1 Columbian Chemicals Korea Human Resource Integration

2 Columbian Chemicals Global Subsidiary of Phelps Dodge Corp - Phoenix CCC Headquarters: Marietta, Georgia USA CCC Product - Carbon Black Employees: 1,355 Manufacturing Facilities  5 North America  1 South America  5 Europe  1 Asia 2002 Annual Sales: $520,000,000

3 Columbian Chemicals Korea Company start date: February 1, CCK Employees Contractors Capacity 000 MT’s Annual Sales $000 44,00054,000 Fixed Cost / $MT 86 40

4 Due Diligence Process 1998 Understand Korean Business and Social Culture.  Utilized Prudential Intercultural Training  Utilized Korean Consultant - Towers Perrine Design Company Organization  Utilized CCC Global Models  Incorporated Korean Best Practices now in use. Staff the Organization  Retained Key Korean Employees  Utilized CCC Expertise as Expatriates

5 Integration Priorities Understand and Utilize Intercultural Synergies Understand the current Organization issues Develop Human Resource Strategy Communicate to Employees:  CCK Organization Structure and Staffing  CCK Mission  CCK Core Values  CCK On the Job Behaviors  CCK Key Business Skills  CCC Global Regulations  CCC General Business Behaviors

6 Intercultural Synergies “Reality happens to be like a landscape possessed of an infinite number of perspectives all equally veracious and authentic. The sole false perspective is that which claims to be the only one there is.” ---Jose Ortega y Gasset--- CCC  Open Communications and Transparency  Lean Manufacturing  Low Level Decision making  Risk Taking / Outside the Box  Value of Diversity  Performance Based Rewards Korea  Loyalty to Organization  High Education / Training  Work Process Discipline  Team Oriented Activities  World Class Manufacturing  Data driven decision making

7 Organization Issues 1999 Morale was low due to poor business results Weak HR Management in place. Employee identification with KKPC Culture. Lack of English communications skills Lack of western business culture understanding Employees fear - resulted in forming Union No use of Performance Based Compensation Union Employees wages were above Managers due to Bonus System Technical employees felt they lack career development opportunities Managers wanted to be differentiated from Technical employees. Employees expected immediate improvement in Salaries and other Benefits.

8 Human Resource Strategy Utilize Best Practices from within CCC Global and Korea to establish and operate a Value Driven World Class Manufacturing Organization

9 HR Integration Actions Hire HR Manager with international experience and excellent English communications skills. Develop Employee Communications Plan. Introduce CCC Mission, Core Values, On-the-Job Behaviors, Key Business Skills and General expectations. Revise Work Processes based on New Organization. Complete detailed Wage and Benefit Surveys Implement Employee Performance Evaluation and Development Process Implement Employee Performance Based Compensation Systems. Develop and implement Training Programs

10 CCK Organization

11 CCK Mission Create Value for our stakeholders by offering a compelling value package of products and services at competitive costs in an environmentally responsible and safe way.

12 CCK Core Values Safety Quality Trust Confidence Teamwork Accountability Doing What is Right

13 CCK On the Job Behaviors Promote Safety / Work Environment Fostering Teamwork Being Flexible and Adaptive Creating Ownership Acting with Integrity Fostering Open Communications

14 CCK Key Business Skills Using Sound Judgement Driving for Results Focusing on the Customer Investing People Knowing the Business Being Innovative

15 CCC Key Global Regulations Code of Business Ethics Non-Discrimination Policy Financial Regulations and Controls Travel and Entertainment Policy QS 9000 Quality Management System CCC Safety Policies OHSAS Safety Management System ISO Environmental Management System

16 CCC Management Beliefs All employees are Responsible and Accountable for their Job Performance. Sub-Standard Performance will not be accepted. Your Career Promotions depends on your Performance and Capabilities not your Age, Seniority or your Education. This applies to all employees. Your Career Development Plan is your Responsibility. Compensation Systems will be Based on Performance. Management is responsible to ensure work atmospheres are enjoyable and based on mutual respect for all without any form of harassment or discrimination.

17 Challenging Events Delay in hiring of HR Manager in 1999 Union Executives in 1999 had no experience leading to poor negotiations and Union Chairman resignation and removal from Union. HR Manager resigned in Disciplinary action against 2nd Union Chairman leading to his resignation in rd Union Executive Team lack of experience and unreasonable requests in 2001 led to 20 day strike. 2nd HR Manager replaced Management lack of communications to Union prior to decision making on new Regulations.

18 Lessons Learned Hire HR Manager prior to business start and ensure they have high levels of “Korean common sense” and Communications skills. Spend as much time on HR Performance as you do on Operations and Financial Performance. Communicate, communicate, communicate then communicate some more. Quickly implement “Supervisory Leadership” training for all managers. Do not underestimate need to consider Korean Cultural issues when new HR Regulations are implemented. Prepare prior to business start.

19 Positive Developments 3rd HR Manager hired in 2002 very stabilizing force. Management Employee Evaluation and Development Systems and Performance Based Compensation in place since 1999 and working well. Year End Bonus for all Employees based on Performance criteria. Promotion Systems for Management and Technical Workers tied to Performance criteria. Technical Workers promoted into Management. Successful Integration of all Key Global Work Processes and Regulations. High levels of Communications and Employee Participation High levels of Trust and Understanding now exist between Management and Employees. CCK viewed as a “Benchmark Company” within CCC in many areas.