|POSCO’s steelworks in Gwangyang, South Jeolla Province. (POSCO)|
Despite its privatization in 2000, POSCO has been considered a company for the citizens since its foundation in 1968 because of its history attributing to the nation’s economic miracle starting from scratch.
Beyond Korea, POSCO has also grown as one of the biggest steel brands in the world for the past 45 years. As of 2012, POSCO is the world’s fourth-largest steelmaker with steel production of 37.99 million tons per year. The company ranks first among listed global steel giants in market capitalization, worth $28.7 billion.
Behind the business success of the steel giant is the “POSCO Way,” seeking continued innovation, driven by a deep-rooted founding philosophy and spirit.
Steel patriotism and ‘turn right’ spirit
Whenever POSCO faces challenges, its top management reminds its executives and employees of the philosophies of late founder Park Tae-joon ― “steel patriotism” and the “turn right” spirit ― to push them forward.
Professional soldier-turned-businessman Park was assigned by President Park Chung-hee the mission to build a steel company in the early 1960s when war-torn South Korea was still suffering through poverty. President Park considered steel products an essential ingredient, along with other infrastructure like roads, to transform the agriculture-based poor country to an advanced industrial one.
Armed with steel patriotism, the nation’s steel king tided over a number of difficulties and established Pohang Iron and Steel Co., currently POSCO, in 1968 in Pohang City’s Yeongil Bay, 360 kilometers southeast of Seoul.
Steel patriotism refers to Park’s firm belief that steel is the nation itself. Park stressed that the nation’s wealth depended on the success of steel, a basic need for a number of industries from construction and shipbuilding to automotives.
After breaking ground, Park oversaw the construction site day and night and encouraged workers, saying, “We should have the pride and sense of duty in participating in building the nation’s long-desired steel mill. If we fail in the construction, we’ll leave an indelible stain on our history and we should ‘turn right’ and drown ourselves in Yeongil Bay.’’
Three years later, molten metal was finally poured out of the furnace at the first steel mill in June 1973. Pohang Iron and Steel’s production fueled the national drive to promote the heavy and chemical industries in the 1970s.
Steel patriotism and the “turn right” spirit have kept POSCO moving forward. POSCO continued to expand Pohang Steelworks, having produced 9.1 million tons of crude steel by 1983. To meet rising demand in line with the nation’s rapid economic growth, POSCO took on a new challenge in building its second integrated steel mill in Gwangyang Bay between 1985 and 1992.
Other achievements of POSCO came from investing in talent and developing original technology ― by establishing Pohang University of Science and Technology in 1986 and the Research Institute of Industrial Science and Technology in 1987.
In 1992, POSCO’s R&D team developed an environmentally friendly iron production process called FINEX, the first of its kind in the world.
Making a better world: Rise as a global steel brand
With completion of its privatization in 2000, POSCO turned its eyes to the global market beyond the matured local market. Under the renewed corporate value of making the world a better place, POSCO has continued to expand steel processing lines where big clients are located and production lines near leading iron mines abroad since the 2000s.
This global expansion strategy has brought the steel giant to run steel processing centers in 12 countries where global auto, shipbuilding and electronics giants are located as of 2012. It also pushed ahead with steel mill construction plans in India, Indonesia and Brazil and other countries home to big iron mines.
POSCO’s global expansion drive hit a bumpy road amid the global economic downturn in 2008. The global steel industry, without exception, has been pressed by unprecedented deteriorating demand for steel products and oversupply by Chinese steelmakers.
The “POSCO Way” of emerging from hardship is rooted in continuous innovation based on the founding spirit. To cope with recent difficulties, first of all, the steel giant is expanding sales of high-value-added products such as automobile steel plates and steel materials for energy, while reducing operating costs. As a result of these initiatives, POSCO outperformed other steel giants in return on sales, posting a 7.8 percent operating profit margin in 2012.
It also has diversified its business portfolio from steel to the energy and material businesses through mergers and acquisitions over the past few years.
POSCO chairman Chung Joon-yang said at a recent CEO forum, “Global competition for survival in the steel industry is expected to be more intense this year than before. POSCO will seek profitability and growth potential by turning this crisis into an opportunity.’’
By Seo Jee-yeon (firstname.lastname@example.org)