A BUSINESS NEWSLETTER FOR BLUESCOPE PEOPLE Issue 37 October / November / December 17
PRIME MINISTER VISITS PORT KEMBLA STEELWORKS The Prime Minister of Australia, the Hon. Malcolm Turnbull MP, and Federal Minister for the Environment the Hon Josh Frydenberg MP, visited Port Kembla Steelworks in late November. Prime Minister Turnbull was greeted by Paul O’Malley, Managing Director & CEO, and Mark Vassella, Chief Executive BANZ, at the new Port Kembla Steelworks Visitor Centre, and then taken on a tour of the BOS, led by Sam Gerovasilis, Manager Slabmaking. “It’s great to be here at BlueScope,” remarked Prime Minister Turnbull. “It has been such a fantastic tour and I thank you so much for showing us how steel is made.” During his visit, Prime Minister Turnbull explained how the Federal Government’s new National Energy Guarantee (NEG) would support businesses like BlueScope and other Australian companies as it aimed to bring down power prices. He stressed the need to ensure that we maintain Australian jobs in Australia. “What we need is Australian steel made in Australia, and that requires affordable energy,” he said.
(L-R) Sam Gerovasilis, Manager Slabmaking, welcomes the Hon. Josh Frydenberg MP, Minister for the Environment, and the Prime Minister, the Hon. Malcolm Turnbull MP
Paul praised the Government’s energy plan, stating that BlueScope cannot survive and continue to be internationally competitive without efficient energy. “This is the first time in 10 years that I have seen a sensible strategy that addresses the transition to a clean energy future,” he said. The Prime Minister wished Paul well on his retirement, and said he was looking forward to the strong relationship with BlueScope continuing under the leadership of Mark Vassella.
(L-R) Mark Vassella, Chief Executive BlueScope ANZ, the Prime Minister, the Hon. Malcolm Turnbull MP, the Hon. Josh Frydenberg MP, Minister for the Environment, and Paul O’Malley, Managing Director & CEO
WELCOME
The Prime Minister, the Hon. Malcolm Turnbull MP, speaks to the media after his tour of Port Kembla Steelworks
IN THIS ISSUE 02 FY2017 AGM
05 Zero Harm awards
03 A message from Paul O’Malley
06 Our communities are our homes
04 Introducing Pathfinder
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BLUESCOPE FY2017 Annual General Meeting “BlueScope’s FY2017 annual results are the best and most important in a decade,” stated BlueScope Chairman John Bevan in his address to shareholders at BlueScope’s Annual General Meeting held in Melbourne in October. “The return to a $1 billion Earnings Before Interest and Tax (EBIT) result marks the transformation of BlueScope from an Australian focused, commodity steel producer into a value added, geographically diverse company with a clear ongoing strategy,” continued John. “This transformation has been led by Paul O’Malley since 2007, having navigated the company through the global financial crisis.” John remarked that BlueScope is a vastly different company from that of 10 years ago when Paul assumed the role of Managing Director & CEO. “Ten years ago the world could not supply enough steel to meet the growth in China. BlueScope focused and became dependent on its export business. As undersupply has changed to significant oversupply in the last decade, BlueScope has had to change too. “Today the Company has a much lower dependency on export driven commodity sales, and has refocused to serve the changing needs of its domestic customers.
America 41 per cent. And looking ahead, our established footprint in Asia will enable us to diversify this further. “Importantly, BlueScope has learnt the necessity of a very strong balance sheet. This gives us the resilience to counter the economic cycles and also to take advantage of opportunities, an example of which was acquiring the remainder of North Star two years ago. “This transformation will all be part of Paul O’Malley’s legacy - he has been an outstanding leader with great strength of vision and purpose.” John noted that the real legacy Paul leaves behind is his strong personal values that have set the tone from the top, and are reflected in everything the business does. “His focus on safety, and on the turnaround and transformation of the Company in the decade after the global financial crisis showed leadership of the highest order. I am sure you will join with me, my fellow Directors, and all BlueScope employees in giving him our warmest thanks and best wishes.” The Chairman also welcomed Mark Vassella as BlueScope’s incoming Managing Director & CEO. “My fellow Directors and I look forward to working with Mark in the years ahead,” he said.
“Today, a large proportion of the business is providing value added, differentiated painted and coated products. This change in our sales mix, gives a greater diversity to our earnings and lower exposure to fluctuations in spread.
Turning to BlueScope’s FY2017 financial performance, the Chairman noted that the improvement in underlying return on invested capital (ROIC) to 18.5 per cent from 9.6 per cent in FY2016 further confirms that strategic initiatives across the Company are working well.
“Today, BlueScope’s geographic diversity also provides great growth opportunities. Ten years ago 70 per cent of earnings were derived in Australia. In FY2017, Australian operations accounted for 41 per cent of earnings, and North
“The improved financial performance has enabled the Board to approve payment of a fully franked full year dividend of 5.0 cents per share, bringing the total dividend for the year to 9.0 cents per share.
Members of BlueScope’s Board and Executive Leadership Team with employees at the AGM
“It is the Board’s intention to pay consistent dividends in conjunction with on-market share buy-backs. Directors believe this achieves the appropriate balance between retaining strong credit metrics, continuing to fund our growth opportunities and returning cash to shareholders,” he said. “The steel industry is a capital intensive sector, with investments running over decades. A company must make its capital work hard to drive returns through the cycle, and ROIC is the right measure for this. Our philosophy is to invest capital wisely and then make it work hard. “In this context, and to support our strategy for the future, challenging ROIC targets will be the key driver of remuneration rewards for all employees.” In concluding his address, John stated that the Board of Directors continues to believe that BlueScope has a strong future. “As I have already noted, the work done to reset the cost base, improve the geographic and product mix of the portfolio and deliver cash returns to shareholders will stand the Company in very good stead. “As we work to embed sustainable profits and growth, we recognise the challenges of a cyclical business. But we have confidence in our leaders and the work that has been done to develop a sound platform and strategy to support the Company through the cycle.”
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A message from Paul O’Malley What a privilege it has been to work with you all as Managing Director & CEO of BlueScope for the last ten years. In all I’ve enjoyed 12 inspiring - but often very tough - years at BlueScope. It’s been quite a journey, as we’ve been buffeted by fluctuating industry cycles and exchange rates, unprecedented economic conditions brought on by the effects of the global financial crisis and its aftermath, and the rise of the Chinese steel industry which has fundamentally altered the nature of the global steel industry. This constantly shifting landscape has meant that we’ve had to make some really hard decisions to ensure a future for BlueScope and for us all who work here. I think the hardest was the decision to shut down Blast Furnace No6 at Port Kembla Steelworks in 2011. It fundamentally changed the model of BlueScope in Australia to focus solely on the domestic steel market. It was awful for the 1000 or so people directly involved and for the community, but it was essential for the future of the total business.
The establishment of the coated products joint venture with Nippon Steel Sumitomo Metal Corporation was another decision we had to make – one that dramatically changed the shape of our business in ASEAN and across to North America. The benefits to the Company have been significant, including access to new markets, new insights and new products and, importantly, greater financial stability. Across the Company we have all seen tough times over the years as we have changed the shape of our business and the way we work.
I believe we can all feel confident about the future, and I’ll be watching with interest from the sidelines as I take a break before deciding what I’m going to do next. I’m looking forward to spending more time relaxing with my wife and family, riding my bicycle and keeping fit.
I’ve always been so proud of the way BlueScope people have stepped up in tough times to support the Company, even when their own jobs were at risk. BlueScope for me is all about the people. A lasting impression will be the dedication of BlueScope people to working safely and to looking after each other, to getting the job done, sometimes in the most difficult of circumstances, to being innovative in finding new ways of working, and to supporting BlueScope through thick and thin. And I’ve always admired the willingness of BlueScope people to do whatever is needed to support our communities. One regret that will stay with me is that some employees have been seriously injured at work and a small number have suffered fatal injuries during my time as CEO. This is why our journey to Zero Harm is never over. Working with the entire BlueScope team, and being so well supported throughout my time here has been the greatest honour of my professional career. I’m obviously sad to be leaving this superb team. But, I’m confident that Mark and his new team will lead you very well in the next phase of BlueScope’s journey. BlueScope has a clear strategy for growth. This means our fantastic brands, products and manufacturing plants, our great customer base and very good balance sheet, underpin the future potential for BlueScope.
Thank you for your support to me over the years, and I know Mark will continue to enjoy the same level of support from all of you as you build the next phase of BlueScope’s growth. And please remember to continue to look out for each other, and stay safe at all times. Regards, Paul
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Finding a path through contracts Pathfinder, BlueScope’s new contract risk management framework, aims to help businesses manage contract risk requirements. The Pathfinder framework centres on BlueScope’s Delegation of Authority (DOA) Policy and highlights those areas of contract risk that BlueScope regards as important at a corporate and business unit level. BlueScope’s legal team has been exploring new and innovative ways to support our businesses globally to make contract risk management more efficient and intuitive through the use of new tools and information sharing initiatives. It is important that our businesses are fully informed of those areas of contract risk that have corporate significance, and those areas where a tailored approach is required to accommodate local operating environments.
Pathfinder provides a framework for current, consistent information to be made available to enable appropriate decisions to be made when negotiating arrangements with suppliers and customers. The Pathfinder framework is accessible in a new portal available on the Intranet. The portal: • contains BlueScope’s DOA policies; • explains key DOA terminology; and • includes simple contract risk guidelines and Contract Assessment Tools (CATs), to help guide contract negotiations (which have been in place in some businesses since last year). All new BlueScope contracts must comply with the Pathfinder framework, which is being incorporated into all DOA policies and contract
risk management processes and systems at corporate and business levels. It’s important for all employees involved in preparing, negotiating, managing or approving contracts to be familiar with Pathfinder by taking time to go through the Pathfinder portal and incorporating each element of Pathfinder in all contract and any risk based policies within your business. Training has been rolled out across BlueScope for employees involved in sales or purchase transactions, and a Pathfinder Discussion Group has been set up on Workplace. If you have questions regarding Pathfinder please speak to your local legal representatives.
Protecting BlueScope’s important assets BlueScope’s intellectual property – or ‘IP’ – is a valuable and important asset. Our IP is our ideas and knowledge. Our IP helps our Company grow and innovate, improves our products and services and gives us real competitive advantage. Our IP is important to support Our Bond. BlueScope IP includes know-how, patents, trademarks, designs, copyright, computer programs and trade secrets, but also business methods and improvements to the way we do our work. It also includes our name and our reputation. Our IP is important and confidential and must be protected.
Shining a light with Orrcon Steel Over the last 20 years Orrcon Steel has formed a partnership with customer GM Poles that has brought to life some of Australia’s most exciting lighting projects. “GM Poles specialises in designing and fabricating steel columns that are used for lighting, signs, communication and surveillance,” says Lester Kirkwood, Sales and Marketing Manager, Orrcon Steel. “We supply a combination of our precision circular pipe and square hollow section cut to various sizes. This ensures there is no wastage because we can cut to the specific length required.” GM Poles’ projects using Orrcon Steel include the 50 metre lighting poles at the Perth Rectangular Stadium in the West, the 40m poles at Elwick Racecourse in Hobart, and the 48 metre lighting poles at Cazaly’s Stadium in Cairns.
In 2015 GM Poles partnered with Orrcon Steel to manufacture and supply 168 special stepped circular poles for the opening of Barangaroo Headland Park along the Sydney Harbour foreshore. “We’re proud that, as we continue to work closely together with GM Poles, this is one of the many partnerships that shines a light on the diversity of the steel industry,” says Lester.
New IP Principles have been introduced to ensure all employees understand the nature and importance of BlueScope’s IP and their obligations with respect to defending and protecting that IP. All employees are encouraged to read these IP Principles on the intranet and ensure you understand what they mean for you and your team. In addition, a new Corporate IP Team has been established to support IP governance across BlueScope. More detailed information has been provided for those employees who work in areas with particular involvement in IP matters, such as product development and technology, engineering, sales and marketing, and legal. If you have any questions about IP, please speak to your manager in the first instance. An IP Discussion Group has been set up on Workplace, and you can also use this to ask any questions.
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FY2017 MANAGING DIRECTOR & CEO ZERO HARM AWARDS The annual Zero Harm Awards recognise significant achievements in our Zero Harm journey, helping make BlueScope a safer place to work. Each business conducted their own health and safety recognition programs to acknowledge exceptional contributions to safety performance and culture.
Best Zero Harm Performance Award NS BlueScope Thailand FY2017: LTIFR 0.00 MTIFR 0.61 At 30 June 2017 BlueScope Thailand had maintained a zero LTIFR for 13.9 million hours. BlueScope Thailand has around 750 employees and a very significant contractor workforce carrying out predominantly construction work. Most Improved Zero Harm Performance Award North Star BlueScope Steel FY2017: LTIFR 0.00, maintained from FY2016, MTIFR 1.85, a 77% improvement from FY2016 This improved performance was achieved by North Star BlueScope Steel’s 380 employees working safely in heavy manufacturing on a site with significant plant and process related hazards. Felt Leadership Award Mark Gold, Construction Manager Project Galaxy Project Galaxy is the construction of the new MCL3 at BlueScope Thailand. In an environment where maintaining good safety requires constant supervision, Mark is recognised for taking the time to ‘teach’ safety and explain BlueScope’s safety systems to the employees and contractors working on the project. He always smiles when he talks about safety, which helps make people feel more receptive to his ideas and safety messages. His strong felt leadership and active engagement with employees and contractors has contributed to the project celebrating 1,000,000 man-hours injury-free in July. Safety Champion Award David Grassi, Product Technician, BANZ Processing & Logistics On top of his day to day duties of driving an overhead gantry crane, Dave leads a Manual Handling Focused Improvement Group which champions safety campaigns. A ‘No Touch’ initiative identified all scenarios where employees need to interact with suspended loads, and steered a series of programs to either eliminate the tasks or design tools to prevent hand injuries. Dave leads monthly meetings to discuss the progress of active projects as well as canvass new ideas. Several tools have been developed, designed and fabricated under Dave’s leadership - common-sense solutions that have helped improve employees’ posture during the work-day, and mitigated crush injuries. Dave steps up to show real leadership and bring others along on the journey.
The winners of these business safety programs were submitted for consideration in each of the Zero Harm award categories. In addition, awards are given for Best Zero Harm performance, and Most Improved Zero Harm performance, as measured by LTIFR and MTIFR results.
Safe and Healthy People Award ‘Stay Conscious – be in the moment’ BANZ Manufacturing Product Innovation and Technology team, Port Kembla Steelworks. Members of the Product Innovation and Technology team - Andrew Micallef, Lyndal Evans, Stephen Hamilton and Horace Cavallaro – developed an approach to reduce injuries by investigating how psychological behaviour puts one at risk. The ‘Stay Conscious – Be in the Moment’ workshop has successfully engaged the workforce and introduced a new approach to conversations about safety. The initiative has provided a refreshed and renewed vigour in personal responsibility for remaining focused to the risks inherent in daily activities and tasks, and no new injuries or significant near misses have been reported since it was launched. Safe and Tidy Plant Falls Prevention Innovation for Working from Trucks NS BlueScope Lysaght Vietnam Falls from height was a key risk identified in the goods handling, finished goods and loading/ unloading area at Lysaght Vietnam. A new handrail fall preventention system has been introduced to significantly reduce the risk of falls. Operators work comfortably and can move freely while working on the truck deck without needing to wear a safety harness or be supervised. The system is easy to install and move around, can be applied on many types of trailers and trucks and also to many loading areas across our business. A working team comprising operators at the goods handling area and maintainance staff created the idea, engineered the design and completed the change risk assessment. Safe System Award Influencing Construction Safety in Malaysia NS BlueScope Coated Malaysia Training Team NS BlueScope Malaysia has a very big challenge in managing safety in construction activities. Over the past two years, the BlueScope Training Centre Malaysia has undertaken a range of activities to engage with government, contractors and customers to help improve the standard of construction safety. To date, 15 courses have been offered under BlueScope’s Product & System Installation and Construction Safety Program; 305 installers have trained in the Enduroframe system; 200 construction personnel have completed the Construction Safety Training series; and five sub-contractors have qualified to undertake Lysaght Supply and Install projects in Malaysia & Brunei under the contractor system. Congratulations to the Malaysia Training Team: Md Nazri Mohamed Nor, Ibrahim Rejab and Hermi Jamingon.
2017 BlueScope Environment Awards – Environment Engagement Award The recipients of the BlueScope Environment Awards for 2017 were announced on World Environment Day in June. Paul O’Malley, Managing Director & CEO, recently took the opportunity to personally present the Environment Engagement Award to representatives of the BANZ Manufacturing Electrical Services team: Natasha Porteous, Senior Environment Advisor – Services, and Peter Barkeit, HV Events Co-Ordinator. The team was recognised for its work in maintaining a sensitive pond habitat within the Port Kembla Steelworks where the endangered Green and Golden Bell frog species has returned after being in decline over the last few years.
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Our communities are our homes BlueScope Lysaght Sabah is continuing its environmental conservation program. Working with community partners Sabah Parks and Borneo Divers, 14 employees and 10 local volunteer divers have cleaned beaches and dived into the ocean to collect rubbish from the water and plant coral.
Over 360kg of rubbish was collected from the islands of Sulug, Mamutik and Manukan, and 40 pieces of coral were planted at Mamutik island.
United Way Day of Caring BlueScope Buildings Annville, PA. employees and family members volunteered for the annual United Way Day of Caring at Quest Inc., a United Way agency that provides vocational and life skills to empower people with disabilities and other vocational disadvantages to achieve a quality of life of their individual choosing. Volunteer tasks included helping with raking leaves and clearing out flower beds and helping with a free paper shred event for the local community.
Support for Mexico earthquake relief BlueScope Buildings Monterrey employees collected food and emergency relief items for the Red Cross to be distributed to victims of the earthquake which hit central Mexico in September, and worked together to provide assistance to those in need. In the immediate aftermath of the earthquake, BlueScope Buildings Mexico City employees volunteered to help remove rubble on the collapsed buildings, bring food and essentials to the local emergency distribution centres, and undertake preliminary structural building inspections to evaluate their safety.
Employees also collected funds for all the communities affected by both earthquakes in Oaxaca and Central Mexico. Collectively, BlueScope Buildings North America employees donated over US$32,000 to help support victims of Hurricane Harvey which hit Texas in August and the earthquake in central Mexico.
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OUR COMMUNITIES ARE OUR HOMES Each year the Illawarra Board Community event is an occasion for BlueScope to thank the local community for its support. This year’s event doubled as the official opening of the refurbished Visitor Centre at Port Kembla Steelworks and an opportunity for the community to farewell Paul O’Malley. The revitalised Visitor Centre retains its function as the start and finish point for visitors taking tours of the plant, but has also been fully renovated to showcase a range of BlueScope products, tell the story of steel manufacturing and offer new spaces for meetings and events.
The COLORBOND® steel mobile van attracted guests interested in the new COLORBOND® steel Matt product
The BlueScope Youth Orchestra entertained guests
Paul O’Malley with Ray Peters, Manager Springhill, and the mini steel coil presented to Paul as a farewell gift
Artist Donald Keys with Ken Dean, BlueScope director and two of the works from Donald Keys’ series of paintings of the Port Kembla Steelworks
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