[Inside Chodong] POSCO Hit by Multiple Crises... Must Undergo a "Radical Transformation"

[Image source=Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] On July 7, 1967, during the monthly economic trend briefing meeting held at the Economic Planning Board, President Park Chung-hee made the final decision to select Pohang as the site for the integrated steel mill among 18 candidate locations nationwide, including Ulsan, Samcheonpo, and Wolpo. Pohang was chosen as the optimal site due to its proximity to deep waters, a vast area of over 3 million pyeong, and the ability to supply 250,000 tons of industrial water daily. The area around the estuary of the Hyeongsan River and Yeongil Bay thus transformed into the world's largest integrated steel mill.

Now, half a century later, the reason for revisiting this once unquestioned decision is because POSCO is facing its greatest crisis since its founding. It seems as if it has been struck by the "three disasters" (Samjae), with a series of adverse events continuing to unfold.

First is the natural disaster (Pungsujae, wind and water disaster).

POSCO Pohang Steelworks halted production of molten iron for the first time in 49 years due to the aftermath of Typhoon Hinnamnor. The blast furnace, which had never gone dark for 24 hours, was plunged into darkness, and major facilities were submerged in muddy water.

Simultaneous fires broke out in several parts of the plant. Although the fires occurred during the burning of by-product gas?a safety operation to prevent explosion risks caused by equipment shutdowns?the company had to issue a statement clarifying that "there was fire, but it was not a major blaze," which sparked controversy.

At this critical moment, POSCO employees, along with the government, local authorities, fire departments, and the Marine Corps, joined forces to carry out recovery efforts. Fortunately, three blast furnaces soon resumed normal operations.

However, some of the key steel production facilities will only be able to restart next year due to the severe aftereffects. If steel products are not supplied on time, major industries such as shipbuilding, automotive, and construction are expected to be shaken. The direct and indirect damages are projected to reach astronomical levels.

[Image source=Yonhap News]

Next is the human disaster (Injae).

On the 14th, the government launched an investigation into POSCO, which is struggling with production difficulties caused by typhoon damage. There are expectations that if inadequate preemptive measures are revealed, those responsible will be held accountable. Since the typhoon was forecast well in advance, some have criticized the situation as a result of outdated organizational culture or governance issues.

The controversies surrounding POSCO are similar in nature, differing only in subject matter. POSCO has been in conflict with the local community for months over the relocation of its holding company to Pohang. During the holding company transition, it faced opposition from some shareholders. Additionally, a few months ago, the company faced public outrage over its sluggish response and delayed apology in a female employee sexual harassment scandal. All these incidents have raised questions about POSCO’s responses.

Its position remains not free from political influence. Although it has risen as a global steel company, none of its past chairpersons have completed their terms. Since privatization in 2000, former chairpersons such as Lee Ku-taek, Chung Joon-yang, and Kwon Oh-joon resigned mid-term. They all stepped down under government pressure, including prosecution investigations, and POSCO has been treated as a "spoils."

Chairman Choi Jeong-woo declared that "POSCO is not a national company" in an attempt to break free from external pressures, but this statement faced criticism for "forgetting history and losing its spiritual assets."

What is the way for POSCO to overcome the three disasters? With carbon neutrality emerging as a key issue, the POSCO Group is accelerating its transformation from a steel-centered company to a leading eco-friendly future materials company. The holding company transition and large-scale investments in the materials sector reflect the urgent need to no longer rely solely on steel. The 'radical transformation' to correct past mistakes and be reborn should not be limited to just the business domain.

This content was produced with the assistance of AI translation services.