from last year. The anode production capacity expanded to 44,000 tons and added 20,000 tons to last year’s figure. In addition to the existing Gumi plant, Gwangyang and China plants were established to enable growth in the cathode business. While for the anode business, the first phase of the Sejong’s 2nd plant was completed soon after the 1st plant, driving the secondary battery business.

② SOCIETY   #POSCO1% #Volunteer #POSCOConcert #Venture #YouthEmployment

■ 2019 — A Year ‘Filled’ With ‘Sharing’
POSCO’s 2019 in terms of society could be put into these phrases, “practicing sharing” and “cultivating dreams of the youth”. In 2019, POSCO 1% Foundation was active more than ever. 98% of POSCO executives and employees participated in the POSCO 1% Foundation donation — 44% p higher than last year — and it is expected to raise 9.3 billion won by the end of this year. Founded in 2013, the POSCO 1% Foundation has become a representative employee-participating foundation in Korea. POSCO 1% Foundation is contributing to creating a better world, and this year, it has focused on supporting future generations, multicultural families, and the disabled. Some of the programs that have been under progress are as follows — a participatory art program, ‘1% Art School’ ; A science class with experiments, ‘Science Beyond Imagination’ ; Support for immigrants to visit homelands ; Remodelling of welfare facilities for the disabled, ’Space of Hope’ ; and assist devices support for the disabled, ‘Wings of Hope’.

Volunteer activities, which were like daily routines for employees, were reorganized to become Talent Volunteering, which could be of real help to the community. This action was practiced so that employees could provide more meaningful and rewarding volunteer activities as corporate citizens. In addition to the existing volunteer groups, — such as the Clean Ocean, electric repairing, tutoring, and photo volunteer corps — 25 new talent volunteer groups of various sectors including law, landscaping, cooking, and financial education were established this year. Employees are expected to utilize their talents and job-related knowledge in these groups. There are 23 volunteer groups in Pohang, 19 in Gwangyang, and 12 in Seoul, amounting to a total of 2,762 employees this year, which is an increase of about 1,000 from last year. POSCO’s employees spent about 440,000 hours in volunteer activities this year alone, which equals to 17,000 employees participating more than two hours each month.

Meanwhile, POSCO held free concerts for citizens in Pohang, Gwangyang and Seoul. Under the name of “Corporate Citizen POSCO Culture Concert” this year, diverse music genres such as trot, classical, and opera were selected, and the number of performances increased to once a month. Last October, many popular trot singers — like Ga-In Song and Yeon-Ja Kim — appeared on stage, resulting in intense competition for tickets and huge crowds near the venue. The number of audience at this year’s POSCO concert was 36,114 — recording 10,000 more from last year’s 23,749.

■ Supporting the Dreams of Youths And Ventures
POSCO is also making efforts to realize the dreams of ventures and creating jobs for youths. POSCO established the Industry-Academy-Research Cooperation Office and specified its plan to operate the ‘POSCO Venture Platform’, a large scale investment. Venture Valley, supporting venture development, secures incubation centers in Pohang and Gwangyang based on POSCO’s Industry-Academy-Research infrastructure and helps the start and growth of venture companies. Venture fund supports their growth by investing in the Venture Valley companies and promising ventures.

POSCO’s investment and support for venture companies have been going on for quite a while. In 1997, POSCO established POSTECH Technology Investment (former POSCO Technology Investment) to promote venture companies and has been engaging in mentoring and investment activities through the Idea Marketplace (IMP) since 2011. IMP is a venture development program where POSCO conducts training for startups and venture companies. By 2019, POSCO has fostered 379 venture companies through IMP, including 98 direct investments amounting to 16.9 billion KRW. Some companies that received this direct investment were listed on the KOSDAQ, and some received the Presidential Award at the national startup competition.

Also, POSCO is operating a variety of youth employment programs including the ‘POSCO Youth Dream’, which consists of practical job training, an AI and Big Data academy, and a startup incubating school. The number of participants this year was 1,328, an eight-fold increase from last year. 430 of them were employed, and 39 opened own businesses.

③ PEOPLE   #WorkLifeBalance #8-5 #HarmoniousManagement&Labor #BusinessPartners #Welfare #DayCareCenter

■ Work And Life Balance of POSCO Employees
As “Work and Life Balance” has become a critical condition of a good workplace, POSCO also took an active part in fulfilling employees’ balance. Since November, POSCO has introduced an 8 to 5 work schedule (8-5 system) to allow employees to spend their evenings on self-development or with their families.

The 8-5 system is a result of POSCO’s 2019 wage and group negotiation. In addition, the following measures were carried out as well — Basic wage raise ; Maintenance technology incentive raise to improve the conditions of maintenance workers ; Reorganization of job position ; Extension of infertility treatment leaves from 5 to 10 days per year, and partial cost support for employees who are having difficulty in pregnancy ; and extension of limit in children’s educational expenses to reduce burden of employees with two or more children.

■ The “Expert Young Board”
Another new thing at POSCO this year is the ‘Expert Young Board’. The former Young Board was participated by the heads and managers of each department and research lab, but from this year, it has been expanded to employees working in the field — experts who are in charge of operation and maintenance at steel mills. The age limit has also been greatly reduced. In their first meeting with Chairman Jeong-Woo Choi last September, the Young Board freely discussed issues of the steel mill, including solutions for site safety, activating communication between generations, strengthening the motivation of field workers, and so on. POSCO’s first Expert Young Board is expected to be an important communication channel for expanding communication areas and delivering the opinions of the field to the management.

■ The Best Welfare for Business Partners
2019 was also a year that POSCO showed ‘true partnership’ with business partners. POSCO established an integrated operational system to extend the usage of recreation facilities to business partners. As a result, the annual number of days available to business partners increased significantly from 0.4 days last year to 4.8 days this year. To implement this, POSCO secured 350 additional recreational facilities nationwide, including the “With POSCO Residence”, which was used as accommodation for the press at the time of the Pyeongchang Winter Olympics. POSCO is also working on improving the on-site welfare facilities and office environment of business partners. Following 1,176 locations last year, 786 sites have been further improved this year — all used by POSCO’s business partners.

POSCO is also expanding children’s daycare centers — which is of primary interest for married employees. POSCO plans to build daycare centers that can be used by all employees and business partners from Pohang, Gwangyang, and Seoul. Especially, in 2020, a second daycare center that can accommodate 220 children — 100 more children compared to the first daycare center where 120 children attend — is to be built in Seoul. POSCO has also invested 19 billion KRW in constructing daycare centers in Pohang and Gwangyang for the children of POSCO employees and business partners.

POSCO has also decided to spend 130 billion KRW to renovate dormitories and welfare facilities for employees at the steel mills. It is in consideration that future generations — who will become the main players of the company — must be able to settle more easily. By 2021, the Pohang Works will remodel the welfare center and build a large 700-seat cafeteria. Gwangyang Works plans to build 500 new dormitories and expand the welfare center here. POSCO’s efforts to ensure employees’ work and life balance will continue.

Looking back at 2019, we looked at the achievements that POSCO has made for the year and what meanings these achievements have. POSCO will take strong strides into 2020, creating a better tomorrow and maintaining the harmony of BUSINESS, SOCIETY, and PEOPLE as it always has.

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