Calling for 'Smart Management' To Crush Crises

POSCO Chmn. Chung is certain to get a 2nd term; steelmaker seeks increased communication inside and outside the company to increase profit

The POSCO Group will invest 8.1 trillion won in facilities and total solution marketing areas, among others, up 17 percent from last year, including between 4.5 trillion won and 5.1 trillion won to keep its competitive advantage going this year, Chairman Chung Joon-yang announced at the annual CEO Forum held at the Korea Exchange on Feb. 3.
The investments by the steelmaker will be down more than 10 percent from the previous year as the chairman made clear POSCO will only invest from its cash reserves to allow its steel facilities both at home and abroad make needed investments in maintenance and other normal areas.
This year's investments will go to securing opportunities for growth amid the economic downturn by maintaining its competitiveness in the steel business and help growth industries in which it has already invested produce good results.
POSCO netted 5.413 trillion won in profit on sales of 68.939 trillion won last year.
POSCO was ranked 30th in the Global 100 Most Sustainable Corporations announced by Corporate Knights, a Canadian economic magazine, at the World Economic Forum in Davos, Switzerland, on Jan. 25.
In the meantime, the POSCO CEO Recommendation Committee has recommended the current Chairman Chung Joon-yang as the only candidate for CEO for the steelmaker, which comes up for approval at the shareholders meeting on March 16. Chung is certain to be reappointed for his second term as no candidate recommended by the committee has ever been rejected at the shareholders meetings in the past.
When elected for the second term, Chung will serve as chairman until March 2, 2015. His first term can be said to have been smooth sailing, as he got support from his executives and foreign investors who hold some 48 percent of total outstanding shares in the company.
But Chung is expected to have some tough problems during his second term. First of all, the steelmaker will have to contend with sluggish steel product demand both at home and overseas due to the continuing economic slowdown.
POSCO, as the largest steelmaker in Korea, would have to lead the way for other steelmakers to find a way out of the current steel market slump, considered one of the worst in recent years. Every month the steel product inventory rises by 1.25 million tons, making things worse, and cheap steel products from neighbors China and Japan have been flooding the Korean market.
Worse still, the prices of iron ore overseas have also been rising, cutting into profits of steelmakers in Korea. POSCO posted 39.17 trillion won in total sales last year, but its operating profit fell 12.3 percent to 4.19 trillion won, although the annual sales were 20.2 percent higher than the previous year.
Chung called for 'smart management' to break through the current crisis, which means increased communication among business units inside and outside of the company for closer relations among them, which will lead to cooperation in coping with various trends and problems such as ways to cut costs and improve steel quality at the same time and improve safe working conditions at steel mills.
Since 2005, the Davos forum has announced the global 100 most sustainable corporations every year based on the evaluations of sustainability research institutes across the world.
This year, POSCO was ranked 30th, becoming the only steel company on the list, and Samsung Electronics was placed 73rd. Those were the only two Korean companies among the selected 100 most sustainable corporations.
The top spot was given to Novo Nordisk, a Danish pharmaceutical company. Among Asian companies, Toyota Motor was ranked highest at 21st, followed by Hitachi Chemical at 28th.
"POSCO was selected as 30th in the Global 100 Most Sustainable Corporations announced at the Davos forum. POSCO was ranked 93rd in 2010 and has come back onto the list this year. As POSCO is the only steel company on the list and that Samsung Electronics was ranked 73rd, our achievement is very significant," said chairman Chung at a CEO meeting held on Jan. 27.
"This objective result of the outer evaluation will contribute to promoting the positive image of POSCO, which has made huge achievements under the current challenging business environment."
The evaluation items for the global 100 consist of 11 main performance indicators including diversity, safety, efficiency, innovation, competence through R&D investment, employment and mainte-nance of employment, improvement of energy, greenhouse gases, and water resources efficiency.
POSCO was highly evaluated for its increased sales, 20 percent higher over the previous year, and the reduction of carbon dioxide emissions and water use every year. In addition, it has actively conducted activities to improve the added value of by-products, such as utilizing slag to restore the sea from albinism, and has also been praised for its efforts for the transparent release of information, such as publishing the Carbon Report each year since 2010 for the first time in the steel industry. nw

Chairman Chung Joon-yang of POSCO.