POSCO Going Global for Takeoff

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Summary

Asia's No.1 steel maker POSCO has trouble in mergence in the global steel market but it wants to produce more value-added products instead of expanding overseas.

Its first target is to increase the proportion of auto and electrical steel sheets, by 2008. It opened 6th CGL(continuous galvanizing line) at its Gwangyang Mill last year and the plant will has an considerable annual output capacity of 400,000 metric tons of steel sheets for automobiles. Moreover, it is developing the FINEX technology that is a new method of steel production, and it means the end of the era of blast furnace steel manufacturing(60% of the world production). Now POSCO managed commercialized FINEX plant excellently.

The company will adopt its self-developed technology in the $12 billion integrated steel project in Orissa, India and it’s the first output outside of Korea to use the new means. Therefore, it tries to give a significant boost because it is the first market of them. And it established the other new plant ZPSS in China and another plant in Vietnam by 2009.

POSCO plans active investments in related expansion. Particularly, in Mexico it will invest $250 billion to found and auto steel plate plant by 2009 and the annual production will be 400,000 metrics tons from 2010. The reason of foundation is because of the growth of auto industry and the firms, GM, Toyota, and Hyundai Motors, attack the North and the South America so POSCO should build the plant in Mexico.

To overcome the rise in oil prices and global warming issue, it would like to develop the fuel cell generators with no pollution so it invested $131 million to build a Fuel Cell Energy Plant in Youngil Bay, Pohang to produce up to 100MW and it is expect to use in other institution. In addition, POSCO and KEPCO(Korean Electric Power Corp.) develop fuel cell generator plant together.

Opinion

We generally know POSCO is a simple steel company but we have misunderstood extremely. Its best merit is very good targeting because the steel is used all over the industries but it concentrated on the auto market. The market grows bigger and bigger so it translated the market background correctly. Moreover, it entered the alternative energy “fuel cell” development and it can reduce the operation expenses in the long term and eventually it can get more benefit.

Another thing is technology progression. As Koreans get richer, the cost of wage is the big part of cost. The company can benefit as cost is reduced so it used FINEX technology and can simplify the existing production process as well as reducing cost. It is not a brief step to develop FINEX but a maximization of the brand value.

But, POSCO can’t get out of the image of public enterprise so far. When it continues advertising and promoting its specialized part. For this, it needs to make nicer logo than the present. Even though its main customer is the large company, its logo is so simple. Now it is growing the main Korean company by get some subsidiary companies. It is necessary to build a new logo because they can get benefit through “POSCO” significantly.

In conclusion, POSCO is a very outstanding company and its development probability is unlimited. If it tries to come close to us and keep to build new technology, POSCO will be the 1st place in the industry.

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