We are focused on creating long-term, sustainable value for all stakeholders. Our products support and preserve infrastructure allowing the lights to come on in our homes and goods to be delivered safely, efficiently and inexpensively to our communities. We bring these products to life by fostering innovation, maintaining a robust product stewardship process, and responsibly managing our supply chain.
As part of our value creation strategy, we continually work to enhance our product portfolio, solve disposal issues for customers through cradle-to-cradle solutions, optimize our network and logistics, strengthen our balance sheet, and maintain financial flexibility.
Overall, we are well positioned to capitalize on our strong market presence, focusing on growth opportunities in wood preservation, which will allow us to continue creating shareholder value and deliver on our Sustainability goals.
Our financial performance in 2019 reflects our continued efforts to create value for all stakeholders. The core elements of our wood preservation strategy continue to gain strength as it relates to crossties, poles and pilings, and preservatives. Financial highlights from 2019 include:
For further details of our financial performance in 2019, please see our annual report.
A reconciliation to Net Income is available here.
We are proud of the circular benefits our business creates across the globe. Supporting our employees and their families and significantly contributing to tax bases strengthens the financial foundation of the communities where our operations are located and our employees live. In addition, the company donated nearly $800,000, or approximately .38% of Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), to causes important to Koppers and our employees.
Innovation, one of our corporate values, is essential to solving our customers’ most important challenges. Two key facilities – our Koppers Global Technology Center, an applied research facility located 15 miles north of our global headquarters in Pittsburgh, Pennsylvania and our research laboratory and pilot plant in Griffin, Georgia – provide our internal experts with the resources needed to ensure product quality and drive new enhancements and offerings.
Additionally, Koppers operates a virtual innovation laboratory known as our iShare portal. Through the portal, employees can submit original ideas for innovative practices and processes. iShare empowers our employees to identify areas of improvement that align with our corporate strategy and create sustainable value. Each submitted idea is evaluated and scored by local site teams composed of a cross-functional group of representatives. Innovative ideas determined to merit implementation are allocated the necessary resources for their enactment.
We funded and implemented 66 ideas submitted through the iShare portal in 2019 and will continue to utilize the portal to stimulate innovation at Koppers in 2020. A few implemented ideas sparked through the iShare portal in 2019 include:
To provide our employees with the resources they need to foster innovation and process excellence at their facilities, we held a two-day training for a diverse group of employees including assistant managers, a controller, engineers, a logistics manger, a SHE coordinator, a treating supervisor and the Vice President of Operations in Pittsburgh. The training presented an overview of the tools and resources available to support innovation and process excellence at the facility level. The participants also were able to connect with other Koppers employees who they might not have had the chance to meet without traveling to Pittsburgh.
Koppers Idea Summit
In 2019, we looked to expand innovation at Koppers through the creation and implementation of an interactive Idea Summit, which was facilitated in-house using a human-centered design methodology (HCD). The basis of HCD is putting people first by involving them in developing solutions to problems. The first Summit brought together eight employees from across Koppers business units to think through and discuss ideas to improve around a guiding theme. The theme at the first summit centered on the question of “How might we increase our value?” The participants brainstormed ideas around this question, jotting down ideas as their discussion progressed and prioritized the ideas most likely to produce tangible results. Overall, across two and a half days of discussion, a total of 175 ideas were generated, which were then narrowed down into seven major themes for presentation to the Koppers executive team. Out of these seven themes, four ideas were quick wins that were implemented immediately, while the three other ideas were set to be implemented in 2020. One of these ideas was the Koppers Equipment Exchange, an online portal where facilities can list unneeded equipment that is still in good operational condition. Other facilities that may need this piece of equipment can then request to have it transferred to them. This exchange reduces waste, saves money, increases operational efficiency and is an overall win-win for both facilities.
Koppers Innovation Tournament
Recognizing the value of a fresh outside perspective, we partnered with Robert Morris University’s Massey Center for Entrepreneurship and Innovation to conduct an innovation tournament centered on modernizing our workplace safety trainings. Involving Robert Morris students, the tournament offered a prize to the student who presented the most innovative safety training idea to our Innovation and Process Excellence team.
For Koppers, product stewardship is a multi-disciplinary program emphasizing three distinct but interconnected areas for our products: Compliance, Risk Mitigation and Sustainability. The program, which is directed by our Strategy and Risk team, receives diverse inputs from multiple functions, including Product Safety, Zero Harm, Legal, Research and Development, and many others. External partners from trade associations, testing laboratories, toxicologists and legal firms also make valuable contributions to the program.
Our product stewardship efforts focus on product lines across all areas of our business. We effectively manage a product line throughout its life-cycle – from inception to end of life – to ensure its safety and market relevancy. By accomplishing this, we build confidence in our business with customers and the public.
To guide our product stewardship program, we utilize the three previously outlined areas of compliance, risk mitigation and Sustainability. Starting with compliance, it is vital to both our business and culture to ensure our products meet all regulatory requirements. We use a number of management methods to do this, including the regular updating and publishing of our Safety Data Sheets and Product Stewardship Summaries, developing product labeling and safe handling instructions, and conducting extensive product safety testing. Moving to risk mitigation, we conduct risk assessments, prioritize risks and develop mitigation plans. The key to this process is clear communication between the various internal teams working on a product so that identified risks are known and properly addressed. We also engage with our customers to obtain their input on risk mitigation and implement product take-back and recycling programs when possible to reduce risks from improper disposal. Lastly, Sustainability is an increasingly important part of our product stewardship program. We implement sustainable product designs into our development process to ensure that, throughout the stages of a product’s life, its impact on both people and the environment is minimized.
Product stewardship management at Koppers begins during a new product’s development phase and continues throughout the entirety of the life-cycle. This starts with an initial investigation to determine a product’s safety through the examination of proposed chemicals and other inputs. Stakeholders also play a part in the investigation. For industrial products, we work with customers to understand how the product will be handled during use to ensure we clearly understand the risks of the product, and to confirm that customers are equipped to manage potential hazards. For consumer-facing products, this process is focused on predicting product end-uses so that we can better adapt a product to circumstances it will commonly encounter, thus enhancing its safety. Once the investigation concludes and the product’s components have been determined, development begins and is followed by testing and validation, and finally product launch.
Once the product has been introduced to the market, the process continues, first with pilot assessments completed by customers. These assessments involve evaluating a product during its initial exposure to actual work applications, along with a review of the personal protective equipment used by people handling the product to ensure their personal safety.
Lessons learned from the introduction phase assessments are incorporated into the product’s publicly available safety information in the growth phase. Also during this phase, regulatory renewals are completed, along with periodic customer assessments. Once the product has reached the maturity phase, a chemical analysis is conducted and product safety information is updated on an as needed basis. In the final phase of a product’s life, we begin to plan for a product’s retirement and phase out from the market.
Throughout these three stages of a product’s life, we work to manage a variety of other factors that affect its safety and market relevancy. This work includes conducting incident reviews when an adverse event occurs; assessing the product to ensure it continues to meet our quality, and safety, health and environment KPIs; monitoring regulatory and legislative action that may affect the product; and lastly monitoring new science for ways in which it may affect a product’s demand and societal acceptance.
Our current and comprehensive product stewardship program aligns with our spirit of continuous improvement. We strive to develop safe products that meet the demands of industry and consumers alike, and that will continue to meet demands throughout their life-cycles. By accomplishing this, we not only ensure our business performance prospers, we also realize our guiding purpose of protecting what matters and preserving the future.
For our business it is essential that we maintain our supply networks throughout the world to source wood and other raw materials. We work closely with our suppliers to ensure we source our materials in an ethical and responsible manner, in accordance with our Code of Conduct.
Responsibly managing our supply chain starts with the purchase of our raw materials. We utilize multiple key performance indicators to evaluate our suppliers based on topics like delivery performance, reliability, quality of materials and responsiveness to issues. These KPIs are reviewed quarterly and if an issue arises, we work with suppliers to set up action plans to resolve them. One inherent challenge to our supply chain is the limited number of suppliers who are able to provide certain raw materials.
As the purchaser, we are frequently responsible for transporting our raw materials to our facilities and we work diligently to ensure our transportation operators work responsibly. This is done through operations reviews and trainings on subjects such as safe rail car loading. While we do not operate the trains used to transport our raw materials, we do lease and own the railcars used, and we regularly conduct maintenance on these railcars to ensure their integrity.
Koppers vendors, contractors and suppliers are vital to our Sustainability strategy and performance across our supply chain, and we are committed to implementing the Guiding Principles of Responsible Care®. As we strive to design and develop more sustainable products, we also engage with our suppliers to ensure our products are manufactured and transported safely and sustainably. We regularly send our suppliers Responsible Care® qualifications and guidance for them to review and incorporate in their operations, and work with them to bridge any gaps that may exist.
Our successes and achievements in 2019 across the areas of People, Planet and Performance would not be possible without the vigorous participation of our stakeholders. We thank everyone who had a role in this success and we look forward to working towards its continuation in the years to come.
Thank you to all for playing an important role in Protecting What Matters and Preserving the Future.
Koppers is committed to continuous improvement and creating sustainable value for our stakeholders. This report covers significant accomplishments and programs in place for the 2019 fiscal year and has been prepared in accordance with the GRI Standards: Core option.