KLET 1 YEAR OF new vsb - Vallourec · 1 YeAR of neW VsB specIAL booKLeT 9 Actions relAted Actions relAted to to VAlues tHe neW Mission Adaptation of the finishing floors serving as

1 YEAR OF new vsb

Special Booklet

vallourec soluções Tubulares do brasil – The new vsb – celebrates one year after

the merge of the Jeceaba and Barreiro units which took place in October 2016.

A robust action plan is being implemented bringing significant results to the

management as well as the corporate culture of the new company.

2 1 year of new vsb | Special Booklet

1-Introduction

n ovember 1st, 2017 marks one year of the establishment of Vallourec Soluções Tubulares do Brasil – The New VSB.

To guarantee the success of this merge and the competitiveness of both units, The Program of Transformation for the New VSB was formulated. This program defines 18 strategic projects.

The main challenges of The Program were:

InDUsTRIAL AnD ADMInIsTRATIve sYneRGIes

to optimize costs and improve processes.

seTUp of A coMpeTITIve hUb of pReMIUM* soLUTIons In bRAZIL

sYsTeMs InTeGRATIon

for management, billing and process control and improvement.

ADJUsTMenT of The coMpAnY’s coMpeTITIveness

to new price margins in accordance to international levels.

DefInITIon of A RobUsT cULTURAL TRAnsfoRMATIon pRoGRAM

as a fundamental backdrop and based on the following archetypes: Realization; One Team; and Customer Focus, having widespread values and an Inspiring Mission.

*Use the words and meaning glossary at the end of this book

31 year of new vsb | Special Booklet

These examples reflecT our values:

• RespecT foR peopLe

• InTeGRITY AnD TRAnspARencY

• sTAnDARDs AnD pRofessIonALIsM

• coMMon coMMITMenT

• peRfoRMAnce AnD ResponsIveness

2-Synergies,Adjustmentsand TeamIntegration

In many superintendencies there was an integration of teams under one manager for both units, Jeaceaba/Barreiro. These initiatives brought about a greater integration among the teams and opened the way for new processes that are less bureaucratic, faster, fairer and more effective.

Unification of superintendencies in the production, maintenance and logistic areas. These three strategic areas were managed by 8 superintendencies. They were reduced to 3 superintendencies.By centralizing management, it was possible to have gains in cost reduction, uniformity and expediency in decision making related to synergies and integration of personnel, processes and operations. One Team!

GAIns wITh UnIfIeD MAInTenAnce Maintenance cost are extremely relevant in industrial processes. The unification of the maintenance departments, as well as the training of inspectors to work at both units, brought about synergies resulting in many gains. Here are some examples: reduction of spare parts inventory as well as know-how and best practice sharing. Lubrication tests and tool cooling were standardized in both units. The same was done with other raw materials such as grease, packaging and thread protectors.

woRK sTATIons In opeRATIons AT boTh sITesBlast furnace, steel making, Q and T and Threading operators are being prepared to work in both units to balance the productive capacity of both plants using our existing work force.

JoInT RoUTIne MeeTInGsConsidering people working in both units as one team, routine meetings between management and teams have taken place in all productive areas.

g

g

g

saFeTY Is our GreaTer value


3-SystemsIntegration

A complete integration of the management systems of the new company was made with the intense participation of the Information Technology, Logistics, Planning, Purchasing and Finance departments. This integration posed one of the program’s greatest challenges since the main goal was the continuity of the following processes: production, billing and management.

ThemaIN

INTeGraTeD CorPoraTe

sYsTeMs are:

sApMain management tool

used by practically all departments in the

company.

coRpoRATee-MAILsStandardization of e-mail addresses.

bpsStandard in the Planning

Department it was not used by the Jeceaba plant.

ApoLinked to production planning.

InTRAneTAdjustments of the Vallourec Inside Brasil Page.

Set of tools for management reports and KPIs.

bUsIness InTeLIGence


Ls 3.0 (cosTs ReDUcTIon pRoGRAM) – TUbe cosT peR Ton

All sides participated greatly in the sharing of ideas in Jeceaba plant. We are on the right way but we still need to make a lot of effort to reach the final 2018 target. It is important to emphasize that this is a program of The New VSB and should be embraced by all employees in both plants.

pRoJecT RoTA 108 – chARcoAL cosT peR Ton

As the LS 3.0, the Rota 108 has counted heavily with the participation of all people involved through their cost reduction ideas and their implementation in Vallourec Florestal.It is very important that this target be reached so that charcoal can regain its competitiveness for the production of pig iron.

4-Cost Reduction

Cost reduction represents a fundamental factor for the success of the whole transformation plan of the company.Considering the situation of the oil and gas market and substantial reduction in the profit margins of our products, to compete in the international market it is paramount that all the company’s employees make a tireless effort in the search for cost reduction.Only by reaching our cost reduction targets will the company be able to maintain itself as a global supplier of products and services.

In this context, various initiatives have already been implemented and there are still many challenges ahead.

TAX cReDIT RebATe

This is an important action to balance the difference in profile between the Jeceaba plant (export profile) and Barreiro plant (domestic market supplier).

AvoIDeD InvesTMenTs

By concentrating the production of steel in Jeceaba and readjusting the number of operating blast furnaces for the future, it was possible to optimize industrial investments and also investments in Florestal.


5-Cultural transformation

As a backdrop for the integration and setup of the new company, the need to establish a cultural change program was diagnosed. This way the employees would feel involved and engaged in the objectives and challenges of the new company.

During the program, 10 Lever Groups were assembled to meet regularly and discuss relevant issues related to the cultural change. From these Lever groups an extensive action plan took shape and is being implemented in the company using 7 Knowledge Blocks. These groups are regularly followed up by the Program Management and a Steering Commitee.

These Blocs of Knowledge are linked to the following subjects: Human Resources, Controlling and Planning, Purchasing, Know-How, VMS (Vallourec Management System), Communication and Quick Wins, which are actions with expected quick returns.

The general target was to improve the way employees see the company. Bringing them to see the company as a whole and not only their own departments. Create better connections among people, areas and plants according to a common commitment, aligned withthe new company strategy.

A new mission was established for a new company, based on values to be followed by all.

Besides this, the pillars of the new desired culture were based on the following archetypes: Realization, Custumer Focus and One Team.

The Mindset Map of the Program was launched as a tool to disseminate the cultural change in a simple way to the employees. Company leaders were trained and given resources to improve communication and the handing down of information between the strategic area and the operational area.

seal Of The cUlTUral TraNsfOrmaTION plaN chOseN IN INTerNal cONcOUrse WITh The parTIcIpaTION Of The NeW VsB emplOYees. CoNCourse WINNer: KeNIa MoraIs (eNGINeer Of The search aND DeVelOpmeNT area)


Understand, practice and be part of this change

MINDSET MAPCULTURAL TRANSFORMATION PROGRAM

BUILDINGTOGETHER OUR

COMPETITIVENESS

To be recognized as a Premium tubular solutions provider trough industrial excellence,

cutting edge technology, sustainable management and cultural diversity, ensuring a

highly competitive position in Brazilian and International markets.

CULTURAL RENOVATION

SymbolsSystemsBehavior

BEHAVIOR(IS DETERMINED BY)

Self KnowledgeFeelingsBeliefs

TO BE A LEARNERNot to be arrogantHave self-awareness and curiosityBe available to learn

ARCHETYPESRealization

Costumer FocusOne Team MISSION

Respect for PeopleIntegrity and Transparency

Standards and ProfessionalismCommon Commitment

Performance and Responsiveness

OUR VALUES

Safety is our greater Value


6-Cultural Change/Actions implemented

QUIcK wIns –

exchange of outdoor signs in Jeceaba.

Inauguration of the chat with Directors in the production areas.

Improvement in the format of internal communications.ex. organograms.

Reduction of private parking spaces in the plants.

standardization of entrance rules, uniform cleaning and ways of working in both sites.

Development of cultural change Mindset Map.

100% of The 72

plaNNeD acTIONs Were concLUDeD

IN march 2017


Actions relAtedto VAluesActions relAted to

tHe neW Mission

Adaptation of the finishing floors serving as solution providers. ex. Meeting petrobras contract requirement.

products industrialization and “premiumization” in the Jeceaba plant.

Reaching bold cost reduction targets aiming at international competitiveness.

g

g

g

RespecT foR peopLe

• Prior announcement concerning the shut down of the Barreiro steel mill.

• Relocation of both Jeceaba and Barreiro teams.

• Continuous improvement of cascading of strategic information at all levels.

• Uniformity of treatment for employees in both plants.

sTAnDARDs AnD pRofessIonALIsM

• Improvement in the establishment of corporate and individual targets.

• Improvement in the follow -up of targets.

• Common effort in the objective of “doing more with less”.

sAfeTY Is oUR GReATesT vALUe

• Unification of safety management in both sites.

• During the integration process there was no negative impact in the safety indicators.

coMMon coMMITMenT

• Proposal to adopt LS 3.0 project as Corporate and not only in the Jeceaba plant.

• Unification of organizational structures in both plants.

• Unification of systems, symbols and behaviors.

peRfoRMAnce AnD ResponsIveness

• Reaching performance targets as planned.

• Review of flows, processes and compliance to norms.

• Broadening of the Lean tool in several departments.

InTeGRITY AnD TRAnspARencY

• Law abidance in the merge process of the plants.

• Providing clear information to all stakeholders about the process including entities such as CADE, Commercial Council, City hall, State and Federal governments, besides adjustment of licenses with environmental agencies.

• Continuous improvement of cascading of strategic information at all levels.

• Routine meetings with teams from both units.

• Opinion survey in the production areas.

• Chat with directors in the production areas.


Actions relAtedto ArcHetYPes

ReALIZATIon

• Reaching performance targets as planned.

• Achievement of actions planned in the Transformation Program.

• Achievement of actions planned in the Lever Groups and Blocks of the Cultural Transformation Program.

• Achievement within plan of cost reduction targets.

cUsToMeR focUs

• Analysis of flows and processes for the improvement of internal and external customer services.

• Use of the Lean management tool to gain in performance.

• Announcement of the merge between the companies to customers and suppliers

• Reduction of lead time of industrial processes between departments and final customer.

Among the many upcoming actions in the Cultural Transformation Plan, the following actions should occur in the upcoming months:

Removal of indoor and outdoor signs with the v&M brand in the barreiro plant.

Unification of the production area uniforms for both plants.

change in badges and badge holder cords, with vallourec and vsb brands, standardized for both plants.

Announcement of the vallourec and vsb brand usage rules in accordance with the instruction manual.

one TeAM

• Integration of VSB and Vallourec brands in the company’s communication.

• Sinergy among production, maintenance and logistics superintendencies and other support areas.

• Unification of management, billing, controlling and processing systems.

• Standardization of the communication channels in both sites. Ex. Bulletin board, Internal newsletter, Portal Vallourec Inside Brazil, etc.

• Sharing complementary experiences – professionals in both units.

• Significant increase in the personnel circulation among units within the group.

• Unified inventory management.• Standardization of basic basket.• Lavor’s service in Jeceaba.• Standardization of email addresses to:

@vallourec.com.

— UPCOMING ACTIONS FOR THE vALLoURec AnD vsb bRAnDs

g

g

g

g

GROUP WORKER

NameSURNAMECompany’s Name City PN: Record:


Focus on thework groups

7


7 - Highlights Work Groups

FrameworkAgreement

hUDson coUTo

José MáRcIo cAsTILLo

Legal Compliance and Document organization.

Facilitate legal transaction with NSSMC partner.

Facilitate legal transaction with CADE, Banks, Commercial Association, City Hall, State and Federal Government and environmental agencies.

Setup of Vallourec Soluções Tubulares do Brasil, starting October 1st ,2016.

g

g

g

g

“Our accomplishment was managing to reach our targets within the forecasted deadline. This involved submitting the merge to the CADE, which is the Economic regulating body. Some operations needed to be submitted to banks. Our merit was having met the original deadlines of the project. Registers were made at the Commercial Association and registry alterations made at the City hall, State and Federal government. Finally, requests to alter the names on licenses were made at the environmental agencies.”

hUDson coUTo / leGal aDVIsOr

spONsOrs: José MáRcIo cAsTILLo

aUDITING, rIsks aND INTerNal cONTrOl aDVIsOr.

hUDson coUToleGal aDVIsOr



VBr/VsB informationtechnology integration

other information technology initiatives

“Our objective was to merge the two main systems the companies had. The great challenge was to consolidate the system, from February to October 2016, so that the new company could work as a unified entity. We accessed risks based on studies. Decisions were shared. SAP made an offer to do the work for us, but the time frame requested was 15 months. This would not do. We, then, did it ourselves in a non-conventional way with seeking outside support when necessary. We did it all in 8 months!It is important to highlight the intense participation of the teams involved insuring the project success: We made the turn on the agreed date. We suffered some impacts, but they were minor. All this went down very well. The video made by Mr. Philippe Crouzet, the Vallourec president, was proof of that. He said that the project was accomplished on the agreed date with little negative impact.”

RoDRIGo DoRneLes / INfOrmaTION TechNOlOGY sUperINTeNDeNT

RoDRIGo DoRneLes

Reorganize IT department to meet the requirements of the new company.

Conduct tests and simulations to ensure traceability and avoid problems with key processes and their possible impacts.

Unification of the SAP system (carried out in eight months, half the time suggested by SAP).

Consolidation of the BPS, Business Intelligence and APO systems.

Adjustment in emails and corporate intranet.

g

g

g

g

g

neXT sTeps X

• Unification of the Quality Certificate of both units

- Target December 2017• Integration Florestal, Mineração,

Fundação, Lavor and Coovall- Target January 2018• Optimization post-merge and

process changes- Target December 2018

spONsOr: RoDRIGo DoRneLes

INfOrmaTION TechNOlOGY sUperINTeNDeNT


RoGéRIo peRILLo

Finance andtaxes

DAnIeL vAsconceLos

Integration of the Finance and Accounting teams.

Centralization of the whole finance department and relocation of 30 professionals from Jeceaba to Barreiro.

Regularization of the tax situation between Jeceaba (export market) and Barreiro (domestic market).

Tax credit rebates.

Reevaluation of corporate insurance policies.

Unification of SAP system.

g

g

g

g

g

g

“The project had two phases. The first was the pre-merger. We carried out the team integration process. During the year of 2016 (up to September 30th) we assembled several working groups in the Finance, Accounting and Tax departments from Jeceaba and Barreiro. Together we aligned and completed the integration process. Our first objective was to have a new system to meet the requirements of the new VSB without causing any disruption to the business. This was accomplished together with the IT team. First, we made this integration in terms of systems, technology and information flow. The second phase was the most important. We had to integrate people in terms of culture: relationship, team work, common commitment, improvement of quality and one team.”

DAnIeL vAsconceLos / aDVIsOr TO accOUNTING aND fINaNce sUperINTeNDeNce

spONsOrs: RoGéRIo peRILLo

accOUNT aND fINaNce sUperINTeNDeNT

DAnIeL vAsconceLosaDVIsOr fOr accOUNTING aND fINaNce sUperINTeNDeNce



heRvè DeLhon-bUGARD

controlling

“In the beginning people were reluctant with the standardization we want to make. But after they embraced the new ideas. This is an example of the value respect for people and common commitment. The merge offered us an excellent opportunity to share experiences among controllers in both units. This is in line with the value Standards and professionalism. We had four controllers transferred from Barreiro to Jeceaba. With the standardization of the controlling processes in both units we achieved faster consolidation of reports and controlling guidelines- archetype Realization. Ex. Nowadays I receive guidelines from Vallourec Corporate and immediately hand them down to all controllers. This makes the information flow better.”

ALeXAnDRe noGUeIRA / cOsTs maNaGer

Integration of Controlling and designation of processes such as Controlling, Economic, Planning, Product Engineering and Management System.

Implementation of controlling in Jeceaba and training of controllers in Productivity, People Management and TQM (BSC).

Implementation of BPS as the standard for budget control in Jeceaba.

Use of the Transfer Table as a performance tool.

Unification of the Monthly Reports and KPIs.

Discard of processes found in duplicity.

Benchmarking in the German and French plants regarding the ideal number of controllers.

Improvement in management communication.

g

g

g

g

g

g

g

neXT sTeps X• New round of synergies and

centralization of controlling.• Follow-up of corporate cost

reduction targets. Ex. LS 3.0, IndEX, Tracker Transfer Price and Rota 108.

spONsOr: heRvè DeLhon-bUGARD

cONTrOllING aND maNaGemeNT sUperINTeNDeNT

g



cARLos IvAn MAToso

Maintenance

Barreiro Central Workshop working for both plants.

Unification of Central Maintenance areas.

Synergies among departments, unification of the superintendency and coordination.

Optimization of performance in maintenance activities (cost reduction and optimization of existing resources).

Unified big stoppage teams prepared to work in both plants.

g

g

g

“The project was developed in a very positive way. The relationship between both project leaders was honest, professional and this allowed us to complete all the actions within the deadline and the planned savings. In the beginning of the project the team feared that they would lose their functions and their jobs. We also had some difficulty moving people between Jeceaba and Barreiro to perform their activities. Nowadays, since all management is unified, people already have the commute between Jeceaba and Barreiro as part of their routine.”

Carlos Ivan Matoso / Central MaintenanCe Superintendent

neXT sTeps X• Reorganizing Maintenance

Engineering directly linking it to the Industrial Director aiming at improving the performance of the rolling mill.

spONsOrs: cARLos IvAn MAToso

ceNTral maINTeNaNce sUperINTeNDeNT

cLáUDIo sALZAnoceNTral maINTeNaNce sUperINTeNDeNT UNTIl JUNe 2017

g

g



eDUARDo RIbAs

Human resources

“We had savings with resources and people. We also improved the service for our internal clients. We simplified our structure and managed to be faster in our processes without lowering the quality of services rendered. The development of synergies was our greatest objective.”

GIovAnnA ReAL / peOple DeVelOpmeNT maNaGer

neXT sTeps X• Actions forecasted in the new

strategic HR plan completed.• Monitoring the performance of

the new processes for employee assistance.

• Continuity in management of the Cultural Transformation Program.

Unification of Human Resource departments.

Reduction of HR departments in both plants.

Key role in developing synergies.

Unification and standardization of procedures.

Management of the Cultural Transformation Program.

g

g

g

g

g

spONsOr: eDUARDo RIbAs

hUmaN resOUrces sUperINTeNDeNT UNTIl OcTOBer 2017



Purchasing/contracts

“From the moment you have just one company and one department this brings opportunities. There’s nothing better than having just one company, one commercial manager and one technical manager for each contract. Now we reach out to the market in search for solutions for a company that has two plants. I think we can explore even more the negotiation potential of having just one biding process for just one company. This will certainly help the LS3.0 cost reduction project. The fact that our internal customers have merged too is also very good. It was really difficult for us to make truly unified contracts when we had two separate departments with two separate managers although they tried to cooperate. Today, we are creating just one entry way into the company for all suppliers. We don’t want suppliers to have to go through two different processes to work for the company.”

beRTRAnD MoURIeR / pUrchasING sUperINTeNDeNT

beRTRAnD MoURIeR

Incorporate part of the Jeceaba purchasing department, which functioned independently and functionally integrate around 12 people with the Barreiro team.

Integration of purchasing process systems.

Announcement of the new company to suppliers.

Adjustment of all contracts in both plants to the new company.

Renegotiation of contracts considering service to both industrial plants.

Migration of supplies register- circa 120 k items registered.

Stockroom inventory and stock adjustment.

g

g

g

g

g

g

g

neXT sTeps X• Improvement in contract

management- definition of one manager for both plants.

• Market research for companies that have experience in the supply to companies which have two industrial plants such as VSB.

• Support actions related to LS 3.0- 169 actions planed involving the purchasing department.

spONsOr: beRTRAnD MoURIeR

pUrchasING sUperINTeNDeNT



energy, utilities and infrastructure

“We are managing to do more with less. Less in all senses, labor- our own, outsourced, contracts etc. We have gained in quality, in the way we operate, manage and do. We have gained in communication in both units. We have facilitated understanding among the teams. Communication is the key to success in any organization. It is important that we be role models for other teams so that they may engage in the same objectives.”

LUcAs sAMpAIo / eNerGY, UTIlITIes, INfrasTrUcTUre aND eNVIrONmeNT sUperINTeNDeNT

LUcAs sAMpAIo

Integration of Energy, Utilities and Infrastructure departments in both plants.

Setup of regular follow-up routines related to working environment, costs, quality and productivity.

Unification of corporate contracts- mail, cleaning, sweeping, upkeep of greenery, electric energy and Jeceaba DBOT.

Reduction of operational risks and consequently reduction of insurance costs.

g

g

g

g

spONsOr: LUcAs sAMpAIo

eNerGY, UTIlITIes, INfrasTrUcTUre aND eNVIrONmeNT sUperINTeNDeNT



Finishinglines “We have monthly meetings

of the managers with the team. We use this time to convey the strategic guidelines of the company and talk about the results. Since we have done well in our mission we had a major gain- the Petrobras contract. We consolidated our position by being a solution provider and not only a tube supplier. If we had focused on the tubes alone, we would have lost. We will render services, preparation for shipping… To establish our mission in the foreign market we need to reinforce our archetypes and be highly competitive.”

MATeUs sILveIRA / OcTG TUBe prODUcTION sUperINTeNDeNT

MATeUs sILveIRA

Integration of people, processes and operations in the finishing floor areas.

Transfer of the Casing Coupling production from Barreiro to Jeceaba- to balance the productive capacity of the plants.

Use of existing labor force through synergy avoiding hiring or firing personnel.

Sharing experiences and best practices. e.g. Barreiro employee who was temporarily transferred to Jeceaba brought back a best practice about machine configuration when he returned to Barreiro.

Setup of routine production quality and method meetings. Happening every fourteen days with the participation and attendance of professionals from both units.

Unification of maintenance, reducing costs and improving performance with professionals working in both units.

Only one spare parts inventory; impacting cost reductions.

Setup of four big safety stoppages with the entire team to improve communication about safety and other relevant issues.

Change in the purchasing procedure for threading protectors.

Testing: similar tools among plants, different lubrication practices, standardization of other raw materials (grease, packaging items, etc.)

Adjustment focused on services aiming at meeting the requirements of the Petrobras contract- e.g. Preparation for loading products.

g

g

g

g

g

g

g

g

g

g

g

spONsOr: MATeUs sILveIRA

OcTG TUBe prODUcTION sUperINTeNDeNT



BiP cAPeX –investments

fAbIAno peReIRA

Implement the necessary project to adapt the Jeceaba unit to produce billets for Barreiro.

Implement the necessary project to adapt the Barreiro unit to receive and use billets from Jeceaba.

In addition, integration of Engineering and Investments departments of both units (Barreiro and Jeceaba) was made.

Adjustment of Jeceaba Steel Mill to produce billets for Barreiro.

g

g

g

“The main project, which is the adaptation of the Jeceaba Steel Mill to produce bars for Barreiro, was completed in June 2017. Since then, bars are already being produced in Jeceaba that are being rolled in Barreiro. We still have the bar-cutting line in Barreiro and traceability in Barreiro Plug Mill. We need to complete the remaining projects and qualification of the products with the use of Jeceaba bars for the customers of Barreiro. Once this qualification was concluded, the Steel Mill and the Blast Furnace of Barreiro could be disconnected.”

fAbIAno peReIRA / eNGINeerING, INVesTmeNTs aND TechNOlOGY sUperINTeNDeNT

Due to the industrial remodeling of the Vallourec plants in Brazil (BIP-Brazilian Industrial Plan) this project deals with the deployment of the necessary investments associated to the industrial synergies. The attempt to optimize assets, to generate savings and to increase competitiveness are the pillars of this project. The optimization of the Jeceaba Steel Mill (100% of the billets for the three rolling mills for both units are produced in Jeceaba), this allows for the shutdown of the steel mill and blast furnace in Barreiro.

neXT sTeps X• Adaptation of the billet

cutting lines in Barreiro.• Traceability in the Barreiro

Plug mill.

spONsOr: fAbIAno peReIRA

eNGINeerING, INVesTmeNTs aND TechNOlOGY sUperINTeNDeNT

g



LoThAR bIRKhäUseR

industrialstructurespONsOr:

LoThAR bIRKhäUseRINDUsTrIal ,TechNOlOGY aND UpsTream DIrecTOr

Redesign the industrial structure of the Jeceaba and Barreiro units unifying the superintendencies.

Setup an Industrial Technology department, integrating experts and know-how from both plants, speeding up problem solving and perfecting the interfaces with the other units of Vallourec group.

Strengthen the automation processes by focusing on critical issues offering quick responses to solve problems.

g

g

g

“To support the transformation of Vallourec in Brazil and consolidate the new industrial design of the Jeceaba and Barreiro units, it is necessary to also work to redefine the structures that would better support these changes having the participation and consent of NSSMC.”

LoThAR bIRKhäUseR / INDUsTrIal ,TechNOlOGY aND UpsTream DIrecTOr



operationaland salesPlanning/logistics

“Long before the shutdown of the blast furnaces and steel mill in Barreiro, an announcement was made to all. This showed enormous respect for people and demonstrated transparency. There was clarity regarding what would happen, so all people had more time to make decisions. For instance: relocating employees from the blast furnaces and steel mill, transferring people to Jeceaba and considering retirements, which are normal and natural. This was a tremendous demonstration of respect. All people got information and managed to work with it in the best possible way.”

ADRIAnA MAGALhães / lOGIsTIcs sUperINTeNDeNT

ADRIAnA MAGALhães

Systems Unification of: billing, sales, production, planning, invoicing for material dispatch and of systems of billing, sales, production, planning, issuance of material output invoices.

Adjustments regarding confidentiality of commercial order systems between the Barreiro commercial team and their NSSMC counterparts.

Organization of the system regarding the placement of orders versus production in a given plant.

Adjustment regarding the possibility of a product beginning its production process in one plant and finishing in the other.

Unified inventory check.

Unification of billing in both units.

Integration of sales, production and finances planning.

Consider the three rolling mills as integrated units for planning purposes.

g g

g

g

g

g

g

g

g

g

g

g

g

g

g

Adjustments that enable industrial synergies in times of decreased demand.

Unification of equipment inventories.

Unification of transportation contracts of personnel, products and cargo transport.

Appointment of one Internal Logistics Manager for both plants.

Appointment of one External Logistics Manager for both plants.

Know-how sharing with the Jeceaba team regarding the export process.

Change in the allocation model for tubes in the Rio de Janeiro port, considering new dispatch volumes and consequent cost reduction.

neXT sTepsX• Data harmonization in the post-merger

system.• Development of KPIs considering the

new reality. E.g.: Integrated view of a sales order that leaves one site and is produced in another.

• Adjustments to support the shutdown of the blast furnace and steel mill in Barreiro.

spONsOr: ADRIAnA MAGALhães

lOGIsTIcs sUperINTeNDeNT



Quality

industrialization

JúLIo MáRcIo sILvA

Harmonization of 17 quality procedures in the system.

Use of a single Quality Manual for the new company.

Qualification and certification of more than 250 clients.

220 items industrialized in the Barreiro and Jeceaba Plant.

g

g

g

“We had to tell our clients what the new company was, and what would change in terms of Quality. We had to reassure our clients regarding the quality matter. We discussed all these issues with NSSMC, in Brazil and in Japan, in order to define how the communication with the clients would be. Quality documents, marking, licenses... Everything was covered within this work. We had to determine how the certification of tubes manufactured in Barreiro and Jeceaba would be. We checked, with the normative entities such as API, how this certification would be. The products wouldn’t be from VSB or VBR, anymore. They would be from Vallourec Soluções Tubulares do Brasil. All this was discussed and agreed upon with NSSMC.”

JúLIo MáRcIo sILvA / QUalITY sUperINTeNDeNT / INDUsTrIalIZaTION sUperINTeNDeNT

neXT sTeps X• Conclusion of qualification

processes with the clients.• Continuity of the

industrialization process.

spONsOr: JúLIo MáRcIo sILvA

QUalITY sUperINTeNDeNT

spONsOrs: JúLIo MáRcIo sILvA

INDUsTrIalIZaTION sUperINTeNDeNT

MARceLo feRReIRAsTeel maNUfacTUrING prOcesses maNaGer

g



Barreiro Blast Furnacesand steel Plant shutdown

cLáUDIo MUsso

“Our main focus of the work was on people; maintaining a positive work environment and good communication, creating synergies while maintaining safety. Unifying structures, aiming at the best opportunities for all people and also retaining people know-how in the company. Besides the unification of the Steel Making superintendencies in both sites, the Maintenance, Pig Iron Production, Steel Making Quality, Pellets Commercialization and Co-products Sales departments were also unified.There was strong collaboration with the HR department and we have already concluded the relocation of many people from the Steel Making Superintendency in Barreiro to the Steel making Superintendency in Jeceaba. Relocation has also been made to other areas of the company and the group.”

cLáUDIo MUsso / sTeel makING sUperINTeNDeNT

Shutdown of Blast Furnace 2 in Barreiro in February 2016.

Maintaining a positive work environment; striving to maintain good safety results while performing all the planned industrial processes.

Assessment of the opportunities within the group, for the reassignment and relocation of personnel.

g

g

g

neXT sTepsX• Continuation in the personnel

reassignment process.• Shutdown of Blast Furnace 1 and Steel

Mill in Barreiro by June 2018.

spONsOr: cLáUDIo MUsso

sTeel makING sUperINTeNDeNT



MoAcIR nAscIMenTo

Adaptation of Forests –rota 108

Setup of the Rota 108 project - Reduction of the sales price of charcoal to VSB.

Reassessment of all operational and administrative processes focusing on cost reduction (Carbonization, Forestry, Harvest and Support).

Adjustment of Florestal management structure, adjusting the number of superintendencies, departments and support teams.

Promoting events with the participation of operational team andadministrative team, with the purpose of presenting the current status of the project, next steps and highlighting the importance of VFL in the transformation process of the Vallourec Group.

Development of ideas of cost reduction during the implementation of the Rota 108 project.

g

g

g

“The Rota 108 project is being developed in order for charcoal to regain its competitiveness in steel production, versus the alternative route which is the use of scrap. In addition, it has helped management to work with method, discipline and cooperation. This will ensure the sustainability of the results in the long run. The Vallourec Florestal unit team is proud of the work currently being developed and we have certainly become more seasoned to achieve the results needed to reach the target.”

MoAcIR nAscIMenTo / VallOUrec flOresTal sUperINTeNDeNT

neXT sTepsX• Ensure the implementation of the

actions planned in the project.• Keep the follow up/evolution of the

actions.• Keep the whole team on track making

sure not to lose focus of the project objectives.

• Strengthen a routine of idea development in each department and setup a workshop to share experiences among the leaders of the Rota 108 and LS 3.0 projects.

g

g

spONsOr: MoAcIR nAscIMenTo

VallOUrec flOresTal sUperINTeNDeNT



ProgramManagement

RUbens feRReIRA fILho

VSB’s competitiveness is essential to the survival of the company. Low International oil prices; Critical political environment in Brazil; Severe economic crisis; Petrobras, our main client is in a delicate situation; automotive industry and industrial sectors affected by theGDP fall; Overcapacity of the steel industry in Brazil. This was the scenario when the VSB Transformation Project was deployed.

We received the mission of creating, in Brazil, a highly competitive hub in premium solutions. Hence four goals were established:

MAKInG An InTeGRATeD MAnAGeMenT of vALLoURec In bRAsIL possIbLe (sYneRGY)

Merging the two plants and creating a new company with a single CNPJ, with thecontinuous industrial cooperation of NSSMC. Bringing together all the support functions,implement the unified SAP, streamline processes and change the culture.

TRAnsfoRM JeceAbA InTo A pReMIUM pRoDUcTs MAnUfAcTUReR

Produce new steel grades and create a new Rolling Mill and Finishing Line. Createand develop new steels to meet the requests coming from Europe and the USA. EnableJeceaba to have a relevant production of Line Pipe tubes.

opTIMIZe oUR InDUsTRIAL sTRUcTURe

To reach this goal, it is necessary to optimize the occupation by shutting downThe two Blast Furnaces and the Steel Mill in Barreiro and concentrating steelproduction in Jeceaba.

IMpRove cosT effIcIencY

Reach the cost reduction program targets. Make synergies with the work force in production and in the support areas. Adjust investments.

— IMPORTANT MILESTONES OF THE TRAnsfoRMATIon pRoGRAM

Establishment of the commercial agreement between Vallourec and NSSMC.

feb/2016 – Shutdown of Blast Furnance 2 in Barreiro.

10/01/2016 – Integration of SAP /company and signing of the agreement with NSSMC.

JUn/2017 – Investment in the adaptation of the Continuous Casting for the production of 180 and 220 millimeters round billets in Jeceaba.

seconD hALf of 2018 – Shutdown of the Steel Mill in Barreiro and resume operations of the Blast Furnace in Jeceaba.

spONsOr: RUbens fRReIRA fILho

aDVIsOr fOr sTraTeGIc affaIrs aND maNaGer Of The TraNsfOrmaTION prOGram fOr The NeW VsB.



“When I was informed that I would be the leader of the Transformation Program of the new VSB, I asked myself, ‘What is that?’, and I looked for literature on the subject. In the first page of one of the books there was the following sentence: ‘If you are reading this book it is because you’ve been invited to participate in a merger and acquisition program. If it´s true, congratulations! Few people work in such programs. But, don’t celebrate just yet ... ‘The author states that in 100% of programs of this nature, 65% fail and 95% of these failures are due to a communication problem. Besides that, the author mentions that in such projects involving values higher than 250 million dollars, it is imperative to hire a specialized consulting company. In our case, our guidelines were to do the job without the support of a consulting company, so I set out to discover what were the most common reasons these processes failed. The issue is not simply an economic one, but rather lies on the cultural factor: people need to feel like one team. The company continues to operate and have good results, but uniting two different teams and getting everyone on board is the big challenge. We have already made advances in this direction. The synergies were important in the management processes and in the feeling of individual belonging, within the work teams. Joint meetings also help in this sense. I believe that of all of our challenges, besides reaching the economic target of LS 3.0, it is paramount to make everyone feel part of the same company. We Are One Team.”

RUbens feRReIRA fILho / aDVIsOr Of sTraTeGIcal affaIrs/ GeNeral maNaGer Of VsB TraNsfOrmaTION prOGram


T he first step of the challenge was concluded very successfully. As milestones of this phase, we highlight the SAP system integration and the creation of a single CNPJ for the New VSB.

The second phase is now! Among all the planned actions still to come, our main mission is the achievement of the cost reduction targets. Ensuring that our products have competitive prices is paramount to the New VSB so that we are strong both in the domestic and global markets.

Last but not least, regarding the Cultural Change Plan being implemented, its very important to highlight the One Team feeling idea. We have to meet this challenge head on and for this we rely on the engagement of each and every employee of the new company.

We are all one company! We are One Team!Board of Directors of Vallourec Soluções Tubulares do Brasil – VSB.

Lothar birkhäuserUpstream Industrial and Technology Director

João perez JúniorCommercial and Downstream Operations Director

Manfred Leyerer Chief Financial Officer

Alexandre de campos LyraSenior Vice President of the Vallourec Group in South America

eXecUTIve boARD


— VSB CONCEPTS GLossARY

API: American Petroleum InstituteAPO: system connected to the production planningArchetypes: model or image of something that molds people’s culture.Benchmarking: is the search for best practices that lead to superior performance.BIP: Brazilian Industrial Plan, has as objective the increase of competitiveness of Vallourec in Brasil through the optimization of the steel making area, and the consequent shutdown of the Steel Mill and Blast Furnace in Barreiro.BPS: Business Planning and Simulation, budget control model used by the Planning department which was not used by Jeceaba plant.BSC: Balanced Scorecard means balanced performance indicatorsBusiness Intelligence: set of management reporting tools and KPIs.CADE: acronym which stands for Conselho Administrativo de Defesa Econômica. It is the Brazilian federal body, with purpose of guiding, supervising, preventing and investigating abuses of economic power.CAPEX: CAPital Expenditure. It indicates the amount of money spent on the purchase of machinery, equipment, building materials, industrial facilities of a certain company.Cascading: creating a cascade effect for the handing down of information to teams and coworkers.Casing Couplings: parts produced by VSB that belong to the connections between casing tubes for oil wells. Continuous Casting: industrial facility in the Steel Mill area responsible for transforming liquid steel into solid billets.Controller: professional from the Controlling area whose function it is to coordinate the management process, in the economic, financial and patrimonial aspects.Coovall: Vallourec Employees Credit Cooperative.

DBOT: Design, Build, Operate and Transfer. To transfer to a specialized company,all the prospection, harvesting and treatment of waters and waste processes.Downstream: “end of flow”. In our business, the term is related to finishing lines.Slag: by product generated of steel production.IndEX: Vallourec cost reduction corporate program.Knowledge Blocks: are groups formed by experts from the company departments who are implementing the cultural change actions raised in the Lever Groups.KPI: Key Performance Indicator.Lead Time: waiting time. It is used to monitor the delivery flows to internal andexternal clients.Lean: short form of the international management tool known as Lean Manufacturing which seeks to improve process performance.Lever Groups: Leverage means to boost, encourage, promote, instigate. The levergroups were formed aiming at boosting the cultural change in the new company.Line Pipe: tubes produced by VSB with specific technical characteristics for transport of oil and gas.LS 3.0: program created to generate ideas and action plans with the aim of reducing the production costs and final price of tubes in VSB. LS is the acronym for Long Sausage. The “nickname” was given to the program due to the extensive unfolding resulting from cost assessment in each step of the production process of the tube.Mindset Map: tool designed to disseminate the basic concepts fundamental to cultural change. It is important that each employee understands the purpose of the Mindset Map and uses it as a guide in this or her routine actions at work.NSSMC: acronym corresponding to Nippon Steel and Sumitomo Metal Corporation,

a shareholder of the Vallourec group, a VSB special client, a strategic partner in the development of technologies and a competitor in the seamless steel tubes market.PMO: abbreviation of Project Management Office which is the sector responsible for defining and maintaining the project management standards in the company, in order to optimize the control and execution of the organization as a whole or of one specific area.Premiumization: making something Premium. Term used in regarding the need to adapt the Jeceaba plant to produce tubes with advanced technical specifications that characterize our product as Premium.Responsiveness: is the responsibility without fear. In psychology, it refers to comprehensive attitudes that aim to promote and develop autonomy and self affirmation.Rota 108 (Route 108): project created to develop ideas and implement actions that aim at reducing the production cost and final price of the charcoal in Vallourec Florestal.S&OP: Sales and Operational PlanningSAP: the main VSB data processing system used by almost all departments of the company.Sponsor: In project management sponsor or patron is the person who supports a project inside the organization. Stakeholders: it refers to interested parties. They are all the groups or individuals a company or entity affects or is affected by.TQM: Total Quality Management. Traceability: capacity to trace the background, application, use and location of an individual commodity or a set of characteristics of commodities, by means of identification.Tracker: Reference tube for process monitoring.Transfer Price: or Transfer Pricing, is the general name given to the methods

of calculation of prices for products and services imported or exported between companies considered to be bound by the transfer pricing law in Brazil.Transfer Table: performance/savings measurement tool using fixed and variable cost control.Upstream: in our business, the term refers to steel making production and also the rolling of tubes.VMS: Vallourec Management System.

People who answer correctly will take part in a raffle for the new VSB

polo shirts of New VSB.

— THINk fAsT!

— wHAT ARE THE 3 ARcheTYpes dESIREd FOR THE BUILdING of The new

cULTURe foR The new vsb?

send your answer with your name, extension and personal number to the Whatsapp of the communication department: 9 9854 9699

Documents

KLET 1 YEAR OF new vsb - Vallourec · 1 YeAR of neW VsB specIAL booKLeT 9 Actions relAted Actions relAted to to VAlues tHe neW Mission Adaptation of the finishing floors serving as