No Cuts in POSCO Investments

Chmn. Chung promises expanded job sharing and eyes M&As to broaden turf

Chairman Chung Joon-yang said investment is an insurance against the future and makes the company more competitive, adding that POSCO will try to reduce costs as much as it can to overcome the current difficulties, while investments will continue to be made.
During a media conference, following his official inauguration as the new POSCO chairman, he said he can't say how circumstances will change down the road for sure, but he doesn't think POSCO's investment allocation for this year will change. POSCO initially allocated 7 trillion won in facility investments and other areas including 1 trillion won overseas.
Stressing that difficult circumstances could get easier if they are shared, he said he believes more job sharing will have a positive impact. He said he will continue to work for job sharing during his tenure as chairman of the nation's largest blast-furnace steel mill, promising that all POSCO affiliates will hire new employees this year.
The board of directors meeting named two new presidents for the steelmaker; Vice Presidents Lee Dong-hi and Choi Jong-tae got promotions to be presidents and CEOs. Lee was in charge of the finance and investment sector, while Choi headed the management support sector, both as vice presidents. POSCO now has three CEOs. Former President Yun Sok-man, who competed against Chung for the position of POSCO chairman, resigned and is reported to be reassigned as chairman of POSCO Construction.
POSCO, he said, will always be on the lookout for M&As with suitable steelmakers and other firms, including Daewoo Shipbuilding, when the economic crisis now sweeping the world subsides and when signs show steel product prices are rising.
POSCO would look into investments in the brown field and other areas. Investments in the brown field, as opposed to the green field, means that POSCO will take over an old steel mill and upgrade it with the addition of new steel production facilities including a blast furnace.
The chairman also said the steelmaker will not neglect investment in environmental areas, including steelmaking facilities to reduce toxic gases generated during the production processes. Such investments should be considered investments, not expenses, as technologies to reduce CO2 gas could be an income source. Low-carbon green growth should be an ethical standard for steel mills as they generate large quantities of toxic gases during the steel production process.
The new chairman said POSCO and its affiliates would hire from 1,000 to 2,000 new employees this year, although correct figures will be announced later. Chairman Chung also said he will see that POSCO officials and those of its affiliates and even suppliers will take a 10 percent reduction in their paychecks this year and the money will be used to hire interns, not new employees, totaling about 1,600. He will also set up start-up firms and have them hire new employees this year, he said, stressing that companies should hire talented people and train them so that they will play vital roles for the companies that survive the economic crisis.
Chung said he learned that the world steel industry will remain in the doldrums for at least two to three years during his conversations with the vice president of Nippon Steel, who came to the shareholders' meeting. If that's the case, POSCO would have to cut 30 percent of its steel production down the road, he said. The Japanese steel company is a shareholder of POSCO under a stock swap deal.
The chairman said POSCO will continue to cut steel production in March to bring the steel production cut during the first quarter to 780,000 tons. The steelmaker also will try to find ways to remain profitable, despite the production cut, Chung said, adding the important thing is to segregate steel production and at the same time reduce costs.
The new chairman said he felt that POSCO was lucky to lose its bid to take over Daewoo Shipbuilding and Marine Co. last year now that demand for new ships is down substantially. nw

(left) Chairman Chung Joon-yang of POSCO. A scene of POSCO officers and employees raising their arms to step up their work pace when the new POSCO chairman visited their plant in Pohang.