A BUSINESS NEWSLETTER FOR BLUESCOPE PEOPLE Issue 34 November/December 16
CORPORATE POWER RANKING Chairman John Bevan addressing shareholders at the AGM
2016 AGM – FIRST HALF OUTLOOK UPDATED At the 2016 Annual General Meeting of shareholders held in Melbourne last month, Paul O’Malley, Managing Director & CEO, updated BlueScope’s first half outlook. “The Company expects underlying 1H FY2017 earnings before interest and tax (EBIT) to be at least $510 million, subject to spread, FX and market conditions,” he told shareholders. Chairman John Bevan told shareholders that the Company was encouraged by improvements in the Australian business. “These have been driven by better despatch volumes and productivity gains despite higher raw material costs,” he said. “And as we mark one year of full ownership of North Star BlueScope Steel, as expected this business is generating substantial earnings and cash flow.” John also said that the Building Products joint venture saw earnings growth especially in North America due to spread expansion in the supply chain, and the North American Buildings business is delivering further productivity improvements.
$595 million in the June 2016 half, and with a strong balance sheet, the Company is making excellent progress on its strategy. “Nonetheless, we are well aware that global steel remains in oversupply. We must continue our relentless focus on cost competitiveness in the face of this oversupply, raw material price pressures and market volatility. “We will continue to pursue our strategy for each of our businesses: • In Coated and Painted Products our focus is to further grow our business, particularly in Asia. In Thailand, the NS BlueScope joint venture is targeting increasing sales of home appliance steels and is developing a third metal coating line with in-line painting. In India with our partner Tata, we are reviewing the potential for additional painting capacity. Meanwhile in Australia, we are targeting further sales growth opportunities in inter-material areas such as roofing, steel framing and facades.
“Driven by strong cash flow from the Australian business and North Star, net debt reduced by
WELCOME
Paul O’Malley, Managing Director & CEO, has been ranked number 14 in the AFR Magazine 2016 corporate power list of the most powerful business people in Australia. According to the AFR (Australian Financial Review): “Those who made this year’s corporate power list have not only survived but thrived amid seismic shifts in the landscape. “The chief of BlueScope Steel runs one of the world’s few profitable steel companies. The fate of its 100-year-old Port Kembla steelworks in Wollongong hung in the balance until late last year, when O’Malley secured major concessions from his unionised workforce and negotiated a $60 million tax break from the NSW state government. “The company’s fortunes have changed as a result. O’Malley upgraded BlueScope’s profit forecasts four times in the 2016 financial year as conditions kept improving. He signed off on the timely decision to spend $947 million to move 100 per cent of North America’s most profitable steel mill just as US authorities imposed punishing anti-dumping duties on steel imports from China. The story is in sharp contrast to struggling Arrium in South Australia.” BREAKING NEWS Paul is also among the eight ‘leaders, builders, pioneers and stirrers’ selected for the 2016 AFR Business Person of the Year Award.
IN THIS ISSUE 02 AGM trading update 03 Awards for BlueScope 04 COLORBOND® steel 50th anniversary wraps up
06 A good safety catch in North America 07 Kids say safety first
HORIZON Issue 34 2016 Page 2
AGM UPDATE Cont from page 1 • In BlueScope Buildings, productivity gains and cost reductions in North America should lead to a significant improvement in earnings compared to FY2016. Our focus in the China Buildings business is cost and productivity improvements and to enhance our market and customer engagement against a challenging market backdrop. • We continue to seek to maximise value from North Star through cash generation in a robust U.S. trading environment and through lowcost incremental volume growth initiatives. • In Australian steelmaking, significant cost savings have provided the basis to continue to make steel. This is an ongoing challenge. Our pursuit of productivity improvements will continue. We need to consistently deliver the returns that earn the right to reline the blast furnace at Port Kembla in a decade or so. A profit-share plan is being rolled out which will deliver better reward for effort.
• In New Zealand, a cost improvement program to make steelmaking operations at Glenbrook internationally competitive and profitable is continuing, as is the sale process for the Taharoa export iron sands operation.” Paul told shareholders that it has indeed been another big year for the Company. “We have been on a long journey to create one of the most profitable and successful steel building products companies in the world. “As you saw at the announcement of the full year results in August - we are delivering on the initiatives necessary to execute BlueScope’s strategy. That strategy is: to be the global leader in coated and painted steel products in building and construction markets, with a profitable portfolio of premium value brands, positioned in the fastest growing markets in the world and at the same time being a globally costcompetitive steelmaker.
“I’m pleased to say that BlueScope is positioned much more favourably today than at any time in the past 10 years. We have an outstanding market presence in the fastest growing areas of the world where our products are being well received by customers throughout Asia, Australia, New Zealand and the United States. We will continue to ensure that our steelmaking operations are globally cost competitive. “We are never complacent about our position in the ever-changing business environment and continue to be vigilant with our approach to innovation and investment in new products and new markets, cost reduction efforts and of course, safety. “Finally, I want to thank all BlueScope managers and our 15,000 employees worldwide, who have shown such resilience and professionalism in turning around the Company and providing us with a strong platform on which to build a most successful future.”
BlueScope directors with employees at the AGM
Trading Update Paul O’Malley gave shareholders an update on business performance for the first half of FY2017 to date: Australian Steel Products The Australian business has seen some despatch volume growth in 1H FY2017. Cost reductions and productivity improvements greater than previously advised have largely mitigated rising coal costs. The high coal price will impact the March 2017 quarter to the extent increases in steel prices do not offset the cost rise. It is pleasing to note that East Asian HRC prices have risen in recent weeks. North Star BlueScope Steel North Star will make a strong contribution this half. Steel spread in the September quarter was US$110-130 per metric tonne higher than during 2H FY2016. While steel spread has moderated thus far in the December quarter compared to the September quarter, in line with
our expectation, it remains US$30-50 per metric tonne higher than the average through 2H FY2016. Building Products The Building Products segment has seen a good start to 1H FY2017 with margins in North America significantly stronger than last half’s good performance. Our Vietnam and India businesses are tracking ahead of expectation due to higher margins in both regions and strong volumes in India. Malaysia and Indonesia are delivering consistent results. Thailand is seeing a slightly softer half due to lower margins on higher feed costs. BlueScope Buildings The North American buildings business performed strongly in the peak summer building season. We expect earnings this half to be materially better than the December
2015 half, boosted also by the business improvement program. Our China coated products business, combining coating, painting and roll forming operations is performing well and in line with our expectations. China Buildings is making good progress on cost reductions however continues to face competitive pressure on margins. New Zealand and Pacific Steel Domestic activity in New Zealand continues to be strong, particularly in residential and non-residential construction and we are seeing the full benefit of the Pacific Steel and billet caster investments. Overall, with steel and iron ore prices slightly higher than our expectation at August, we expect the segment to deliver an underlying EBIT result better than 2H FY2016.
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A sustainability journey
David Bell, Manager Cokemaking, Ironmaking & Port Kembla Works Manager and Matt Imber, Environment Manager, received the award on behalf of the BANZ Manufacturing team from the Hon Mark Speakman, Minister for the Environment, NSW.
BlueScope has won the 10 Year Sustainability Achievement Award in the NSW Government’s 2016 Green Globe Awards, which celebrate excellence, leadership and innovation in sustainability. This achievement reflects the success of the BlueScope ANZ manufacturing strategy – making good environmental practice good business – and is all the more notable given the difficult economic environment in which the business has operated over a large part of the past decade. Environmental management systems and operational practices are in place to: • identify, assess and manage environmental risks; • set performance targets, regularly monitor and publicly report on our progress; • drive compliance with relevant industry standards and legal requirements; • engage with all stakeholders to drive continuous improvement and build relationships based on honesty, openness and mutual trust; • drive product improvements; and • provide market leadership through engagement with customers and industry bodies.
The BANZ manufacturing team regularly assesses environmental risks and this, supported by a culture of engagement and continuous improvement, has resulted in significant achievements, including:
BlueScope’s sustainability journey includes marketing and product development initiatives:
• 50 pollution reduction projects completed since 2006, working constructively with the EPA. Over 270 active improvement projects with direct environmental benefits completed in 2016.
• Next generation ZINCALUME® steel: 10 to 26% reduction of environmental impacts across 18 categories in an industrial roofing Life Cycle Analysis (LCA) study.
• Significant reductions in fresh water consumption, with over 96 per cent of water used at the Port Kembla Steelworks now either recycled or salt water. • Steady reduction in emissions to water, with a goal to eliminate emissions to water from process disturbance. • Considerable reduction in greenhouse gas energy consumption since 2006 and, since 2011, improvements in greenhouse gas intensity. In FY2016, 81 energy/greenhouse gas specific improvement projects were completed, and the aim is for greenhouse gas intensity to be within the lowest quartile of comparable facilities. • Material efficiency has been maintained at greater than 99.7% through reducing waste generated, recycling by-products, selling by-products to external parties as feed materials, and increased use of scrap. Reuse and recycling offsets the need to use raw materials such as iron ore and coal, which in turn reduces emissions, energy and water use by eliminating upstream processing requirements. In addition, increased recycled content leads to better use of the steel scrap supply generated in Australia, which in turn results in less steel scrap being transported overseas for further processing. • In FY2015 air emissions from manufacturing operations were close to half the level reported in FY2006.
Product development
• Next generation COLORBOND® steel: 18 to 38% reduction of environmental impacts across 18 categories in a residential roofing LCA study. • COLORBOND® steel with Thermatech® solar reflectance technology - an innovation to help reduce ingress of heat into buildings through roofing materials. • COLORBOND® Coolmax® steel introduction of a premium cool roofing product to help reduce HVAC (heating, ventilation & air conditioning) energy use in commercial and industrial buildings. Market leadership • Influencing standards and recognising sustainable aspects of steel through engaging with Green Star, Infrastructure Sustainability Council of Australia (ISCA), Responsiblesteel, World Steel Association, Australian Sustainable Built Environment Council, CRC for Low Carbon Living (Steering Committees for National Conversation and Integrated Carbon Metric), the Australasian Environmental Product Declaration Programme and Steel Stewardship Forum. Stakeholder engagement • Active engagement with employees (incident reporting, auditing and work performance targets), customers, suppliers, the community (including the Illawarra Community Consultative Committee, BlueScopeWin community partners program, Port Kembla Pollution Group participation, Illawarra and corporate websites) and regulatory authorities.
Award for community partnership The BlueScopeWIN Community Partners program has received an Australian Government Community Business Partnership Award for 2016 in recognition of its collaborative approach to strengthening the community. In particular, the award recognised its support of the ‘Permaculture Partners’ program, which actively encourages school students to plant, nurture, harvest and use produce from gardens they establish at school. Through this hands-on experience the students learn some very important life skills. Permaculture Partners is a co-operative of local schools and businesses. Over the years, BlueScope has helped develop the program’s business plan, and has also encouraged many of the Company’s alliance partners and local businesses to join in supporting this community project.
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CELEBRATING COLORBOND® STEEL It’s been a big year of activities and events to celebrate the 50th anniversary of COLORBOND® steel and to thank employees and customers whose decisions to work for, buy, sell, install, design and build with COLORBOND® steel have made the brand an Australian icon. More than 7,000 cupcakes were served to employees at morning teas at BlueScope sites all over Australia, and there was plenty of fun with photos taken in the specially made COLORBOND® steel photo frames. Congratulations to the Acacia Ridge team who took out the funniest photo award and received a one of a kind COLORBOND® steel trophy.
Just a few of the 7,000 cupcakes served to employees
Photo competition
There were some beautiful entries in the Photos of Australia competition which asked employees to submit a photo of a favourite place and say why it is special to them.
First prize of a $5,000 travel voucher went to Peta Smith, Finance Administration Officer, Kewdale WA
Pannawonica, WA, at sunset
Cape Leveque, WA
Lake Illawarra, NSW
Lake Illawarra, NSW
Snowy Mountains, NSW The five runners-up in clockwise order: Tony Apps, Account Manager, BANZ Sales & Marketing; Chris Jones, Welding & Materials Evaluation Team Leader BANZ; Ross Cunningham, Coke Plant 1 Operations Engineer / Senior Env Advisor, BANZ; Troy Kenwrick, Account Manager, Tamworth; Stacey Sutherland, Senior HR Advisor, BANZ Manufacturing.
Port Macquarie,NSW, at sunset
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50 days for 50 years The #COLORBONDcafe coffee vans were a feature of the 50 days of COLORBOND® steel to say thank you to as many people as possible for their support of the product over the years. It was quite a scheduling exercise that saw thousands of cups of coffee served and many kilometres travelled across the country by the five vans. Customers were very grateful for the effort made, and feedback ranged from many thank you emails and phone calls to birthday cakes being baked and videos produced from one end of the country to the other.
Community grant The Community Grants program offered employees the opportunity to nominate a local group to receive one of five $10,000 COLORBOND® steel 50th anniversary grants to help them continue their work in the community. Out of the many nominations received, these groups were chosen: • We Care Community Services submitted by Ellie Cumine, Business Support Coordinator, Braeside • Dress for Success submitted by Cathy Carr, Specialist - Procurement Sourcing and Projects, BANZ • Peninsula Specialist College submitted by Leon Anderson • Nepean Therapy Dogs Inc submitted by Michael Celeban, Product Development Manager, Lysaght, and • Rotary Club of Engadine submitted by Michael Hughes and Philipp Leschnik, BANZ Manufacturing.
Digital news Alongside these activities, the COLORBOND® steel website colorbond.com has been relaunched and remodelled, and a new COLORBOND® steel eMagazine colorbond.com/ magazine/colorbond-magazine-issue launched. A new video series of #COLORBONDstories has also been born, starting with the story of wonderful 91 year-old ‘Norma’ whose property in Rockhampton has been home to the COLORBOND® steel test panels since 1966. As COLORBOND® steel’s 50th anniversary celebrations draw to a close, it’s been fabulous to see everyone in BlueScope enjoying the celebrations. Thank you to everyone who participated and congratulations to all.
Mark Vassella, Chief Executive BlueScope ANZ, launches the Hop Up exhibition in Sydney
Events galore The ‘Hop Up’ exhibition of COLORBOND® steel roos by award-winning sculptor Louis Pratt was a notable highlight of the year. Mark Vassella, Chief Executive BlueScope ANZ, kicked off the exhibition in Sydney, overlooking the Opera House, and the roos were also guests of honour at a customer dinner attended by BlueScope’s Board and members of the Executive Leadership Team. Guests at the dinner had the opportunity to bid for two of the roos at auction, with the
proceeds going to the Australian Council of State Emergency Services (ACSES). Three more COLORBOND® steel roos have since been auctioned online, also raising money for ACSES. Breakfast and cocktail events were held in every state, featuring entertaining guest speakers, including world champion surfer Layne Beachley and actor Shane Jacobson.
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A good catch for safety BlueScope Buildings ‘Good Catch’ safety program encourages employees to recognise and correct safety hazards in their workplace. Each site selects a ‘Good Catch All Star’ based on the engagement and leadership they display in participating in the program.
on the Python should operator controls fail. He designed and installed a way to stop a beam from going through the fence and potentially causing a fatal injury. This P4 incident was written-up as a proactive SSO and has been presented to other BlueScope Buildings North America facilities.
Awards are presented to those who report significant safety risks and commit to see them through to resolution, in turn making the work environment safer for everyone. The 2016 ‘Good Catches’ were celebrated at an event at Kauffman Stadium, home of the Kansas City Royals baseball team, with tickets for each All-Star team member and a guest to watch the Royals in action.
Brandon Waggoner – St Joseph Having conducted a routine crane inspection at the beginning of a shift with no issues to report, later that day Brandon saw a snap ring on the floor. Further investigation showed it was from the shaft that goes through the pulley on the crane hook. This ‘good catch’ prevented a potentially serious accident.
The 2016 Good Catch All Star team included representatives of each manufacturing location and, for the first time, two office employees: Harry Shaud – Anville While assisting a crane operator Harry noticed that the hardware that holds the lifting clamps together was about to fall off. He took it upon himself to correct the hazard and so prevent what could have been a serious incident. This incident also helped identify a gap in the system. Aaron Lucht – Evansville Aaron observed a stacked SSR coil starting to lean, caused by the bottom coil centre starting to collapse. He picked the top coil off, secured it on the bottom row, and ensured no other coils were stored on top. Aaron has also volunteered to become a crane Train the Trainer for new hires, and has worked 17 years without injury or incident. Bill Tharp – Jackson Bill has been recognised for three ‘good catches’. i) He noticed an unusual sound coming from a B-133 press, immediately stopped the operator and called for maintenance – subsequently a broken weld was found on the press; ii) he stopped material that was too heavy being run through a press where the operator was still in training; iii) he took the initiative to re-fabricate turret guards so they are all identical. Leonard Snead – Laurinburg Leonard correct a serious unsafe condition after observing there was no stop at the end of the out feed conveyor
Ryan Wade – Rainsville Ryan found a biodegradable product to use in place of acetone for ink marker cleaning. It has a flash point of 133°F as opposed to 1.4°F for acetone, is much less volatile and greatly reduces health hazards. The product is now in trial in Rainsville. Daniel Hernandez – Visalia Daniel realised that a junction box on a segment line gantry had not been replaced, leaving the electrical power supply exposed. Also, on an occasion when phone and networks were down, Daniel discovered that the ground prong to the power plug supply was broken off inside the wall outlet. This could have destroyed any equipment being serviced by that line, and subsequently caused a fire or fatal incident.
The Company is committed to working with the Ministry to deliver on the Malaysian Education
Ryan Wade
David Nicolau – Varco Pruden Turlock office David was part of the VP Western Region team that launched the Good Catch program and recorded near misses and good catches in the reporting database. The Western region was recognised for great participation and use of the system. Jorge Rodriguez - Butler Kansas City office Jorge is actively engaged in safety initiatives. He has reported several good catches in the Kansas City office and has many ideas on how to make the workplace safer. Dan Kumm – President Bluescope Buildings North America, presented the Good Catch All Star Safety awards to the 2016 winners.
Strategic partnership builds industry talent In Malaysia, BlueScope is proud to have been appointed a strategic partner in Technical and Vocational Education and Training to the Ministry of Higher Education Malaysia. Together with its roll-formers BlueScope Lysaght Malaysia, Superspan and AJIYA, BlueScope has signed an agreement with Politeknik Port Dickson to provide construction skills training.
Leonard Snead
Blueprint 2015-2025 and help students acquire knowledge, skills and awareness of industry technologies and BlueScope’s first class safety practices. Politeknik Port Dickson is highly regarded in Malaysia. With its diverse mix of students, including 44 per cent women, it will offer BlueScope access to a new internship talent pool.
David Nicolau
What safety means to us BANZ Manufacturing Western Port site ran a colouring competition that asked employees’ children to draw what safety means to them. The drawings will be published in a calendar for 2017 as a daily reminder of why safety is important.
Jim Graham, Manager Western Port, with the winners of the safety drawing competition
Running for a cause BlueScope Thailand and four local leading steel companies have supported the 9th Iron Man Mini Marathon, an annual running event that raises funds for a number of charities that support disabled people. Employees and their families took part in the marathon and enjoyed the opportunity to exercise and support a good cause. This year BlueScope chose to donate the funds it raised to TAB Foundation which is building a school for blind children in northern Thailand. Meanwhile, a team from Butler Canada has raised over $1600 for breast cancer research in the 2016 CIBC Run For The Cure, a 5k or 1k walk or run which is the largest single-day, volunteer-led event in Canada in support of breast cancer. Shannon Pollock and Mark Devine of the Builder Services Department organised the Butler Buildings Canada team, with employees and their families joining in.
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