SCG Factsheet · PICMET ’10 Keynote – Phuket, Thailand – July 20, 2010 •3 SCG’s Vision Our People… Drawing the Future Byyy the year 2015,,g SCG will be well recognized

PICMET ’10 Keynote – Phuket, Thailand – July 20, 2010

•1

Kan Trakulhoon

President & CEO

Managing Innovation and

Technology of SCG, A Case Study

11© SCG 2010 1© SCG 2010 1

July 19, 2010

PICMET Conference

SCG Factsheet• Founded in 1913 by King Rama VI, and listed on the Stock

Exchange of Thailand since 1976.

• Major shareholder: The Crown Property BureauMajor shareholder: The Crown Property Bureau

• Business Units in SCG: Cement, Chemicals, Paper, Building Materials, Distribution, and Investment

• Companies: Over 120

• In 2009, Total net sales: $7.2 Billion

22© SCG 2010 2© SCG 2010 2

• Total employees: 28,568


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SCG Products

33© SCG 2010 3© SCG 2010 3

Evolution of Business Strategies

Entry into new

1980’s - 1990’s

Entry into new ind stries

Organic growth in

construction

1913 - 1970

Organic Growth in construction

material

1970’s - 1980’s

Take over of “ailing”

1998 - 2003

Concentration on Competitive

2004 - Onwards

Regional Moves & Inno ation

“Joint venture partner of choice”

Cement Construction

Materials Steel

industriesindustries

““Historic roots”

Cement Construction

Materials Steel

material industries

material industries

“Opportunistic investment in

assets”

Cement Construction

Materials Steel

gindustries

pPlatforms

After the crisis“Restructure

Business Unit”

Innovation

High Value Added products and

services

44© SCG 2010 4© SCG 2010 4

Ceramics Paper &

Packaging

Petrochemicals Automotive Electrical

Ceramics Paper &

Packaging


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SCG’s VisionOur People… Drawing the Future

By the year 2015, SCG will be well recognizedy y , gas an innovative workplace of choice,

and a role model in corporate governanceand sustainable development.

We see SCG as a regional market leader,t ib ti t th t i bl

55© SCG 2010 5© SCG 2010 5

contributing to the sustainable progressof ASEAN, and the local communities where

SCG operates.

© SCG 2010

SCG Competitive Landscape

The old playing field

•Territory: Domestic

•Product: Commodity-based

•Focus: Cost leadership

The new playing field

•Territory: ASEAN

•Product: High Value Added products/services

•Focus: TechnologyTechnology, , Green Green InitiativeInitiative,, Brand

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• Increase customer satisfaction

• Differentiate from the competitors

• Compete on Value to Customers, not price

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Innovation through R&D helps us transform commodities to unique high value added products and services

HVA Net Sale (Billion Baht)

8

39

60

18

55

0

20

40

60

80

2004 2007 2008 2009 Q1/2010Year

% HVA Net SaleTotal Net Sale

27%25%25%

30%

HVA Contributed almost 30% of SCG total sales in Q1, 2010

88© SCG 2010 8© SCG 2010 8

Note: Including associates

Year

4%

19%17%

0%

5%

10%

15%

20%

25%

2004 2007 2008 2009 Q1/2010


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R&D Expenditure 2007

Country R&D Expenditure as % of GDP (2007)

% of R&D Expenditure contributed by

Public Private

Thailand 0.24 57% 43%Tie

r

Malaysia 0.63 28% 72%

China 1.34 33% 67%

Singapore 2.36 36% 64%

Taiwan 2.52 35% 65%

Korea 2.99 23% 77%

ce

ies

Fir

st T

ier

Sec

on

d

99© SCG 2010 9© SCG 2010 9

Japan 3.33 24% 76%

Finland 3.48 29% 71%

© SCG 2010

Ad

van

cC

ou

ntr

i

Source: 1. OECD, Main Science and Technology Indicators, May 2007

2. Malaysia Science and Technology Information Center (MASTIC)

3. NRCT & NSTDA

How to create effective HVA products

• Exchange program of R&D personnel from public to private sector to understand need of private sector and gain field experience

Most of R&D personnel in Thailand are still in Non‐Business segment

1010© SCG 2010 10© SCG 2010 10

Source: IMD


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SCG Innovation

Create value to our customers, employees,

partners, and shareholdersp ,

Focus on both incremental improvement and breakthrough of products, process, and

business model

1111© SCG 2010 11© SCG 2010 11

Enhance creativity by inducing Inno-Culture & Atmosphere

SCG Innovation Clear Business Direction and Leadership

Inno-Culture

•Open mind

•Think out of the box

•Assertive

•Risk taking

•Eager to learn

Continuous Improvement

R&D

•Our own technology

•Own IP (Intellectual

Property)

High Value Added

Products and Services

1212© SCG 2010 12© SCG 2010 12

Effective R&D and Technology Management

Human ResourceR&D


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Innovation Management System R&D

• R&D Project Management

• Open Innovation

Fit & St t i

Collaboration IP

• IP Creation

IT Infrastructure

g

• Portfolio Management

• Resource Allocation

• Human Resource Management

• Fit & Strategic Partners

• Community of Practice

• IP Protection

• IP Commercialization

1313© SCG 2010 13© SCG 2010 13

R&D for HVA Staff Our People

• R&D for HVA Staff

By 2015…with the full involvement of our people about 50% of our revenues will come from HVA

Capability Development

500

600

700

800

900

1,000 2007

2010

882142%

• R&D for HVA Staff

- 2010: 882 persons (PhD 40 persons)

- 2007: 364 persons (PhD 9 persons)

Recruitment

•Project Based Recruitment

•Innovative Organization Brand

•PhD Internship

Networks and Collaboration with leading

1414© SCG 2010 14© SCG 2010 14

0

100

200

300

400

364

142%

2007 2010

•Networks and Collaboration with leading Universities

Development

• Technical Mentoring program

• Development Program for R&D Staff


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SCG Technology ManagementObjectives:

• Create capability to develop own technology & IP

• Promote visibility & critical mass of R&D careery

•Encourage synergy among business units

Structure:• R&D Centers at business units

• Corporate Technology Office (CTech) at SCG Headquarter

•Technology Management Committee

S t Ali t b t b i t t

1515© SCG 2010 15© SCG 2010 15

System: Alignment between business strategyOrganic

growth in construction

material industries

Business Strategy

Organic growth in

construction material

industries

Technology Strategy

Organic growth in

construction material

industries

R&D and IP Strategy

SCG R&D and Technology Scheme

Pulp/Paper/PackagingPulp/Paper/Packaging

Corporate Technology Corporate Technology OfficeOffice

• Strategic R&D Mgt• Cross BUs Tech. Roadmap• Strategic IP Mgt• Alliance Development

Business R&DBusiness R&D• Product Line

Extension• Short, medium and

long term business R&D

Suppliers Customers

Corp. Tech. OfficeCorp. Tech.

Di t

Cement Cement Building Building MaterialsMaterials

RD&T Director

• New Technology/ Business

Tech. Mgmt. Committee

1616© SCG 2010 16© SCG 2010 16

Director

ChemicalChemical DistributionDistribution

Universities/Research Institutes

Government


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Thailand & Global Collaborationwith Universities and Research Institutes

No. of Universities and Institutes

Domestic 13

International 18

e g Georgia Tech MIT U of Tokyo

Activities e.g.

- Collaborative R&D projects

- SCG scholarships for various universities in Thailand

- Industrial/ Business internship

R h h d

1717© SCG 2010 17© SCG 2010 17

e.g. Georgia Tech., MIT, U of Tokyo, Tokyo Inst. Tech., NSTDA,

- Researcher exchange and training program

Inno-Products and Inno-Awards

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• SCG Chemicals developed PE 100+ Pipe, flexible & no

rust pipe – The first in ASEAN and the second in Asia

SCG Chemicals

1919© SCG 2010 19© SCG 2010 19

• Tiger Mortar: Color render cement

SCG Cement

2020© SCG 2010 20© SCG 2010 20


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SCG Cement• Agricultural Drying Yard Concrete (CPAC)

• An innovation product to accelerate drying of agricultural products on concrete floorp

• Shorten drying period of agro-products

2121© SCG 2010 21© SCG 2010 21

• Smart wood: Wood substitute products

SCG Building Materials

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Own SCG HEIM House within 3-4 months

SCG HEIM: Home Technology for Superior Quality of Living

Low Life Cycle Cost e.g. utility cost, maintenance

Superior Technology Only at SCG HEIMM d l

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The 3Cs Concept for Better Living: Concept, Confidence, and Convenience

Modular system

Air tightness system

Insulated Double – Glazing for windows

New exterior wall

Air factory system

• The First Innovative, Environmental Friendly Printing and Writing Paper

SCG PaperInnovative Printing & Writing Paper

Printing and Writing Paper

• With Eco Fiber, Idea Green reduces the usage of Tree by 30%

• Idea Green received MATT Award by Marketing Association of Thailand in November 2008

2424© SCG 2010 24© SCG 2010 24

*Marketing Association of Thailand

• Idea Work, Super Premium Quality Office Paper with New Matrix Fiber Structure and Nano Coating Formula


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SCG Paper: EucalyptusNew hybrid-strain development achieved in 5 years(normally 11 years)

Properties:Properties:– Resist to plant disease, arid climate

– Suitable for plantation on hard soil

– Fast growing with higher yield

– High wood content for pulp production

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• In-dept & Inspiring People

• Efficient & Innovative Process

SCG Experience: SCG Flagship Store

• Inspiring Physical Environment

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Green Initiative is a key trend in the world

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• eco = Ecology + EconomyBalance and Sustainable relationship of economy, society

and ecology• value

SCG eco value

Value for stakeholders, society and environment received from innovative products and services

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Cool Roof System Activ-Flow: Reduce energy in formation process

Elephant Cement: Corrosion Resistance

Green Read: Eye-cared Paper

> 80 products with sales of 34,000 Million Baht (14% of total sales)


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SCG eco value

Reduce Green House Gas and fuel consumption by 3%/Transportation ton

Text Pro Creamy (for textbook printing): Low weight and low light reflection for long reading, and lower CO2 from production process

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Exhibition (from Corrugated Containers): Furniture for exhibition, e.g. shelf and podium

SCG eco value

Heat InsulationSound Insulation

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In addition to saving energy, the product contains recycled contents greater than 80% by weight (100% natural sand substitution)

The product contains recycled contents greater than 70% by weight (100% natural sand substitution)


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• Alignment between business and technology strategy is

important.

Summary

• A company without R&D will hardly survive in the future.

• Smart R&D project give rise to innovation.

• Company’s R&D will not be sustained without external

science and technology collaboration (University and

Research Institutes).

3131© SCG 2010 31© SCG 2010 31

esea c s u es)

• Government must play a vital role in nurturing R&D

activities in the country

From SCG Experience

“R&D is a source of competitive advantageR&D is a source of competitive advantage, wealth, and growth of SCG… and will be a solid foundation for future economic growth of Thailand and ASEAN.”

Kan Trakulhoon

3232© SCG 2010 32© SCG 2010 32


•17

Thank you

3333© SCG 2010 33© SCG 2010 33

Documents

SCG Factsheet · PICMET ’10 Keynote – Phuket, Thailand – July 20, 2010 •3 SCG’s Vision Our People… Drawing the Future Byyy the year 2015,,g SCG will be well recognized