Human Resources and Social Policy

In 2010, following the financial crisis, TMK implemented a series of measures to improve the efficient use of resources to achieve an optimal balance in the Company’s organizational structure, its number of employees, staff costs and productivity growth. This was done to ensure the implementation of the Company’s key business objectives.

TMK employees

  2008 2009 2010
3 Russian division includes employees, among others, TMK-Kazakhstan, TMK-Kaztrubprom, TMK Africa, TMK Global and TMK Middle East
Total, as of 31 December, 2010 48,941 46,013 46,273
Russian division 3 44,086 42,100 41,850
European division 2,566 2,037 1,946
American division 2,289 1,876 2,477

Completion of the main stages in the modernization of TMK’s facilities was accompanied by a series of measures for training and retraining of personnel to work at modern metallurgical sites. In 2010, training costs amounted to U.S.$ 2.23 million. Particular attention was paid to the implementation of the Integrated Specialist Training Program at TMK Trade House, which boosted the Company’s sales. The process of inter-plant cooperation received new impulse, including exchange of knowledge between professionals at TMK’s facilities in Russia, the United States and Romania.

Amid a challenging demographic situation and a lack of specialists in the labor market, preventive measures for staffing of the production facilities were taken, and active cooperation with the educational institutions on targeted training was carried out. The main bases for training the Company’s specialists are the National Research Technological University MISA and the Yeltsin Ural Federal University.

In the area of remuneration TMK’s facilities have largely overcome the effects of the global economic crisis: regular and appropriate market level salaries are guaranteed, as well as the preservation of basic social benefits. The Company is committed to increasing the average pay of its employees based on the dynamics of productivity growth. In 2010, wage growth in various businesses ranged from 10- 15% relative to the level in 2009

Wage dynamics

  2008 2009 2010
% from 2007 level 134.8 141.5 162.0

In order to improve the performance indicators in 2010, new forms of incentives were introduced at a number of the Company’s facilities to encourage employees to optimize costs. The American division has developed and implemented an incentive program whereby payments to employees are based on their work performance. New motivational provisions aimed at increasing sales are being used successfully in a number of trading companies.

The Company aspires to use a unified approach to working with employees in all countries and regions where it operates, taking the local context into account, focusing on staff development, dissemination of best practices, development of managerial competencies and motivation of young professionals toward innovative solutions to production problems. In 2010, an annual companywide contest called “Best Young Master of TMK” was held for the first time, and implementation of a scientific and technical creativity program for youth was continued. Another scientific research conference held by TMK provided an opportunity to identify the most active and enterprising young people at the Company. The best solutions presented in the conference papers are being implemented at TMK facilities.

TMK focuses on providing safe working conditions and ensuring the health of Company employees by solving the following problems:

  • introduction of modern technologies and production processes that eliminate occupational hazards and risks;
  • reduction in the level of occupational injuries and harmful production factors;
  • elimination of occupational diseases and maintaining the physical and mental health of workers at a high level;
  • formation in the Company’s employees of a sense of personal responsibility for complying with the rules of safe operation and ability to predict dangerous situations.

TMK focuses on providing safe working conditions and ensuring the health of Company employees

The Company’s production activities are regulated in strict accordance with the laws of the countries where it operates and with international laws. All plants are certified and audited annually for compliance with the international standard Occupational Safety and Health Management System OHSAS 18001:2007. Supervisory audits conducted in 2010 confirmed compliance with the requirements of OHSAS 18001:2007.

The system of occupational health and safety is under constant control of plants’ administrations and trade union committees, and upcoming events in this area are included in the collective bargaining agreement. In 2010, the Company sent 720 million rubles to implement health and safety measures, purchase of personal protection equipment and compensation. As a result of improved working conditions at 1,207 jobs, there has been a 12% decrease in the level of occupational sickness, and in some plants it has been completely eliminated.

TMK plants are actively cooperating with regional supervisory officials. Routine inspections and examination of dangerous industrial sites are conducted, and actions designed to improve the health and safety system are carried out. The following awards were given to plants for strong performance in the area of health and safety in 2010:

  • Seversky Tube works was declared the winner of the regional stage of the national contest “Russian Organization of High Social Efficiency” in 2009 for the reduction of workplace injuries and occupational sickness.
  • Sinarsky Pipe Plant took second place in a competition for culture of production and occupational safety among the organizations located in the Sverdlov Region in 2009 (by Sverdlov regional government decree of May 24, 2010). The plant was also awarded a certificate for second and third places in an occupational safety competition among organizations Kamensk-Uralsky in 2009 in a group in the group of companies employing more than 1,000 people.
  • In April 2010, TAGMET received a letter of gratitude from the Taganrog City Administration and the Center for Occupational Safety for “Best Occupational Safety Organization” based on the results of a city-wide seminar on “Safe Work-Everyone’s Right 2010” that was held among companies in the city.
  • A number of TMK IPSCO facilities received local awards for best occupational safety practices.

TMK’s social policy is based on the principles of maintaining a stable balance between the interests of the Company and its employees, compliance with national laws, human rights, elimination of all forms of discrimination, and promotion of cooperation with trade unions and social organizations at TMK facilities that is based on annually negotiated collective agreements and social programs.

At TMK’s facilities the following types of social support programs are carried out:

  • Medical insurance, health care facilities; partial payment vouchers for spa facilities.
  • Additional pension provisions and implementation of pension schemes.
  • Provision of benefits to employees and preferences concerning lower production volumes.
  • Programs to support the family members of Company employees.

Using the advanced experience of countries where the Company operates and under programs offered by the Russian government, the Company has introduced trial corporate pension plans in the Russian Federation, which has been a significant factor in improving staff performance and retention of highly qualified personnel. The American division successfully operates a program that distributes benefits whereby employees are awarded annually with additional payments to their retirement accounts based on performance achievements.

In 2010, new approaches were identified to solve the housing problem for workers at TMK’s Russian plants through the implementation of low-rise construction programs. Construction of the first cottage village is taking place at Seversky Tube Works. The Company will support “key” staff in acquiring housing.

2010 was the final year in the implementation of the HR policy 2006-2010, the results of which were reviewed and approved by TMK’s Board of Directors. The Company has begun to develop a new HR management strategy based on TMK’s medium-term strategic goals.

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