Posco, one of the Korean companies whose growth over the past decades is synonymous with what the world admires as the “Miracle on the Han River” celebrated its 50th anniversary on Monday. The anniversary provides some food for thought.
Most of all, the steel company as we see it now shows how important having good and strong leadership is to build a nation and modernize its economy.
As is well known, late President Park Chung-hee wanted to build a steel mill to spearhead the nation’s economic growth. He assigned the job to Park Tae-joon, the Posco founder whose dedication and leadership constitute a fair part of the company’s success story.
There are some detractors of the late president for his military-backed dictatorship and the Posco founder for being part of the past authoritarian system, but their united passion for building a steel mill deserves credit. In fact, Posco, by producing steel products Korea had been importing, laid the basis for the nation’s economic growth buttressed by development of heavy industries and exports.
Some simple figures testify to Posco’s contribution to the Korean economy and industries: It produced 449,000 tons of steel products in 1973, the first year of its operation, and the output grew to 37.2 million tons last year. Its sales grew 686 times from 41.6 billion won ($39 million) in 1973 to 28.5 trillion won in 2017. Posco, which once topped the world ranking 1997-1998, is now the world’s fourth-largest steelmaker.
Backbone of industrial development
Steel products provided by Posco helped boost development of such industries as shipbuilding and auto, in which Korea stands tall in the global market.
For instance, the Korean car industry, which produced 25,000 cars in 1973, rolled out 4.11 million cars last year, becoming one of the world’s major automakers. Posco played the role of a key supplier for the local automakers as they grew by leaps and bounds. Now about 25 percent of Posco products goes to automakers around the world, with one out of every 10 vehicles produced uses its steel plates.
As one of the leading public enterprises in the country, Posco stood at the forefront of globalization. It became the first Korean company to be listed in the New York Stock Exchange in 1994, paving the way for more Korean companies like KEPCO, Samsung, LG and SK to follow suit. It also became the first Korean conglomerate to appoint outside directors in 1997, three years before it was fully privatized.
Growing to one of the world’s top steelmakers did not come without difficulties. Like other major former public enterprises like KEPCO, the power monopoly, and KT, the telecommunications juggernaut, Posco was often tied up with domestic politics, with politicians interfering with appointment of CEOs and other affairs.
Posco underwent unprecedented crisis in 2014 in the face of growing trade protectionism and oversupply in the global market. It registered first-ever red figures in the following year.
Under Chairman Kwon Oh-joon’s tutelage, the company implemented radical restructuring, cost reduction and a strategic shift to high-value and premium products and non-steel businesses, including trading, construction, energy, information and communications technology and new materials.
Kwon championed “Posco the Great” as the vision for the company as it embarks on the path for another 50 years. He also put forward as the company’s mission “Unlimit the Limit. Steel and Beyond.”
Given Posco’s role in the Korean economy, the vision and mission are as important to the nation as the company itself. How the company overcome limitations, sustain its competitiveness as a global steelmaker and fare in non-steel industries will have much impact on the nation and the economy in the future as it has done over the past five decades.