Overview
Management Report
Looking back on the past year, the steel industry has encountered numerous difficulties and challenges. Although there has been a slight easing of the COVID-19 pandemic, global inflation and the tightening of monetary policies by central banks have impeded economic recovery. In addition to the ongoing Russia-Ukraine war, tensions have further escalated due to the Israel-Hamas conflict, gradually increasing the geopolitical risk, resulting in a continued slowdown in overseas steel demand. The real estate market near mainland China is currently facing turbulence, which is impacting investment. Additionally, there is a lack of control over crude steel production, leading to an oversupply situation that continues to intensify, further postponing the steel market's turnaround. The quantity and price have significantly decreased, which has had a severe impact on sales and profitability performance. In light of the significant challenges presented by the external environment, Dragon Steel recognizes that the key to achieving sustainable operation lies in the relentless pursuit of excellence and continuous improvement of economic, environmental, and social benefits. The key tasks that are relevant are summarized as follows:
Economic
Despite the challenging operating environment, all employees of Dragon Steel continue to work diligently in their respective positions, aiming to lower costs, enhance quality, and explore high-grade steel markets. We implemented 350 action plans, resulting in a cost savings of NT$3.52 billion, which is a historic high at a rate of 113.5%. Additionally, we submitted 5,003 innovative improvement proposals, resulting in a total benefit of NT$8.76 million. In terms of quality enhancement and market expansion, we have collaborated with the group to implement a refined steel product policy. This involves improving the order qualification rate and promoting technical marketing. These initiatives not only contribute to the stability of customer confidence and the advancement of the steel structure industry, but also generate market demand. According to statistics, the overall order qualification rate has reached a new historical high of 95.05%. The high-grade product ratio stands at 46.7%, showcasing our commitment to becoming a ‘high-value refined steel plant’.
Environmental
Dragon Steel is actively addressing climate change and carbon reduction issues. In 2007, the ‘Energy Conservation Committee’ was established to promote energy and water conservation. In 2022, the ‘Energy Conservation, Carbon Reduction and Carbon Neutrality Promotion Group’ was established, setting mid-term goals of reducing carbon emissions by 7% in 2025 and 25% in 2030. The long-term goal is to achieve carbon neutrality by 2050.
We have made significant progress in energy conservation and carbon reduction. In 2023, our average annual energy-saving rate reached 3.26%, and we successfully completed all 35 energy-saving projects. As a result, we achieved energy-saving benefits of 35,026,904 kWh, leading to an annual carbon reduction of approximately 17,338 metric tons of CO2e. In addition, in accordance with the government and group's renewable energy development policy, solar photovoltaic facilities are being installed on the roofs of the factory buildings to promote the development of green energy. The installation of floating solar energy equipment helps to minimize direct sunlight exposure to the water surface, thereby reducing water evaporation and effectively conserving water resources.
In terms of water conservation, process improvements are implemented to optimize scheduling and reduce water usage, ensuring more efficient utilization of water resources. Dedicated to increasing the reuse cycles of every drop of water. After it can no longer be reused, it is used for irrigation or washing, achieving a water recycling rate of 98.6% or higher. On the other hand, we are actively developing multiple water source pipelines. This includes signing green loans and collaborating with the Taichung City Government to promote the ‘Futian Water Resource Recycling Center Effluent Recycling and Reuse Project’, establishing a reclaimed water plant in the Taichung Harbor area capable of processing 58,000 tons of effluent daily. By using reclaimed water, it will help increase Taiwan's resilience in response to water resource shortages by diverting precious tap water resources for domestic use and fulfilling corporate social responsibility.
Dragon Steel has achieved success in carbon reduction, energy conservation, and environmental friendliness. In 2023, it was awarded the ‘Gold Award’ in the ‘Energy Efficiency Benchmark Competition’ organized by the Ministry of Economic Affairs, and the ‘Green Energy Contribution Award’ in the ‘Taichung City Sunshine A+ Competition’.
Chairman of the Board
President
Social
Ensuring the safety and wellness of our employees and collaborators is our top priority at Dragon Steel. It is also a critical factor that affects our production and operations. Therefore, employees and collaborators work together with the goal of achieving zero disaster, dedicating themselves to creating a safe and healthy work environment. In 2023, we continued to implement integrated education and training, promote mobile management of work safety and the Five Lines of Defense program. We strongly encourage proactive problem identification, and the frequency and severity of employee disability injury were both zero, reaching record lows in recent years.
In terms of caring for employees, Dragon Steel participated in the Happy Workplace Evaluation in Taichung City for the first time and was recognized in five major areas: ‘Harmonious labor-management relations,’ ‘Healthy workplace environment,’ ‘Friendly labor system,’ ‘Inclusive and barrier-free workplace,’ and ‘Sustainable career development,’ and was awarded the prestigious ‘Five-Star Award.’ In the future, we will continue to uphold the spirit of ‘steel as the foundation, people as the core’ and continue to move towards a better and happier enterprise.
In terms of neighborly aspect, we remain committed to the principles of ‘Implementing localization of employment, supporting local education and culture, and sponsoring charitable initiatives,’ actively contribute to the betterment of society. In 2023, as the COVID-19 pandemic subsided, we expanded our support to our fellow villagers and neighbors. This included providing various forms of emergency relief and procurement of local agricultural products. Furthermore, to foster cultural development, we arranged career planning seminars for high school students, sponsored reading programs, and encouraged the advancement of women in the natural sciences and technology. These initiatives are designed to give back to the local community, creating specific initiatives to foster positive cycles and drive societal progress.
Future outlook
Looking ahead to 2024, the World Steel Association predicts a global steel demand growth rate of 1.9%, which is an increase of nearly 34.6 million tons compared to 2023. The future seems to be moving in a positive direction. In response to changes in the external business environment, we have revised our business policy to focus on ‘Occupational Safety and Environmental Protection, Low Carbon Sustainability; High-quality Steel Products, Market Expansion; Smart Steel Plant, Digital Transformation; Cost Reduction and Profit Increase, and Lean Innovation.’ In addition, starting in 2024, we will introduce two new production indicators: the ratio of electric furnace high-quality steel products ≥ 13.6% and the construction of four intelligent plants. These additions demonstrate our commitment to moving towards high value-added and intelligent steel plants. We encourage a shift in mindset, embracing change and innovation, and actively overcoming current challenges to drive continuous improvement. In the future, Dragon Steel will collaborate closely with all stakeholders to collectively strive for and achieve outstanding results in sustainable operations.