 Introduction of U. S. Steel Košice |
On Friday, November 24, 2000, U. S. Steel Group a unit of USX Corporation (now operating under the name "United States Steel Corporation") completed its purchase of the steelmaking operations and related assets of VSZ, a.s.. The acquired steel operations of VSZ, a.s. are now operating as U. S. Steel Košice, s.r.o. (U. S. Steel Košice).
With annual raw steel capacity of 4,5 million mt, U. S. Steel Košice represents approximately 30 percent of U. S. Steel´s steel manufacturing capacity. United States Steel Corporation is the largest steel producer in North America, and with the addition of U. S. Steel Košice it has become the ninth largest steel producer in the world. U. S. Steel Košice is one of the largest employers in Slovakia with approximately 16,000 employees.
| Standards of Conduct |
U. S. Steel Košice has adopted, and communicates to all of its employees on a regular basis, six drivers (i.e. basic principles) of its business. These business drivers are:
· Safety: Protecting the Safety of our Employees
· Environment: Environmental Compliance
· Quality: Providing High Quality of Products and Services
· Service: Providing Excellent Service to our Customers and Business Partners
· Cost: Being the Low Cost Producer
· Productivity: Maximizing the Productivity of U. S. Steel Košice´s operations
U. S. Steel Košice is the largest fully integrated, flat rolled producer in Central Europe. It is a modern, 100-percent continuous-cast steel producer, which is ISO-certified (ISO 9001 and ISO 14000 standards) and places its market focus on quality-critical, value-added products and customer service.
The U. S. Steel Košice production facilities are modern and equipped with the latest technology. Equipment has been continually upgraded to meet environmental requirements and achieve improvements in quality and efficiency to address the demands of the market place. U. S. Steel Košice produces a full range of sheet and tin products supplying numerous markets and industries.
U. S. Steel Košice has committed to a 10-year capital improvement plan, subject to business conditions, which will result in expenditures of approximately $700 million. This money will be spent in three areas:
1) Projects designed to increase and improve production of U. S. Steel Košice´s value-added product line (73%);
2) Environmental Equipment (15%);
3) Infrastructure Repairs and Improvements (12%). These expenditures will assist in enabling U. S. Steel Košice to be among the leading producers of steel in Europe and remain the competitive leader in the Central European steel market.
| Financial Performance |
U.S Steel Kosice is currently the single profit-making unit of the U.S. Steel Group. It netted USD 82 million in the first half of 2001 and the volume of deliveries stood at 1.8 million tonnes. The 1H output in raw steel was two million tonnes, which meant that production ran at 94.4 % capacity.
In 2001 capital expenditure reached SKK 14 million in the first six months of the year. U.S. Steel Group plans to meet the investment obligations agreed upon when it purchased the Kosice based metallurgical operations from the Slovak company VSŽ Kosice. Investments will target strengthening the company's competitiveness and technology, which will enable broader production with a higher added value. The company will use cost saving methods used in its other operating units in the United States. The measures will not mean job cuts rather the development of technology and improvement of production quality.
| Investment Activities of US Steel Kosice |
With plans for $427 million in capital investment highlighted until the year 2009, this represents 61% of the total $700 million in capital investment that U.S. Steel promised to invest within ten years of its acquisition of the metallurgical core business of VSŽ Kosice in late 2000. The company also plans to inject another $182 million into infrastructure development and $91 million into environmental projects.
Plans to expand the USSK tinning plant production capacity has revealed an investment project totaling SKK 6.7 aimed at boosting its tin-sheeting capabilities. The present capacity of the tinning plant is expected to grow from 200,000 to 340,000 tons of tinned steel plates annually. Completion of the new tinning plant is expected early in 2003.
As the sole overseas unit of Americas largest integrated steel producer U.S. Steel Kosice is actively looking to promote the region of Kosice for Foreign Investment and are seeking Western European Investors for Slovakia.
| The Corporate Citizenship Awards 2001 |
Nominee: U. S. Steel Košice
Nominated By: American Chamber of Commerce
The above nominated company, in the year 2001, has initiated
Project Name: "U. S. Steel Košice as a Corporate Citizen"
| Reasons for Nomination |
U. S. Steel Košice has made a commitment to be a productive and generous member of the Slovak Republic business community. Through its financial support and commitment of time and resources, U. S. Steel Košice strives to assist in fulfilling many of the needs of the people from Eastern Slovakian region. Those efforts can be categorized as follows:
A: Fostering Economic Opportunity and Enhancing Economic Recovery
B: Encouraging Civic Initiatives: Humanitarian Assistance and Charitable Activities
C: Encouraging Civic Initiatives: Efforts to Foster Sound Business Ethics and Reduce Corruption
D: Fostering Economic Opportunity and Providing Extraordinary Care for Employees, Consumers and Stockholders
 A: Fostering Economic Opportunity and Enhancing Economic Recovery by Establishing the Economic evelopment Center of U. S. Steel Košice, s.r.o. |
U. S. Steel Košice´s Economic Development Center (the "EDC") was established almost immediately after U. S. Steel concluded its purchase of the steelmaking operations and related assets of VSZ a.s.. The principal focus of EDC is to increase the flow of Foreign Direct Investment ("FDI") into Slovakia.
1) The EDC
The EDC was set up by U. S. Steel Košice with the aim of assisting in the promotion of Slovakia abroad and attracting business investment into the country - particularly into the Eastern Slovakian region. Through the EDC, U. S. Steel Košice attempts to increase the stream of FDI with the objective of regional economic development.
What EDC offers:
· It attempts to broadcast the benefits of doing business in Slovakia. Through investment forums, trade shows and personal contacts it attempts to recruit businesses to Slovakia.
· It offers potential investors access to the expertise which U. S. Steel Košice gained through the VSŽ, a.s. acquisition.
· It connects potential investors with investors who have already successfully established operations in the region (i.e. Molex, Taylor-Wharton Harsco - "green field investment", Matshusita - purchased an existing company.
· It connects potential investors with representatives in important positions in national, regional and local government.
· It offers businesses considering locating in Slovakia access to an extensive database of professionals necessary for the establishment of operations in the country, including professionals in commercial law, tax advisors, real estate advisors, project management experts, as well as professionals able to supply "turn-key projects" for green-field construction.
The EDC has carried out two successful business development forums - an investment conference in Brussels in June and another in Berlin in October of this year. More than one hundred participants in Brussels and Berlin attended the forums and listened to presentations descrabing the experiences and insights of representatives of several foreign firms that have already established themselves in Slovakia. These included companies such as Volkswagen, Siemens, Citibank, Molex, Matshusita. A similar forum is schedule to take place in Oslo, Norway in November, 2001.
The EDC has also presented its activities and services in several exhibitions and trade fairs, including:
Germany / Hannover April 23 - 28, 2001
Hungary / Budapest May 22 - 25, 2001
Poland / Poznan June 18 - 21, 2001
Czech Republic / Brno September 24 - 28, 2001
U. S. Steel Košice´s efforts are beginning to reap dividends. Recently, one of the oldest American industrial companies, Taylor-Wharton, established operations of one of its divisions, Harsco Corporation, in Košice. Also, Tube City, Inc., a steel scrap processor, has recently established operations within the U. S. Steel Košice facility. That company´s customers include several major U. S. steel manufacturers. Eastern Slovakia expects to soon attract another strong investor - the transportation company, Kralovetz Trucking. These results of U. S. Steel Košice's efforts gives hope for a bright future for Košice and Eastern Slovakia.
In addition, through the efforts of U. S. Steel Košice and the EDC, in September, 2001 QSI (Quality School International) opened a K through 8th grade international school in Košice. This development was critical to U. S. Steel Košice´s efforts to attract foreign investors to Eastern Slovakia since the availability of international schooling is high on the list of priorities of foreign investors considering a region.
2) Month of Slovak Culture
U. S. Steel Košice recently played a major role in an historic event featuring Slovakia. In February 2001, New York City hosted a Month of Slovak Culture, in which U. S. Steel Košice proudly acted in the role of principal sponsor and general partner. The event, which was opened by the Slovak Prime Minister, Mikuláš Dzurinda, took place in the World Financial Center. The Month of Culture was organized by the Association for Art and Communication of the Slovak Republic and the Foundation for the Civil Society in New York.
The purpose of this event was to develop and increase the level of understanding between the people of Slovakia and America. As a general partner, U. S. Steel Košice contributed significant financial support to this event, which featured the culture, art and people of Slovakia.
The Month of Slovak Culture concluded with an investment forum organized by SARIO (Slovak Agency for Foreign Investments and Commmercial Cooperation) and B+ Business Centrum. On February 26, 2001, John J. Connelly, Vice President of the U. S. Steel Group made a presentation entitled "Building Strategic Partnerships". The main objective of the investment forum was to describe Slovakia´s business potential and present opportunities for investment in the Slovak Republic with the hope of attracting U. S. investors.
| B: Encouraging Civic Initiatives: Humanitarian Assistance and Charitable Activities |
U. S. Steel Košice has been an active and responsible corporate citizen during its brief tenure in Slovakia. During the period November 24, 2000 through September 30, 2001, U. S. Steel Košice´s total contributions, sponsorships and advertising expenditures in Košice and throughout Slovakia exceeded SKK 55 million (approx. $ 1.1 million).
The focus of these contributions has been in three areas: 1) Children's and Health Care Projects (orphanages, schools and the children's oncology wing at a local hospital);
2) Education (the Technical University, the Secondary Industrial School of Metallurgy and various elementary schools and pre-schools in the Košice region); and 3) Sports and Entertainment.
1) Children´s and Health Care Projects
The following projects have been supported by contributions by U. S. Steel Košice:
a) Solving the transportation needs of physically impaired children was the purpose of U. S. Steel Košice´s SKK 250 thousand gift to the Košice Wheel-chair Association. These funds were used to purchase a specially designed vehicle for the physically impaired.
b) U. S. Steel Košice donated SKK 50 thousand
to the association "Sportinvalid" for
the purchase of equipment for use by the physically
impaired. |
c) U. S. Steel Košice donated company products such as steel sheets (for roofing) and heating radiators to several orphanages throughout the Košice Region.
d) U. S. Steel Košice was the principal donor to the contribution of a new children´s oncology wing at a local Košice hospital. That facility will provide health care services for young patients from throughout Eastern Slovakia. U. S. Steel Košice´s contribution in the amount of SKK 3.6 million allowed for the completion of the interior of the building with sufficient capacity and equipment to replace the temporary and emergency equipment of the hospital's children's oncology department.
e) U. S. Steel Košice was a major donor of funds for the purchase of hyperbaric (hi-pressure) chamber for a hospital located in the area of Košice-Šaca (where U. S. Steel Košice is located). This equipment will be used to treat burn injuries, gas poisoning as well as treating insufficient blood circulation problems. U. S. Steel Košice´s financial contribution to this project totaled SKK 2.5 million.
f) U. S. Steel Košice is one of the major donors funding a Christmas concert entitled "Christmas 2001". U. S. Steel Košice will donate SKK 600 thousand. Income from the event will be used for the rehabilitation of physically and mentally impaired children in the Košice Region.
U. S. Steel Košice has also been involved in a project attempting to facilitate the adoption of Slovakian children by citizens of foreign countries, including the USA. Many Slovakian orphanages are overflowing with young children, many of Roma decent, who have little or no hope of being adopted by Slovakian parents. It is the hope of U. S. Steel Košice that liberalization of the adoption of the laws and practices will provide options to these children.
2) Education
U. S. Steel Košice´s financial contributions since November 24, 2000 in support of science and education total approximately SKK 1.5 million. U. S. Steel Košice´s agreement of cooperation with Košice´s Technical University includes the financial support of specific educational programs and activities, such as the scientific conference "Metalurgia 2001" and the international conference "EKO 2001". U. S. Steel Košice has also been a major contributor to the Secondary Industrial School of Metallurgy. In addition U. S. Steel Košice has funded the remodeling of classrooms, purchase of computers and other projects in several local primary and secondary schools in the Košice Region.
3) Sports and Entertainment
U. S. Steel Košice is also deeply involved in development and support of culture and sports in Košice Region. On April 9, 2001, U. S. Steel Košice entered into a frame agreement with the City of Košice under which U. S. Steel Košice committed continued financial support and mutual cooperation with the City. Specifically, U. S. Steel Košice agreed to cooperate in four areas:
a) In organizing and funding the recently concluded Košice City Days which celebrate the City being granted a coat-of-arms on May 7, 1369 (SKK 0.5 million);
b) In assisting and funding the City's Year 2001 Christmas celebration (SKK 0.5 million);
c) In organizing and funding international cultural and sports events during 2001 - e.g. the 2001 Peace Marathon with contributions totalling of SKK 1.25 million;
d) In organizing, managing and supporting other extraordinary civic events.
During 2001, U. S. Steel Košice has made a major commitment to the Kosice Ice Hockey Club, an organization that fields the City's professional hockey team as well as sponsors the City´s youth ice hockey program. U. S. Steel Košice's commitment involves:
a) Sponsorship/advertising expenditures totalling SKK 15 million (approximately $300,000);
b) The donation of accounting services which will be provided by members of the U. S. Steel Košice Accounting Department (to provide financial planning assistance and to ensure that donations are spent as intended);
c) A concerted effort to inspire other businesses to make a financial commitment to the Club.
U. S. Steel Košice has also supported the 1st city handball team (MHK) Košice with contributions of SKK 2 million and the junior teams of Tennis Club Anicka with a SKK 250 thousand contribution.
U. S. Steel Košice has not been indifferent to financial needs associated with other art and recreational activities. For example, its contribution of SKK 200 thousand to the reconstruction of the historical Children´s railroad, made the summer months more pleasurable for the children of the city and its surroundings. It has also been a significant supporter of the Košice´s Theater (SKK 250 thousand) and the State Philharmonic in Košice (SKK 300 thousand).
| C: Encouraging Civic Initiatives: Efforts to Foster Sound Business Ethics and Reduce Corruption |
In March, 2001, U. S. Steel Košice published and distributed to all of its employees its Code
of Ethical Business Conduct ("Business Ethics Code"). U. S. Steel´s Business Ethics Code begins with the following message from U. S. Steel Košice President, John H. Goodish:
U. S. Steel Košice, s.r.o. (hereinafter referred to as "U. S. Steel Košice") is committed to conducting its business ethically as well as lawfully. Ethical and legal conduct at all levels of our business is essential for our future.
The reputation of U. S. Steel Košice is a valuable business asset. Each of us must be dedicated to the highest degree of personal integrity to safeguard this asset and to exhibit respect for our fellow employees, customers, suppliers, and shareholders. Ethical conduct forms the foundation of the trust necessary for the long-term success of our business. Our commitment to ethical and lawful business conduct must be exercised without reservation.
The ethical and legal responsibilities and guidelines found in the Code of Ethical Business Conduct are not new. They have, over the years, formed the cornerstone of U. S. Steel's commitment to conduct all of its business activities lawfully and with the highest ethical standards. It is essential that each of us continue to support this commitment in our everyday job performance. Maintaining our reputation is a shared responsibility.
U. S. Steel Košice´s is committed to ensuring that its employees adhere to the principles described in that document. The Business Ethics Code establishes regulations and guidelines covering all aspects of its employees´ performance, including workplace safety, protection of workplace property, environmental compliance, refraining from fraudulent or deceptive business practices, sexual harassment, misuse of confidential information and compliance with competition laws. Each employee is required to sign a letter stating his/her understanding of the Business Ethics Code´s principles.
The Company also established a business ethics "hot-line" for reporting any unethical conduct and encouraged employees to report suspected illegal or unethical behavior. In addition, a letter was sent to all external company suppliers stressing their obligation to comply with U. S. Steel Košice´s business ethics principles and providing them access to that same ethics hot-line. This letter, and subsequent correspondence on this issue, was published in newspapers throughout Slovakia. Finally, an ethics compliance meeting with external company suppliers was held on August 3, 2001. The Company´s suppliers were again reminded that U. S. Steel Košice expects the highest ethical behavior not only from its employees, but also from the business partners.
U. S. Steel Košice communicates on a regular basis with its employees regarding business ethics, alcohol and drug abuse, and safety issues through its company newspaper, Ocel Východu, letters sent to the employees´ homes and in employee meetings. The purpose of this communication is to constantly remind its employees of U. S. Steel Košice´s commitment to an ethical, safe and alcohol-free workplace.
| D: Providing Extraordinary Care for Employees, Consumers and Stockholders |
Under its agreement with the Government of Slovakia U. S. Steel Košice has committed to maintaining a stable workforce. It has agreed to limit workforce reductions to terminations for cause and voluntary quits. U. S. Steel Košice has gone well beyond this commitment, however, and is actively engaged in attempting to ensure that its employees are well-trained, fairly compensated and motivated to continously improve their performance.
1) Compensation and other benefits for the employees
Collective bargaining between representatives of U. S. Steel Košice and the Board of Trade Unions OZ Metallurgy began in December 2000, weeks after completion of U. S. Steel´s purchase of the Company. The parties first negotiated to conclusion outstanding issues relating to the contract years 1999 and 2000. Bargaining relative to a new collective bargaining agreement commenced immediately and concluded 45 days prior to the parties' self-imposed deadline of March 31, 2001. The agreement, which U. S. Steel Košice made effective retroactively (to February 1, 2001) includes, among other things, a tariff increase for each employee of 9.5%, increases in premiums for non-stop work, and payment of 13th and 14th month wages at 100% of the tariff.
2) Social care program
The Company´s social program is directed toward the fulfillment of basic employee satisfaction needs. Areas in which program focused during year 2001 are: dining, medical care, care for work-force regeneration, care for selected groups and social services.
a) Dining
The Company provides its employees with dining at the workplace or in its vicinity, serving one hot meal including a drink each day. During the period January through September, 2001the cost of these dining benefits totalled SKK 113,808 thousand. This meal benefit is also provided to Company retirees at a local hotel in Košice. Each day, approximately 300 retirees are served.
b) Medical care
USSKe provides its employees with the following forms of medical care:
C, Regeneration of workforce
USSKe provides its employees with the following forms of medical care:
c) Sport activities
As part of the social care program for company employees, the following sporting events are organized by U. S. Steel Košice and held on an annual basis:
· Ice hockey tournament
· Bowling tournament
· Football (American soccer) tournament
· Table tennis tournament
· Volleyball tournament
· U. S. Steel Košice Summer Olympics
· U. S. Steel Košice Winter Olympics
d) Accomodation Loans
The Company provides low interest loans to assist employees in purchasing their first
houses or apartments. These loans are provided to buy an apartment or house. This
year, SKK 16 million was set aside for this purpose.
e) Meetings with long service employees
In compliance with its collective bargaining agreement, long service employees (20, 25, 30, 35 or 40 years of service), as well as employees reaching 50 years of age, receive special one-time bonuses.
F) Supplemental social services
· U. S. Steel Košice provides a bonus of SKK 300 to those company employees who donate blood. The bonus is paid for each blood donation. For the period January through September, 2001, SKK 1.014 milllion was spent on this benefit;
· Child care in a local pre-school facility is provided to employees (currently 65 employees are taking advantage of this service);
· U. S. Steel Košice also organizes summer camps for children of its employees (this year 210 children participated).
3) Trainings and Education
In May, 2001 The Training and Education Department was established by U. S. Steel Košice. The purpose of this Department is to expand and improve U. S. Steel Košice's training programs. The Training and Education Department first prepared an analysis of U. S. Steel Košice´s training needs and is currently involved in developing training programs. The objective is to transform U. S. Steel Košice´s role from that of a passive training administrator to being an active participant in the process. The goal is to structure programs consistent with Company goals and employee needs. Our intention is to perceive our employees as internal customers and aim to fully satisfy their vocational training and educational needs.
Important information regarding U. S. Steel Košice's training:
a) The budget for training and education has been doubled relative to year 2000:
b) Training focus by percentage for the current year:
c) Customized training for specific target groups has been developed in order to improve employee skills and knowledge in different areas of management and business.
d) In the area of workforce skill development, U. S. Steel Košice focuses on developing versatility, identifying skill gaps, and predicting future skill neededs.
e) A concerted effort has been made to provide English classes to all employees desiring such training. |
