Alcan Business Case Slides -- Robert W. Campbell Award

8/8/2019 Alcan Business Case Slides -- Robert W. Campbell Award

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2007ALCAN INC.

The Business Case for

EHS FIRST as Applied to AlcansNew Joint Venture Smelter in Ningxia, China

Simon LaddychukVice Pr esident EH S FIRST a nd Su st a inab ility, Alca n Inc .N athalie FortinM a nag e r-Environment, EHS FIRST

Alca n Inc .C hantal Westgate, Tom KosatskyM cGill Unive r sity


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A lcan at a Glance

Founded in 1902Today: A g loba l lea de r in ba uxite, a lumin a a nd a lumin um A top-r a nked provide r of en g inee r ed s olutionsa nd s peci a lty/f lexib le pa ck ag ing US$23.6 b illion (2006)Dow Jo nes Su st a inab ility Wor ld Inde x since 2003


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Global Presence

65 ,000 employees6 1 countries and regionsEHS FIRST Policy in 11 languages


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A lcan


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A lcan


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A lcan Process Map with Key Issues

Energy, Water, A uM, Waste, Health, Safety and Employee Engagement

Biodive r sity

Ba uxite r esid ue,

P M , Haz .

Ene r gy

Ene r gy

PAH

Ene r gy, So 2, GHG, P M , SPL. PFC ,

Haz . Ene r gy

VOC, OPI, Pro duct S te wa r dshi p

OPI, Pro duct S te wa r dshi p, M ob ile

Equ ip.


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EHS FIRST The C ase for Why?


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84% Reduction in Recordable C ases87% Reduction in Lost Time C ases Since 2001

2001 2002 2003 2004 2005 2006 2007

Ra te 5.59 5.04 3.30 1.95 1.51 1.16 0.79


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Rapid Growth: Distinct C hallenges

2006

a lgroupComb ina tion

Oct obe r 2000

Apr il 2003

V AW Acqu isition

Pechiney Acqu isition

Decem be r 2003

Ja nua r y2005

NovelisSp in-off

5

25

Net ope r a ting r even ues


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EHS FIRST Why C ommon Foundation?

Comm on la nguag e to dr ive contin ua l improvementThe lea de r shi p pr a ctices to delive r e xcellence a s well a s the technic a l kn owled ge Leve r ag e comm on processes a nd best pr a cticeswhe r e a ppropr ia te; invent once not (n) timesLeve r ag e lea r nin g a cross enti r e or ga niza tiona nd move to best pr a ctices qu ickly

Ab ility to move pe op le mor e e a sily within the or ga niza tion


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A World of Benefits

Red uced a ccidents, occ upa tiona l illnesses a nd envi ronment a l incidentsGr e a te r em ployee he a lth, mor a le a nd well-bein g- Red uced ab senteeismInc r e a sed productivity a nd prof itab ilityEnh a nced r e pu ta tion, ma r ket sh a r e a nd st a keh olde r r ela tionshi psRed uced liab ilities a nd ins ur a nce pr emi ums

Sa tis f y invest or cr ite r ia for EHS a nd improve a ccess to ca pita lS timula te devel opment a nd sh a r ing of EHSs olutions a nd best pr a cticesCont r ibute to our corpor a te gove r nin g

objective of M

a ximizing Va lue


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A wards 200 6- 200 7

One of For tune M agaz ines 200 6 MOSTA DMIRED

C OMPAN IES

In top thr ee compa nies ove r a ll a nd the lea ding compa ny in the met a ls a nd minin g indust r y g loba l clim a te ch a nge

2006 I nte r na tiona l S tevie Awa r d for BEST

C ORPOR ATE SO C IA L

RESPON

SIBILITYPROGR A M


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Building on Our C apabilities


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C ritical Few Elements


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C odifying the Learning


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What is EHS FIRST ?


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Proven Management System to C reateBusiness Sustainability

A IMS A lcans IntegratedManagement System four components EHS FIRST , C I,VBM, A P A

EH S FIRST S te a dily improving EHS p e rfor m a nceCI A ccele r a ting CI bene f itsVBM guiding meth odologyNe w pe op le component A lca ns pe op le a dva ntag e Inte gr a ting envi ronment a l, s ocia l a nd ec onomic e xte r na lities to u nde r st a nd r isk a nd devel opne w oppor tunities

Business SustainabilityMaximize value for our stakeholders


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EHS FIRST Knowledge C odification


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EHS FIRST The Starting Point

ManagementWhat we do!

Engag es the mindGets the r ight thin gs doneBa sed on tr a ns a ctionsPro duces product

LeadershipHow we do it!

Engag es the he a r tGets thin gs done the r ight wa yBa sed on commitment to va luesPro duces ch a nge


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EHS FIRST People in A ction


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EHS FIRST People in A ction


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EHS FIRST Training

A dvanced simulation techniques and role playused in training for Executives to shop floor


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EHS FIRST Training

A dvanced simulation techniques and role playused in training for Executives to shop floor


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EHS FIRST : The Business Integrator

Fa cilita tes a nd a ccele r a tes inte gr a tion dur ing M &As- Pow e rful unif ying for ce- Ra llies em ployees a round sh a r ed EHS

va lues, objectives a nd goa ls

App ly s a me high st a nd a r ds eve r ywhe r e Le a r n from e a ch othe r a nd build r es pectPechiney s uccess st or y in EHS


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The C ase

Y ang Xiaoping was a wagon pusher working for a contractor at the Alcan smelting complex in Ningxia,China. Before the creation of the joint venture,environment, health and safety ( EH S) practices at the facility were poor and record-keeping was virtually non-existent. Alcans EHS FIRS T system wasimplemented with the initiation of the joint venture:important changes in work practices and improvementsin health, safety and environmental indicators followed soon after. H owever, on January 12, 2006, Mr. Xiaoping

suffered a fatal injury when he was crushed between twoloaded wagons being pushed by hand into the combined

pedestrian and vehicular entrance of the complex.


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C ase Objectives

Cha nge ma nag ement: system a tic processThe ch a llen ge of inte r na tiona l joint vent ur es: ethn ocent r ism, ge ocent r icism - Cont r a ctor ma nag ement

- Co st a nd bene f its of ma nag ing st a keh olde r s e xpect a tions

Linkag e bet ween EHS a nd business pe rfor ma nce: EH S FIRST in a complex inte r na l a nd e xte r na l envi ronment

Appro a ch to a dd r essin g both sh or t te r m business pr ior ities a nd the longe r te r m goa ls of EH S FIRST


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A lcan Business Environment

Business strategy: Maximizing ValueLong term decline in the real price of aluminiumPressure to improve return on investmentC ompetition for other materials such as plasticsand steelC hanging demand of global customersC hina: aluminum companies adding smeltingcapacity: could lead to drop in aluminum price


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Location of N ingxia Smelter


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A lcan N ingxia Joint Venture

A lcan N ingxia jointventure: inception 200 4

Investment of $1 5 0 million

for 5 0% participation in anexisting pre -bake smelter

Strategic business moveto enhance A lcans

position in the worldsfastest growing economy


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N ingxia Smelter


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A lcans Joint Venture, January 200 4

1,300 employees. Young workforce.A t inception, low efficiency(as measured by aluminumproduced/electricity consumed)

Typical jobs in the smelter:Po t room a ttend a nt- Po t tendin g- Po t lining- Crucib le tr a ns por te r sCr a ne a nd vehicle dr ive r s

Anode ope r a tor Ca stin g ope r a tor sElect r ica l technici a n M ech a nic a l technici a nP ipe f itte r


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N ingxia Work Organizational C hart

De pu ty CEOShen gyu He

CEO Assist a nt Ama nd a Su n

HR M a nag e r Ha ib in Liu

Sa les a nd M a r ketin g M a nag e r

Gua ngdong Pa n

Pro cur ement M a nag e r

Dia nlin Chen

Im p. Exp. &. R M Pro cur ement

M a nag e r Ge or ge Zha ng

Anode M a nag e r Weiguo Wu

Eng inee r ing M a nag e r Li Guoch a ng

He a lth Sup e r vis or Tia n M iao

EnvironmentSup e r vis or Xia ping Li

Sa f ety Sup e r vis or Guy M en g

Fina nceDe pu ty CF OZha ng Na n

IT M a nag e r Shuling Li

CI M a nag e r Xuewei Liu

Log istic Cente r M a nag e r :Ya nwen Li

Administ r a tionSup e r vis or

Winnie Wa ng

CFO Ia n Br igg s

Comme r cia lDir ect or

Foste r Lee

EHS M a nag e r Liu Liping

CTOCla ude Tousigna nt

HR Dir ect or M orr is M u

Chie f Exec utive Off ice r Alexa nd r e Gomes

Aux ilia r y/UtilitiesM a nag e r

Hongb ing M u

Red uctionM a nag e r Qinghua Zhou


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Health issues related to smelting:Res pir a tor y e xpo s ur es to PAH , SO2a nd hyd ro-f luor ic a cidHe a t st r ess

Noise from pne uma tic po t ope r a tions, a nd a node production

As best os e xpo s ur eSkin e xpo s ur e to PAHEr gonomics of diff icult po st ur es, he a vy lif ting

N ingxia Health A spects


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Safety issues related to smelting:M ob ile e qu ipment a nd pedest r ia n s a f etyFa lls from hei ghtsConf ined s pa ceBur ns, e xplosionsEqu ipment f a ilur e

N ingxia Safety Issues


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Joint Venture Leadership

Leadership effectiveness N ingxia plant manager

Global leadership:Globa l mindsetT

ole

r ate

hi

gh

levels

of am

bigu

ity

Cu ltur a l a da ptab ility: em otiona l connecti on to p e op le from diff e r ent cultur es

Transformational leadership:Pro vided em ployees with a ne w vision tha t instilled true commitment

Reference: Organizational Behaviour, Pearson, 322-323


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Alca n: Le a r nin g Or ga nis a tionEH S FIRST : Ge ocent r ic- To be a r ec ognized lea de r of envi ronment, he a lth a nd

s a f ety e xcellence in eve r ythin g we do a nd eve r ywhe r e

we ope r a te .- Best pr a ctices from Alca n, ISO 14001 , OHSAS- Ba sed on: P la n Do C heck Act meth odologyLe a de r shi p: Ethn ocent r icS ta ff ing : Po lycent r ic

Dilemma: tr ansfe r abili ty o f bes t pr ac t ices?

Leadership, EHS FIRST and Staffing in N ingxia


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Dilemma: tr ansfe r abili ty o f bes t pr ac t ices? EH S FIRST a s a dr ive r of inte gr a tion

Ass umption of unive r s a lityCu ltur a l diff e r ences: Confucia n dyn a mismCou nt r ies diff e r in thei r r e a diness to a da pt or a dop t for eign model or to ma nif est NIH synd rome

Reference: Managing Across Cultures 2003 109-114

Leadership, EHS FIRST and Staffing in N ingxia


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Joint Venture as an EHS C hallenge

No EHS cultur e/v a lues be for e joint vent ur eLa ck of envi ronment ma nag ement a nd monitor ing systemLa ck of he a lth ma nag ement system: No infor ma tion

on pa st in jur iesLa ck of ba sic pe r s ona l pro tecti on e qu ipment:- Sa f ety g la sses a nd prop e r r es pir a tor y pro tecti on- La ck of pla nt a ir conditi onin g or coo l wa te r

in the wor ksh op


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A lcan Joint Venture

Benefits of joint ventureGloba l r e pu ta tion, br a nd imag eLe a de r in corpor a te citizenshi pEnvironment a l a nd s ocia l s ust a inab ilityQua lityDec r e a se in jur iesDevel op ing em ployees ca pab ilities

Inc r e a sin g e ff iciency


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Issues to address going into the joint ventureChinese cultur eLa nguag e: high vs . low conte xt cultur ePa r ticula r ist vs . unive r s a listEmployees level of skillsHighe r tole r a nce to r iskJo int vent ur e pa r tne r s va lues a r e prof itab ility a nd low costM a nag ing contr a ctor s

Line ma nag e r s conside r ed EHS a s a f ety de pa r tment job

Reference: Managing across cultures, 2003, 109-114

Dilemma: How can Alcan succeed in ins t alling an EHS cul t u r e as p a rt o f a jo in t v en t u r e in N ingxia?

N ingxia Joint Venture


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Sca nnin g theenvi ronment

Re fr ee ze

Assess curr ent situa tion

r ec ognize ga p

S et objectives

Cha nge ta ctics

Unfr ee ze beh a vior sCha nge

Eva lua te,ma ke necess a r y

a d justments

Re f e r ence: The New M a nag ing Huma n Res our ces, M cGill Unive r sity, 2004



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Ca n be inc r ement a l, r a dic a l, pla nnedDr iving a nd r esistin g for ces of ch a nge

System a tic a ppro a ch to ch a ngeEmployee involvement



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Some actions:Tr a ining 59 ,356 p e r s on-hour s of EHS in 2004a nd 72 ,394 hour s in 2005 or 4% of tr a ining time pe r em ployee .

Improvement of fur na ce ope r a tions: elimin a tion of fr e quent f ir esDist r ibution of PPE a nd tr a ining in its useWor king on a Beh a viour a l Accident Pr eventi on Pro cess (BAPP)



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C ompeting priorities:Pro ductivity, qua lity, ope r a ting costs, prof itab ility a nd EHS needs, la ck of st rong technic a l em ployees since Ningxia is in a r em ote loca tion

Dilemma: gi v en th ese c o m p e t ing pr i or i t ies, to wh a t deg r ee can EHS be FIRST ?



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How can EHS be given competingbusiness priorities?

Ha ving a visionLine ma nag ement foncti on

EH S FIRST in st r a te g ic pla nnin g a nd decisi on m a kingEHS is a lea de r shi p competency: inte gr a ted into

Alca ns Pe rfor ma nce a nd Ca r ee r M a nag ement Ea ch em ployee g iven s peci f ic EHS o bjectives

Compens a tion a nd r ec ognition ba sed on EHS p e rfor m a nce



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C ompeting Priorities

How can EHS be given competing priorities?The belie f tha t qua lity, productivity, prof itab ility a nd EHS e xcellence a r e mutua lly s uppor tive objectives, a nd a lign beh a viour s a round tha t belie f.


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Managing stakeholders expectations:Employees, sh a r eh olde r s, cust ome r sPu b lic inte r ests group s, union, gove r nmentCo ntr a ctor s, M a ison Alca n (due diligence r e qu ir ement ), comm unities

C ontinuous improvement in health and safetynot totally in managements hands

Dilemma: c o s t and benefi t s o f managing s t ake ho lde r s ex p ec t a t i o ns?



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Dilemma: c o s t and benefi t s o f managing s t ake ho lde r s ex p ec t a t i o ns?

Red uction in wor ke r s compens a tion costsRed uction in em ployees gr iev a nce

Red uction of da ys lost Red uction of ins ur a nce pr emi umSa ving in productivity due to r ed uction of lost time incidentRed uction of envi ronment a l footpr int with improvement of r es our ces use a nd r ed uction of emissi ons



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C ontractors Workers

C ontractors workers: 30 % at the time of joint ventureLa ck of tr a ining , low ed uca tiona l level, loca l cultur e of g iving ha r d ma nua l wor k to cont r a ctor s, high tur nove r r a te, pa r ticula r ly for s peci a l pro jects s uch a s const ruction

Above f a ctor s inc r e a sed r isk of a ccidents to themselves a nd othe r s


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C ontractors Workers

C ontractors workers:Cont r a ctor em ployees a r e not a wa r e of pla nt rou tines, s a f ety rules or eme r gency proced ur esCont r a ct em ployees of ten la ck skills a nd e xpe r ience

due to fr e quent job rota tion a nd tur nove r


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The C ontractor Dilemma

Rates of severe workplace injuries are morecommon in contractors than regular employeesat aluminum smelters. However, overall injuryrates appear similar (could this be due toreporting bias?)*

Using contractor employees provides flexibilityand lower costs

Suggest an optimal contacting policy in a smelter where EHS is FIRST

*Re f e r ence: The a luminum indust r y in Br az il, M .Arrruda


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Suggest an optimal contacting policy in a smelter where EHS is FIRST:

Cont r a ctor selecti on sh ou ld be ba sed on a n ev a lua tion of thei r pa st EHS p e rfor ma nce a nd ca pab ilitiesEHS ru les a nd e xpect a tions must be comm unic a ted to the cont r a ctor Look a t e a ch cont r a ctor s EHS p e rfor ma nce: sh ou ld be monitor ed a nd f eed ba ck r e por ted to the contr a ctor

Employee tr a iningRe qu ir ement to cond uct haza r d identi f ica tion a nd r isk a ssessment pr ior to be g innin g wor k

The C ontractor Dilemma


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Ob ta ined ISO 14001 a nd OHSAS 18001 ce r tif ica tion within 11 monthsPhysic a l ch a nges ma de to the pla nt:- Fencin g the f a cility

- Redesi gnin g ent r a nces a nd corr idor s to kee ppedest r ia ns a wa y from moving e qu ipmentS ta r ted me a s ur ing ga se ou s f luor ide emissi ons on the smelte r roof w ith Alca ns st a nd a r dsGHG r ed uced to 66% fro m pr e -JV levels

N ingxia A ctions and Results


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N ingxia EHS FIRST Policy


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LTII C ase Rate

Recordable C ase Rate

200 6 Highlights Achieved 2,2 million hour s withou t r ec or dab le a ccident in Fe b 07 , f ir st eve r in APM G hist or y3,2 million hour s withou t lost time a ccident (Apr il 07)S trong em ployee -involvement BAPPinitia tive implement a tion st a r ted

0.54

0.20

0.000.00

0.50

1.00

2005 2006 2007 Q1

1.08

0.47

0.20

0.00

0.50

1.00

1.50

2.00

2005 2006 2007 y t

N ingxia A ctions an Results


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Alcan Business Case Slides -- Robert W. Campbell Award

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