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Relationships
GERDAU 2013 ANNUAL REPORT
Gerdau continually invests in training, new technologies, and equipment to ensure safety in the workplace.
EMPLOYEES
Investments in training contribute to reaching the Company’s
challenging goals
Gerdau encourages its more than 45,000 professionals
Within this new structure, and with a focus on Technical
to surpass their own goals and transform their expertise
Training of Operations, the Technical School project
into superior results for the business. To achieve this, the
was developed to reorganize the company’s technical
Company believes it is essential to continuously develop
development initiatives and accelerate the dissemination of
its employees at all levels within the Organization. In
knowledge, especially among the operators and facilitators
2013, each employee dedicated an average of 48 hours to
in the melt shop, rolling mill, quality, procurement and
training, resulting in a total investment of R$ 34.3 million.
recycling departments. This is why more than 250 employees
from nine countries where Gerdau operates participated in
During the year, Gerdau restructured its internal education
developing 150 new training courses in 2013, each of which
and training initiatives for employees to expand their
are available in three languages (Portuguese, Spanish,
skill set and to encourage innovation that will promote
and English). To broaden access to this and other training
a performance improvement for the business. Today,
programs to its employees, Gerdau developed a Corporate
Gerdau’s Corporate Education is organized into four main
Education portal. The portal was made available to more than
areas of training and development: basic training, technical
20,000 employees in Argentina, Canada, Chile, Colombia,
training of operations, training in support processes, and
the United States, Mexico, and Uruguay. In 2014, it will be
leadership training.
available to another 23,000 employees in Brazil and Peru.
GERDAU 2013 ANNUAL REPORT
To accomplish the task of training global leaders, Gerdau
has created the Gerdau Business Program (GBP), which
is a customized two-year MBA that meets the needs of the
Company. The program is conducted in partnership with
the Institute of Education and Research (Insper) from São
Paulo and also involves world-renowned universities, such
as Insead in France and Darden in the United States, which
increases the international exposure of the participants. The
INVESTMENTS IN OCCUPATIONAL
SAFETY AND HEALTH
R$ million
120
100
third edition of the GBP was completed in August 2013 and
80
had participation from 32 executives in Brazil, Chile, Mexico,
60
Peru, and the Dominican Republic.
102.3
92.7
71.0
40
During the year, Gerdau also continued its Accelerated
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Training of Engineers program, which is an initiative aimed
to accelerate and strengthen the technical capacity of its
0
2013
participants. With the participation of 19 engineers, the
2012
2011
program guided the development of professionals in the
implementation and management of investments in the
Company’s capital goods (CAPEX). The program included
484 hours of classroom training, technical visits to areas,
and the study of investments, along with the individual
follow-up of mentors and of internal coaches.
TRAINING AND DEVELOPMENT
2013
2012
Investments (R$ million)
34.3
37.2
Number of training hours per employee
48.0
44.6
HEALTH & SAFETY
All of Gerdau’s operations in the world follow the Safety
Management System, which is a strict set of practices
that involve continuous investments in new technologies,
equipment, and global management systems. In 2013, this
area received R$ 102.3 million, a 10% increase from the
previous year.
To further enhance safety in the workplace, Gerdau pursues
continuous improvement of the attitudes and behaviors of
its employees in relation to safety. Since 2012, the company
has been training its leaders through the Handbook on
Behavioral Management in Occupational Safety, which is
a material that has been customized and aligned with best
practices worldwide. Implementation of this training earned
the Company the 2013 Safety and Health Excellence
For the third year in a row, Gerdau is recognized for its
initiatives in safety.
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GERDAU 2013 ANNUAL REPORT
Recognition award from the World Steel Association, which
honors successful programs implemented in the area of
occupational health and safety.
During the year, Gerdau also updated and expanded
the mapping of critical operational risks of its production
processes with a focus mainly on its mining activities. Specific
guidelines were established toward this, accompanied with a
training for employees and third-party service providers at the
mines of Várzea do Lopes and Miguel Burnier, both located in
the state of Minas Gerais in Brazil.
As a result of these actions, the accident frequency
A global intranet enables fast and easy access to global and local
content using a single interface.
rate per million hours worked (international index that
measures the occurrence of accidents in the workplace)
Trainees Program in North America and several countries
remained 1.10, which is lower than the world average
in Latin America, including Brazil. For over two years, the
for the steel industry, whose latest figure released by the
trainees receive on-the-job training to learn the industrial
World Steel Association is 1.41.
and commercial processes. As part of the program, Gerdau
trainees also participate in an individual mentoring program to
GLOBAL INTERNAL RECRUITMENT
develop a project about a strategic theme related to their work
To meet the career development aspirations of its
process or area of expertise. According to a survey conducted
employees and to strengthen the engagement and retention
in 2013 to measure the degree of satisfaction of managers and
of internal professionals, Gerdau created the Global Internal
participants, the favorability index to the program is quite high.
Recruitment program. In 2013, more than 500 positions
In 2014, 127 new trainees will join the Company.
were filled with employees through the internal disclosure of
opportunities, including international openings.
MANAGEMENT OF HIGH POTENTIALS
AND SUCCESSION
EMPLOYEE COMMUNICATIONS
One of the Company’s challenges is the succession
Gerdau is constantly seeking to improve its internal
planning for professionals who will take on positions of
communication practices. Therefore, in 2013 the Company
leadership following Gerdau’s corporate culture. It is
built a global intranet that makes it fast and easy to access
with this objective that every year People Development
global and local content from a single platform. The project,
Committees are held in the various Business Divisions
which was developed over one year by a team of 36
to internally analyze and identify professionals with
employees from all Business Divisions in the Company, was
outstanding potential for career development in the
launched globally in early 2014. The initiative incorporated
Company. Gerdau held 240 of these committees in 2013,
external benchmarks and already existing intranets used by
where division leaders analyzed and proposed career
several of Gerdau’s operations.
development actions for over 9,000 professionals.
FUTURE GERDAU TRAINEES
To support the development of these professionals,
Gerdau continually invests in attracting and retaining
mentoring and external coaching programs were also
new talent. The Company currently has
conducted. The mentoring program is guided by a
110 young professionals attending the Future Gerdau
methodology developed internally and has mentors and
GERDAU 2013 ANNUAL REPORT
mentees meet regularly to enlarge the strategic vision of the
Cause Project was created to seek greater integration and
business, disseminate the corporate culture, and develop
engagement from more than 24,000 employees who are
individual skills. Currently, 22 executives participate in the
involved in this project. To achieve the proposed results, the
program as mentees and are paired individually by
Company turned its efforts to strengthening its corporate
14 mentors with a high level of knowledge and
culture among the leadership, as well as to work hard to
experience, among them members of the Board of
define benchmarks and targets shared among the teams,
Directors and Executive Committee.
and to streamline internal processes while encouraging
the culture of innovation and meritocracy. By this, it is
The external coaching program seeks to develop skills
expected that the challenges imposed are well managed
typically pertaining to leadership, team management,
and absorbed by all, always seeking the achievement of its
communication, and influence, among others. Therefore,
employees and their satisfaction in the workplace.
the external coaching consists of a structured, personalized,
and individual process conducted by a professional from
COMPENSATION AND BENEFITS
the market with training and specific experience and who
Gerdau’s compensation systems are designed to enhance
has been previously accredited by the Company for the
and encourage employees by recognizing their outstanding
development of this program.
performance and contributions. In addition to a fixed salary,
the professionals receive variable compensation based on
INTERNAL CLIMATE
reaching individual, team, unit, and operation goals. Gerdau
In 2013, the favorability index of the Employee Opinion
also offers benefits in line with the needs of each region
Survey, which is one of the main tools used for
where it operates. In 2013, the Company changed the long-
assessing the Company’s internal environment, proved
term compensation plan for its executives to make it even
once again a high level of employee satisfaction. The
more efficient, besides contributing to the attraction and
indicator was 75% favorable, six percent higher than the
retention of talents.
world market average, which includes global companies
with excellent financial performance and/or are ranked one
of the companies most admired by Fortune magazine.
LABOR UNION AGREEMENTS
BENEFITS (R$ million)
2013
2012
Meals
94.3
94.7
In addition, Gerdau was featured in the category leadership
Transportation
75.6
75.4
in the magazine Guia Você S/A that assesses the best
Health
378.2
401.4
companies to work for in Brazil according to the perception
Retirement Plan*
208.6
170.7
of its professionals and evaluation of the management
practices by people from the Company. Since 2008, the
* Brazil, USA, Canada, and Chile.
Company scored among the 150 organizations best
Gerdau’s union negotiations are conducted with
positioned in the ranking.
transparency and focus on the sustainability of the
business as well as common interests. In 2013, the
OUR CAUSE PROJECT
Company secured 15 mutually-satisfying agreements in
Throughout 2013, Gerdau overcame important challenges
Brazil, Canada, Chile, Colombia, Spain, the United States,
in Brazil with the full integration of its long steel operations,
and Mexico.
the start-up of flat steel production, and the expansion of
mining activities. To support the Company’s growth, the Our
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GERDAU 2013 ANNUAL REPORT
CUSTOMERS
New products and unique solutions increase the competitiveness of
Gerdau’s customers
Gerdau works to add value to the business of its more
to the reduction of vehicle emissions. In Spain, for example,
than 130,000 customers worldwide by developing new
a steel grade with high mechanical and corrosion resistance
products, services, and applications for steel. This is
was designed to be used in diesel engine pistons, which
because the Company believes that its sustainability
experience high temperatures and pressure in the
is directly related to the strengthening of the steel
combustion chamber.
business supply chain and helping their customers stand
out before their competitors.
Another way Gerdau contributes to increasing the
competitiveness of its customers is by conducting courses
One example of this is the Company starting up its own
and seminars that provide a deeper technical knowledge
production of flat steel in Brazil in 2013, which made it
of the manufacturing process of special steel and their
possible to expand the product mix and meet the specific
applications. Through the program, The World of Special
demands of each segment of steel. Before starting its
Steel, for example, Gerdau holds lectures and technical
own production and sales of hot rolled coils, the Company
visits at their mills in Brazil. Throughout the year, this
took the time to understand the needs of this new market
initiative involved the participation of 11 companies and
segment by visiting customers and conducting external
benefited more than 150 customers.
benchmarks with suppliers and international producers
of flat steel. Gerdau also invested heavily in the training
of more than 500 professionals, including technicians,
managers, salespeople, and sales reps.
Similarly, in Mexico, Gerdau sought to broaden the
knowledge of its clients about methods for applying steel
structures in construction projects. The focus of the initiative
was to expand the market for selling structural shapes
with the start-up of operations at a new Gerdau mill in the
country (read more on this subject on p. 17). Some of the
highlights of the actions taken are the 50 conferences
organized for about 3,000 people, including engineers,
students, and industry professionals, totaling 5,000 hours
of activities.
In the special steel sector, the focus is on innovation. In
2013, about 10% of the volume sold by Gerdau’s special
steel operations in the world corresponded to products
created in the last three years by the Company’s research
and development centers, especially projects that contribute
Gerdau provides opportunities for its customers to expand their
knowledge of the production of special steel and their applications.
GERDAU 2013 ANNUAL REPORT
SUPPLIERS
Building long-term relationships with suppliers contributes to increasing
Gerdau’s competitiveness
Gerdau believes that building long-term relationships with
Gerdau gives preference to suppliers that share its values
its suppliers is critical to enhancing its efficiency practices,
of respect for people and the environment. In addition to
which translates to manufacturing products with better
requiring strict compliance with the laws in each country
quality, optimizing processes, and reducing costs. In all
where it operates, the Company also performs periodic
countries in which it operates, Gerdau seeks to establish
audits to ensure the compliance of its suppliers to Gerdau’s
partnerships with large and small suppliers in order to
levels of excellence.
gain the knowledge and innovation of global players,
while also contributing to the economic development
DEVELOPMENT OF MICRO AND
of the regions where it operates by supporting smaller
SMALL ENTERPRISES
suppliers that generate local income and jobs.
With more than 30,000 suppliers worldwide, Gerdau
invests in initiatives to improve the management
In 2013, for example, the Company was able to reduce the
practices of micro and small enterprises, which
cost of refractories, which is an important raw material used
represent 60% of its network of suppliers. The Supplier
in electric furnaces that is resistant to high temperatures,
Development Program (SDP), for example, offers more than
contributing to a better operating cash flow (EBITDA).
500 hours of training over 18 months by means of courses
Carried out in partnership with its suppliers, the initiative
and on-site consulting services. This initiative also includes
helped to reduce the consumption of this material in mills
the planning and execution of action plans, participating
located in nine countries. In 2014, the project should be
in trade shows and business trade meetings, as well as
implemented in other Gerdau mills around the world.
visiting other companies to learn practices. Throughout
2013, more than 383 suppliers were trained in Argentina,
The Company has also adopted a new practice in its
Brazil, Mexico, Peru, and Venezuela. As a result, Gerdau
business relationship with some market segments: the
increased the volume of business for these companies by
reverse auction. This initiative uses an online trading
20% over the previous year.
platform where the buyer announces his purchasing
needs and invites suppliers to submit their sales proposals
Because steel scrap is one of its main raw materials, Gerdau
for the product, which brings opportunities for a greater
is also dedicated to the development and improvement
number of companies to participate in the bids. This way
of micro and small scrap dealers as well as recycling
the Company is benefited because it can count on a wider
cooperatives in different countries. In 2013, it promoted
variety of prices, advantages, and terms that best align
projects of technical and managerial training to 150 scrap
to its needs, as well as the supplier since it can measure
suppliers in Brazil, Chile, Peru, Uruguay, and Venezuela.
the market demand and improve the proposals presented.
During these training programs, good practices were shared
In 2013, one-hundred and nineteen auctions were held in
relating to management, quality, and occupational health
Brazil, Chile, Colombia, the United States, and Mexico,
and safety, as well as sustainable initiatives in social and
mostly for purchasing indirect materials, which are not
environmental areas. Ethical values were also shared in all
connected to the steelmaking process. In 2014, this action
these projects and in the case of micro and small enterprises,
should be extended to the other countries where the
there was a significant social focus.
Company operates.
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GERDAU 2013 ANNUAL REPORT
SHAREHOLDERS
Speed and quality characterize Gerdau’s relationship with the capital market
With over 65 years of experience in capital markets,
assessment agencies maintained Gerdau’s investment
Gerdau follows principles of transparency, agility and
grade in 2013. Standard & Poor’s and Fitch Ratings kept
quality when disclosing information, which contributes
their rating level at BBB-, while Moody’s confirmed the
to building a close and long-term relationship with its more
investment grade of Baa3.
than 120,000 shareholders worldwide.
Moreover, Gerdau S.A. and Metalúrgica Gerdau S.A.
Throughout 2013, the Company sought to improve and
were placed for the eighth year in a row in the portfolio of
intensify its activities with the capital markets. During 17
BM&FBOVESPA’s Corporate Sustainability Index (ISE)
non-deal road shows, one deal road show (fixed income),
that highlights institutions with a high level of sustainability
and 16 conferences, 873 meetings were held with
and commitment in the areas of governance, social
shareholders, investors, and market analysts. Gerdau
responsibility, and environment. The Gerdau companies
also participated in two meetings with the Association
are also listed on the main indicator of BM&FBOVESPA,
of Capital Market Analysts and Professionals (APIMEC)
the Ibovespa, in which Gerdau S.A. holds the 11th position
in Brazil, one in Rio de Janeiro and one in São Paulo.
among companies with the highest liquidity.
The meeting held in São Paulo was recognized by the
organization as one of the best meetings in 2013 based
SHAREHOLDER’S DIVIDENDS
on the evaluation of the professionals who participated in
Gerdau’s three publicly listed companies – Gerdau S.A.,
events of publicly-held companies.
Metalúrgica Gerdau S.A., and Empresa Siderúrgica del
Perú S.A.A – have dividends policies aligned with
Another important initiative was the improvement of the IR
industry standards. The shareholders of Metalúrgica
website (www.gerdau.com/ri), which received the award
Gerdau S.A. and Gerdau S.A. receive dividends
for Best Investor Relations Website - Large Cap from the
and/or interest on capital of at least 30% of the
IR Magazine Awards Brazil 2013. The award recognizes
adjusted net profit for the year as determined under
Brazilian companies that stand out for their excellence in
Brazilian accounting practices, with quarterly payments.
transparency and communication with shareholders. During
Siderúrgica del Peru S.A.A., however, pays dividends up
the year, Gerdau was also ranked in eight categories of the
to 33% of its adjusted net profit.
Institutional Investor Magazine, which every year selects the
best IR professionals in Latin America through a survey with
In 2013, the distribution of dividends and interest on capital
450 analysts and fund managers.
for shareholders of Gerdau S.A. totaled R$ 476.7 million,
representing R$ 0.28 per share. The dividends for those
PRACTICES RECOGNIZED BY THE MARKET
owning Metalúrgica Gerdau S.A. shares reached
In recognition of its management capacity and
R$ 150.4 million, which represented R$ 0.37 per share.
diversification of Gerdau’s business, the major risk
GERDAU 2013 ANNUAL REPORT
SOCIETY
Gerdau makes special efforts to improve the quality of life in its communities and to
strengthen the steel business supply chain
In the social projects that it supports, Gerdau believes
on p. 27). Moreover, because steel scrap is one of its main
that one of its major contributions is to share knowledge
raw materials, the Company also focused its efforts on
in management. That is why it encourages the volunteer
the scrap recycling industry through a partnership with the
work of its employees worldwide. Currently, 11,000
Agency for International German Technical Cooperation
employees devote part of their time to make it so
(GIZ). The project started in 2010 and has also prepared
that the social organizations are able to reach their
customers and suppliers of materials and services, along
objectives and remain sustainable. This is achieved
with professionals working with steel and civil construction.
by the application of management methodologies in the
During this period, 9,000 people and 378 companies were
development of social projects.
benefited in Brazil, Chile, Peru, and Uruguay.
In 2013, Gerdau invested R$ 62.4 million in social projects.
In the state of Minas Gerais in Brazil, the most important
The definition of these investments is determined by the
region of Gerdau’s growth, the Company became a
Gerdau Institute, which is responsible for the policies and
sponsor of the Museum of Mining and Metal located in
guidelines of the Company’s social responsibility efforts. The
Belo Horizonte. With a monthly average of 5,000 visitors,
practices of social responsibility permeate the Company’s
the museum houses an important collection on mining
entire 100-year history and began in the late 19th century,
and metallurgy and records the relationship between the
a legacy of the Gerdau Johannpeter family. In the 60s,
history and culture of Minas Gerais with its natural wealth.
the Company innovated when it created the Gerdau
Gerdau also expanded its partnership with the Flávio
Foundation, offering benefits to employees and their families
Gutierrez Cultural Institute, which contributes to the training
and continuing to support the community social projects.
of young people in areas of social risk through courses in
Today, the Gerdau Institute has developed approximately
conservation and restoration of historical heritage. In 2013,
900 social responsibility initiatives in more than 205
the program trained more than 120 students, 85% of whom
communities in 14 countries. At every plant location, the
have already been emerged into the job market.
Company seeks to create value for the communities, the
business supply chain, and society as a whole. Leaders
Gerdau also has partnerships with key institutions that
and local teams organized into Gerdau Institute Committees
promote transformative actions in society, such as
guide the various initiatives supported by thousands of
Todos pela Educação, the Competitive Brazil Movement,
volunteer employees.
and the World Childhood Foundation (WCF). A highlight
during the year was the launch of the National Observatory
Gerdau has also expanded its role in the development of
of the National Plan of Education, sponsored by
micro and small entrepreneurs who are part of the steel
Todos pela Educação in Brazil. The online platform
business supply chain. In 2013, this initiative benefited more
(www.observatoriodopne.org.br) was designed based on
than 3,500 customers, suppliers, and professionals who use
about 300 performance indicators and makes it possible to
products in steel, contributing to improving the management
monitor the evolution of the 20 targets set by the Federal
of these businesses. During the year, for example, Gerdau
Government to expand people’s education, improve the
consolidated one more cycle in the Supplier Development
quality of education, and thereby reduce social inequalities
Program, which is aimed at improving the management
in the country.
of micro and small enterprises, which represent 60% of
Gerdau’s network of suppliers (read more on this subject
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