TMK’s HR Strategy is based on TMK’s Business Strategy and is aimed at maintaining and growing TMK Group’s position as one of the world’s leading pipe producers and the industry’s best employers providing competitive employment conditions, employee benefits, and an opportunity to unlock talent and potential for performance-driven employees.
Through our comprehensive approach to building an effective management framework, we were able to reduce TMK’s headcount while increasing employee productivity and performance levels.
In the Russian division, cost optimization efforts yielded tangible results in 2017, achieved through the successfully implemented projects to centralize and standardize management structures and business procedures, and establish the Management Company’s units in the regions in which the Russian division’s plants operate.
We continued efforts to restructure the Company and divest non-core assets. We also focused on streamlining our business processes, reducing the number of management levels, and further centralizing the Management Company’s functions.
The American division’s headcount grew following the dynamic recovery of the US energy sector, which allowed TMK IPSCO entities to increase production at a number of plants and launch welded pipe production facilities ahead of schedule.
On 01 June 2017, we completed a project to roll out the Unified Remuneration System across all pipe plants within TMK’s Russian division. This enabled transparency into payroll administration, and improved the quality of planning and tracking in respect of labour-related indicators.
With the Unified Remuneration System successfully piloted, we are now planning its rollout to other enterprises of the Russian division. TMK Oilfield Services and TMK-INOX are to transition to the new system in 2018.
Overall, we make sure that our salaries remain competitive in the regions in which TMK’s facilities operate, while making cost-of-living adjustments to salaries provided for in the local legislation, collective bargaining agreements, and industry agreements, based on financial performance of the Company’s divisions.
Average pay as % of the previous year level (in Roubles)
The average pay across TMK in 2017 was significantly affected by fluctuations in the Russian Rouble exchange rate.
Overall, the average pay across TMK’s entities in Rouble terms increased in 2017 by 12% year-on-year in Rouble terms, while the Russian division posted a 7,8% growth.
TMK’s employees are our key asset that gives us our strategic competitive edge.
For this reason, TMK’s HR Strategy encourages its personnel to continuously pursue professional growth by developing their overall professional and personal competencies. In 2017, TMK’s investment in corporate training and career enhancement programs grew by a third from 2016.
The establishment of TMK2U Corporate University in November 2017 was a significant milestone in TMK’s history. This is our key employee competence management asset, which provides support for the development of corporate professional standards, personnel recruitment, onboarding, and training, as well as performance assessment and career management.
TMK’s Corporate University is the methodology leader and interface between the Company’s different divisions and enterprises as they are getting linked together into a single shared information space. It will also lead the process for building the Company’s HR brand, and become the main platform for employees’ creative activities.
2017 was declared the Year of Leadership in TMK. This was reflected in all employee development programs run during the year, and informed the choice of the Corporate University slogans: “Be a Leader!”, “Achieve More!”
Entities across TMK’s divisions follow the principles of social partnership as they seek to balance the interests of all stakeholders.
In 2017, the Company maintained the stability and high-performance levels in our teams and ensured strong social partnerships based on collective bargaining. We consider our cooperation with trade unions both in the Russian and in international divisions to be effective. TMK was actively engaged in negotiating and signing the Branch Tariff Agreement for the Mining and Metallurgy Complex of the Russian Federation.
In 2017, we continued our Russian division corporate programs aimed at improving health and expanding the range of recreation opportunities for our staff. Over three thousand employees and their family members were offered an opportunity to visit the Westend Hotel Sanatorium (Mariánské Lázně, Czech Republic), the Burgas resort (Sochi), and other resorts and recreational facilities in Russia.
The Company promotes healthy lifestyles among its employees and prioritises the health of their children, organizing sports and health events for its employees, sending their children to kids resorts, and presenting them with Christmas gifts and tickets to New Year shows.
TMK IPSCO launched a program in 2017 to raise awareness among employees of the company’s performance and of its key areas in social development. TMK IPSCO employees (76% response rate) gave high scores to the facilities’ HSE levels, opportunities for professional development, and employee benefits. In 2017, TMK IPSCO participated in a number of regional initiatives to support education, children, and arts.
Social partnership initiatives in the Middle East division take into account the local traditions and specifics to offer employee benefits and guarantees package that maximizes support through provision of medical insurance for employees and their family members, free lunches for the staff, etc. TMK GIPI ran extensive social partnership initiatives in 2017. They included financing childcare centres in Sohar and Liwa, participation in infrastructure projects, and financial support for the initiatives run by the Municipality of Sohar, as well as holding open days for the local college students.
In the European division, we continued implementing the already approved social programs that provide sponsorship support for local and national sports, social, and educational initiatives. TMK-ARTROM’s contribution to the economic and social development of the city of Slatina was recognised with an award by the regional authorities.
We build relations with local authorities, local self-government bodies, and NGOs in the cities in which the facilities of TMK’s Russian division operate, based on cooperation, respect for mutual interests, strict compliance with Russian laws and regional and municipal regulations, and strong commitment to corporate citizenship agenda.
We use a wide range of non-financial incentives to foster creativity and work ethics among our staff. In 2017, 17 Company’s employees were awarded state orders and medals and the title of Distinguished Metallurgist; 65 people received industry awards, including Honorary Metallurgist titles and Certificates of Merit from the Ministry of Industry and Trade of the Russian Federation, and were commended by the Ministry of Industry and Trade of the Russian Federation; 110 employees were recognised with corporate awards, including TMK’s Badges of Merit, Honorary TMK Employee titles, and TMK’s Certificates of Merit.
In 2017, TMK conferred Badges for Business Cooperation with TMK and Certificates for Business Cooperation with TMK to 13 representatives of TMK’s partners in recognition of their personal contribution and contribution of their organizations to promoting long-term and mutually beneficial relationships with the Company.
TMK makes systemic and consistent efforts to ensure a safe working environment for employees, guided by 2015 corporate-wide policy on occupational health and industrial safety aimed to mitigate risks, reduce injury rates, and spread safe manufacturing practices.
The Company’s management closely monitors occupational health and industrial safety across TMK’s facilities. Health and safety matters were discussed in February and August 2017 at the meetings of technical leaders, at the Company’s managing Directors meetings and also at the Board meeting in November 2017.
All top managers of the Company were involved in preparing and holding the World Steel Association’s Steel Safety Day 2017 across all production facilities operated by TMK. The event was held by the Company for the second year in a row, and we plan to continue this tradition going forward.
The Steel Safety Day 2017 involved not only TMK employees (35,343 people, 32% of whom performed audits) but also contractor employees, whose number more than doubled from 2016 (6,770 people vs. 3,059 people). Measures to identify safety risks associated with key workplace hazards were implemented across all production sites of the Company, representing 83% of our production capacity. The results were summarized during the World Day for Safety and Health at Work held on 28 April 2017 and submitted to the World Steel Association.
Following the Steel Safety Day, TMK made efforts to eliminate or mitigate the identified safety risks. All planned actions were completed as of 31 December 2017, and preparations for the Steel Safety Day 2018 commenced.
A range of initiatives was implemented across all TMK’s facilities in 2017 to ensure occupational safety and reduce injury rates. TMK’s total occupational health and safety costs for the year stood at $9.2 million.
These efforts helped reduce injury rates in TMK’s Russian and American divisions; however, two fatalities at the Company’s Romanian facilities brought our overall safety performance below the 2016 levels. Both fatalities were thoroughly investigated with an open discussion of all the circumstances at a field meeting of TMK Group’s technical leaders, and a specific action plan was drafted to eliminate identified gaps and prevent such accidents in the future.
TMK’s Russian division pipe plants have a long track record of occupational safety awards. TAGMET came third in a regional leg of the national Russian Organization of High Social Efficiency 2017 contest. The plant was also awarded a diploma at the Russian Health and Safety Week in Sochi (April 2017) as the winner of the best occupational safety innovation competition -Health and Safety 2016 for the Development and Implementation of a Highly Effective Occupational Safety Management System category.
Sinarsky Pipe Plant also received a recognition letter from the Governor of the Sverdlovsk Region dated 21 July 2017 for winning the industrial standards and occupational safety contest held in the Sverdlovsk Region (in 2016).
We are consistently managing our environmental efforts to ensure continuous improvement of our environmental performance and manage environmental risks across TMK’s facilities. Eleven of the Company plants have implemented an ISO 14001 compliant environmental management system. All the certified plants were audited and confirmed compliance with the standard during the year. Volzhsky Pipe Plant, Sinarsky Pipe Plant, TAGMET, TMK-ARTROM, TMK-RESITA, and TMK-Geneva were certified for compliance with updated ISO 14001:2015. The remaining plants are implementing initiatives to train staff and update documents to adopt the new standard.
Environmental projects are an essential component of the Company’s development programs, including the effective Strategic Investment Program.
TMK increased its investment in environmental protection and management initiatives by 2.8 times year-on-year to over $10 million in 2017.
During 2017, TMK implemented 23 capex projects to ensure legal compliance and environmental protection.
We focused our initiatives on the sustainable use of water and minimising the impact of operations on water bodies. The initiatives were included in the quadripartite agreements signed by TMK with the Russian Ministry of Natural Resources and Environment, Federal Service for Supervision of Natural Resources (Rosprirodnadzor), and the regional administrations of the Volgograd, Sverdlovsk, and Rostov Regions. The Company’s spending on these initiatives will total $17 million by 2019, with $8 million already spent in 2017.
Technical and organizational initiatives to mitigate and/or prevent negative environmental impacts from operations
TMK was awarded the Proactive Environmental Policy during the Year of the Environment award by the Ministry of Natural Resources and Environment of the Russian Federation.
TMK’s facilities comply with the legislation covering air emissions inventory, regulation, and control, as well as operations in adverse weather conditions. Our emissions control activities ensure compliance with the prescribed air emissions limits.
Our total expenditure on atmospheric emissions control measures was $2.4 million, which funded the implementation of a range of organizational and technical initiatives, improvement of treatment technologies, and routine maintenance and overhauls of treatment facilities. As a result, our total pollutant emissions decreased in 2017 by 10% year-on-year to 11,100 tonnes.
We make efforts to ensure a comfortable environment for people living in areas adjacent to sanitary protection zones around our plants. To that end, we both install high-performance gas cleaning equipment and implement noise control measures. In 2017, Seversky Pipe Plant and TAGMET (Russian division), TMK-ARTROM (European division), and Camanche (American division) developed additional measures to reduce noise pollution.
TMK builds its growth strategy taking into account its hydrocarbon footprint, with hydrocarbon aspects incorporated into the risk management system and business processes. We compile an inventory of greenhouse gas (GHG) emissions on an annual basis.
As required by the local carbon legislation, European division plants timely submit verified GHG reports and control plans to the regulator, fully complying with the applicable requirements. Russian division plants prepare GHG inventories on a voluntary basis.
TMK implements measures to improve energy efficiency and reduce fuel and energy consumption, optimizes operations, and upgrades technologies, which resulted in a 2.4% reduction of total GHG emissions vs. 2016.
Under TMK’s Environmental Policy, the Company’s water management strategy focuses on reducing water consumption and mitigating negative impact on water bodies. A recycling water supply system is essential for any of TMK’s new, upgraded or renovated facilities.
Subject to permits, TMK’s facilities abstract water from surface and underground sources to supply water for production, general and drinking usage, process use, and public needs.
TMK spent $16 million on sustainable water use and water discharge control in 2017. Consistent water management activities in 2017 enabled TMK to reduce (year-on-year):
Wastewater discharge during the year was within the permitted limits and complied with the prescribed limits of permissible impact on water bodies.
The existing industrial waste management system is focused on practical procedures to reduce, recycle, and reuse waste, as well as reduce waste disposal.
Our production and consumption waste management is in line with approved industrial guidelines and standards in place at TMK’s facilities. Volzhsky Pipe Plant and Seversky Pipe Plant developed and rolled out specialized industrial waste management software solutions. Our waste disposal and temporary storage sites are subject to industrial environmental monitoring.
TMK contributes to the Government efforts to fulfil Russia’s obligations under the Stockholm Convention on Persistent Organic Pollutants ratified by the Russian Federation. The Company developed a Program for Disposal of PCB-Containing Equipment (equipment containing polychlorinated biphenyls).
TMK decommissioned (and transferred for disposal) a total of 951 units of PCB-containing electrical equipment in 2017 (15 transformers and 936 condensers).
Through sponsorship and charity, TMK seeks to foster a favourable social climate in the regions hosting our plants.
TMK has been implementing its charity projects in the Sverdlovsk Region via a professional operator – the Sinara Charity Foundation, and in the Volgograd, Orenburg, and Rostov Region via the Company’s plants.
By implementing joint long-term programs with non-profits, we support the grant-based formats of charitable activities, and actively develop our corporate citizenship initiatives.
We mainly focus on supporting social initiatives by non-profit organizations in health, education, culture, and sports on a project-by-project basis.
TMK continues to develop its Corporate Citizenship project, which involves employees of TMK’s plants in donor campaign to help children with serious blood diseases, collect childcare products for orphaned babies, and provide New-Year gifts to children deprived of parental care and living in orphanages or social shelters.
We also support amateur teams representing TMK’s entities in various sports competitions, including in children’s, youth, and adult sports.