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Columbian Chemicals KoreaHuman Resource Integration

1999 - 2002

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Columbian Chemicals Global

• Subsidiary of Phelps Dodge Corp - Phoenix

• CCC Headquarters: Marietta, Georgia USA

• CCC Product - Carbon Black

• Employees: 1,355

• Manufacturing Facilities5 North America1 South America5 Europe1 Asia

• 2002 Annual Sales: $520,000,000

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Columbian Chemicals Korea

• Company start date: February 1, 1999

1999 2002

• CCK Employees 94 88

• Contractors 56 35

• Capacity 000 MT’s 100 120

• Annual Sales $000 44,000 54,000

• Fixed Cost / $MT 86 40

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Due Diligence Process 1998

• Understand Korean Business and Social Culture.Utilized Prudential Intercultural TrainingUtilized Korean Consultant - Towers Perrine

• Design Company OrganizationUtilized CCC Global Models Incorporated Korean Best Practices now in use.

• Staff the OrganizationRetained Key Korean EmployeesUtilized CCC Expertise as Expatriates

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Integration Priorities

• Understand and Utilize Intercultural Synergies

• Understand the current Organization issues

• Develop Human Resource Strategy

• Communicate to Employees:CCK Organization Structure and StaffingCCK Mission CCK Core Values CCK On the Job BehaviorsCCK Key Business SkillsCCC Global Regulations CCC General Business Behaviors

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Intercultural Synergies

“Reality happens to be like a landscape possessed of an infinite number of perspectives all equally veracious and authentic. The sole false perspective is that which claims to be the only one there is.”

---Jose Ortega y Gasset---

• CCC Open Communications and

Transparency Lean Manufacturing Low Level Decision making Risk Taking / Outside the Box Value of Diversity Performance Based Rewards

• Korea Loyalty to Organization High Education / Training Work Process Discipline Team Oriented Activities World Class Manufacturing Data driven decision making

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Organization Issues 1999• Morale was low due to poor business results

• Weak HR Management in place.

• Employee identification with KKPC Culture.

• Lack of English communications skills

• Lack of western business culture understanding

• Employees fear - resulted in forming Union

• No use of Performance Based Compensation

• Union Employees wages were above Managers due to Bonus System

• Technical employees felt they lack career development opportunities

• Managers wanted to be differentiated from Technical employees.

• Employees expected immediate improvement in Salaries and other Benefits.

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Human Resource Strategy

Utilize Best Practices from within CCC Global and Korea to establish and

operate a Value Driven World Class Manufacturing Organization

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HR Integration Actions• Hire HR Manager with international experience and

excellent English communications skills.

• Develop Employee Communications Plan.

• Introduce CCC Mission, Core Values, On-the-Job Behaviors, Key Business Skills and General expectations.

• Revise Work Processes based on New Organization.

• Complete detailed Wage and Benefit Surveys

• Implement Employee Performance Evaluation and Development Process

• Implement Employee Performance Based Compensation Systems.

• Develop and implement Training Programs

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CCK Organization

S alesTeam

V P O f S a les

F in an ceTeam

C F O

S H & ETeam

H u m an R esou rceTeam

M ain ten an ceTeam

P rod u c tionTeam

Q u a lityTeam

E n g in eerin gTeam

S u p p ly C h a inTeam

ISTeam

V P O f O p era tion s

P res id en t

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CCK Mission

Create Value for our stakeholders by offering a compelling value package of products and services at competitive

costs in an environmentally responsible and safe way.

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CCK Core Values

SafetyQualityTrust

Confidence Teamwork

AccountabilityDoing What is Right

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CCK On the Job Behaviors

Promote Safety / Work EnvironmentFostering Teamwork

Being Flexible and Adaptive Creating OwnershipActing with Integrity

Fostering Open Communications

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CCK Key Business Skills

Using Sound JudgementDriving for Results

Focusing on the CustomerInvesting People

Knowing the BusinessBeing Innovative

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CCC Key Global Regulations

Code of Business EthicsNon-Discrimination Policy

Financial Regulations and ControlsTravel and Entertainment Policy

QS 9000 Quality Management SystemCCC Safety Policies

OHSAS 18001 Safety Management SystemISO 14001 Environmental Management System

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CCC Management Beliefs

• All employees are Responsible and Accountable for their Job Performance. Sub-Standard Performance will not be accepted.

• Your Career Promotions depends on your Performance and Capabilities not your Age, Seniority or your Education. This applies to all employees.

• Your Career Development Plan is your Responsibility.

• Compensation Systems will be Based on Performance.

• Management is responsible to ensure work atmospheres are enjoyable and based on mutual respect for all without any form of harassment or discrimination.

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Challenging Events

• Delay in hiring of HR Manager in 1999

• Union Executives in 1999 had no experience leading to poor negotiations and Union Chairman resignation and removal from Union.

• HR Manager resigned in 2000.

• Disciplinary action against 2nd Union Chairman leading to his resignation in 2000.

• 3rd Union Executive Team lack of experience and unreasonable requests in 2001 led to 20 day strike.

• 2nd HR Manager replaced 2001.

• Management lack of communications to Union prior to decision making on new Regulations.

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Lessons Learned

• Hire HR Manager prior to business start and ensure they have high levels of “Korean common sense” and Communications skills.

• Spend as much time on HR Performance as you do on Operations and Financial Performance.

• Communicate, communicate, communicate then communicate some more.

• Quickly implement “Supervisory Leadership” training for all managers.

• Do not underestimate need to consider Korean Cultural issues when new HR Regulations are implemented. Prepare prior to business start.

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Positive Developments • 3rd HR Manager hired in 2002 very stabilizing force.

• Management Employee Evaluation and Development Systems and Performance Based Compensation in place since 1999 and working well.

• Year End Bonus for all Employees based on Performance criteria.

• Promotion Systems for Management and Technical Workers tied to Performance criteria.

• Technical Workers promoted into Management.

• Successful Integration of all Key Global Work Processes and Regulations.

• High levels of Communications and Employee Participation

• High levels of Trust and Understanding now exist between Management and Employees.

• CCK viewed as a “Benchmark Company” within CCC in many areas.