Global focus on automotive and aerospace social responsibility review
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Global Focus on Automotive and Aerospace - Social Responsibility Review. Rest of World 7%. Americas 32%. Europe 61%. Overview of GKN. 2001 Sales£4.3bn Profit before tax*£245m. Operations in more than 30 countries Employees - subsidiaries36,300 joint ventures13,500.

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Global Focus on Automotive and Aerospace - Social Responsibility Review

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Global focus on automotive and aerospace social responsibility review

Global Focus on Automotive and Aerospace- Social Responsibility Review

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Overview of gkn

Rest of

World

7%

Americas

32%

Europe

61%

Overview of GKN

2001 Sales£4.3bn

Profit before tax*£245m

Operations in more than 30 countries

Employees - subsidiaries36,300

joint ventures13,500

2001 Sales by Business

2001 Sales by Region of Origin

Other

£79m (2%)

AgustaWestland

£784m (18%)

Automotive

Driveline Division

£1,781m (42%)

Aerospace

£709m (16%)

Powder

Metallurgy

£612M (14%)

Other

Automotive

£451m (10%)

* Before goodwill amortisation and exceptional items

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Overview of gkn1

Overview of GKN

Automotive Driveline Division (“ADD”)

  • World No 1 in production of constant velocity joints (CVJs) with 42% global market share

    Powder metallurgy

  • World No 1 in powder parts production with 16% market share and US No 1 in powder manufacture

    Helicopters - AgustaWestland

  • World No 1 by 2001 disclosed revenues

    Aerospace Services

  • Leading supplier to aerospace industry - core structures supplier to Boeing Military Aircraft and Missile Systems Group

A global leader in automotive and aerospace

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Business mission

Business mission

  • To deliver outstanding products and services to customers and to exceed the performance of other companies in our sector in growth and profitability

  • To enrich our shareholders, reward our employees and contribute to the communities of which we are a part

  • We value the spirit of enterprise as a way of empowering our people, we focus on innovation as a way of evolving new products and processes and we build on our global market and technology leadership as a source of competitive advantage

  • We care for the environment, we respect human dignity and rights and we uphold the highest standards of ethical behaviour.This mission is complemented by the Company’s enduring Aims and Values which are set out in full on page 20 of the annual report

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Group policies

Group policies

  • Ethical Standards

  • Competition Law

  • Data Protection

  • Employment Law and Practices

  • Employee Disclosure Procedures - (Whistle Blowing)

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Ethical standards policy

Ethical Standards Policy

  • All Group operations to have an ethical standards policy

  • Best practice within relevant industry

  • Takes account of cultural and regulatory framework

  • All polices must contain certain core principles, including:

    • Business conducted with respect for human rights and in accordance with regulatory framework

    • Prohibition of corrupt practices including prohibition on giving or receiving bribes

    • Protection of assets and recording of transactions

    • Avoidance of conflicts of interest

    • Ethical oversight and advice

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Competition law

Competition Law

  • All companies are required to ensure that all relevant staff are trained in competition compliance

  • Training must include:

    • Responses to competitors

    • Dealing with customers

    • Dealing with suppliers

    • Requirements for regulatory approval

  • Emphasis on the need for external advice

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Data protection

Data Protection

  • The following general principles are applied to all companies:

    • Information obtained/retained where necessary for legitimate business objectives

    • Local requirements must be observed

    • Information kept confidential and in secure conditions

    • All companies to have nominated data controller

    • Upon request the nature of information held and reason for holding it to be supplied to data subject

    • No disclosure without consent other than pursuant to legal obligation

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Employment law and practices

Employment Law and Practices

  • All companies must have employment policy and procedures

  • All policies must contain core principles:

    • Respect for human rights

    • No discrimination (sex, race, sexual orientation, religion, national or ethnic origin, disability)

    • Provision of safe and healthy working conditions

    • Provisions in relation to substance abuse and dangerous weapons

    • Provisions against harassment (physical, verbal, sexual)

  • Formal and confidential grievance procedures must be provided

  • Separate US provisions re age discrimination (retirement)

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Employee disclosure procedures whistle blowing

Employee Disclosure Procedures(Whistle Blowing)

  • Observes basic principle that employees must be able to make disclosures in good faith without fear of reprisal in knowledge that matters will be investigated

  • Areas covered include actual, or anticipated:

    • Criminal behaviour

    • Danger to health, safety, environment

    • Breach of Group policies

    • Concealment

  • Companies must publish disclosure procedures

  • Default system in writing (in any language) to Group Secretary or Head of Corporate Audit

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Employee statistics as at december 2001

Employee statistics as at December 2001

Subsidiaries36,300

Joint ventures13,500

By Division

By Region

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Gkn s integrated loss prevention policy

GKN’s Integrated Loss Prevention Policy

  • The policy is based on GKN’s values:

    • In support of these, the Group pursues a systematic integrated loss prevention approach to safeguard:

      • people’s health

      • the environment

      • an uninterrupted supply to our customers

      • our assets and earnings

  • All parts of GKN must:

    • Provide a safe and healthy working environment

    • Commit to achieving and demonstrating sound environmental performance

    • Systematically analyse and actively manage risk in all areas of business

    • Embed Loss Prevention into its total business process

    • Strive for excellence through continuous improvement

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Policy poster in 8 languages

Policy poster in 8 languages

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Gkn loss prevention infrastructure

GKN Loss Prevention Infrastructure

Executive Committee

Group Loss

Prevention Council

Common Interest Groups

Group Loss Prevention

Divisional Loss

Prevention Committees

Plant B

Company

Plant A

Company

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Health and safety a proactive approach

Health and Safety – a proactive approach

Health & Safety Performance

- focus/support for under-performers

- recognising good performers

- Executive Committee reviews

Improvement objectives & plans

- required for each business

- targets for every business

- review by division & Group

Workshops & seminars

- active senior management input

- practical approach

- all roles, businesses & countries

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Health and safety a proactive approach1

Health and Safety – a proactive approach

Safety visit/review programme

- senior executives & specialists

- focus on improvement

- improvement workshops

People involvement/ development

- health & safety committees

- safety training / activities

- aim to engage all employees

Learning/sharing/ benchmarking

- sharing best practice

- accident communication & learning

- developing Intranet

Point of accident

Bearings and blade for supporting the half shaft

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Accidents

Accidents

Accident severity rate reduced by 37% over 5 years

Accident frequency rate reduced by 47% over 5 years

Accident frequency (number of incidents resulting in one or more lost days per 1,000 employees per annum)

Accident severity rate (days lost per 1,000 employees per annum)

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Environmental

Environmental

  • Environmental Objectives and Targets

    • Devise procedures that properly safeguard the environment,

    • Manage environmental risks so as to minimise the risk of pollution of any media,

    • To take account of environmental impacts when new products or processes are being considered,

    • To achieve continuous improvement through setting and monitoring environmental performance targets.

  • Application of sustainable development to products and processes

    • Board led task force in place to identify and realise opportunities

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Environmental1

Environmental

Energy (1999 = 100)

  • Environmental Achievements

    • Energy consumption and carbon dioxide emissions relative to sales beginning to fall,

    • Volatile Organic Compounds (VOC) use has reduced since 1998,

    • Water use and waste generation relative to sales are declining,

    • Environmental management steadily improving – more companies are accredited to ISO 14001,

Waste (1999 = 100)

Water (1999 = 100)

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Governance and compliance

Governance and Compliance

  • Chairman and Chief Executive roles separated

  • Audit Committee (Chair: Roy Brown) consisting of 5 NEDs

  • Remuneration Committee (Chair: Baroness Hogg) consisting of 6 NEDs

  • Nominations Committee (Chair: Sir David Lees) consisting of 6 NEDs and CEO

  • Executive Committee (Chair: Marcus Beresford) consisting of all Exec Directors

  • Chairman’s Committee (Chair: Sir David Lees) consisting of 6 NEDs and CEO

  • Balanced Board 6 Exec Directors 6 NEDs

  • Combined Code compliance

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Internal control and risk management

Internal Control and Risk Management

  • Board policy to have internal control and risk management systems in place to manage risk in an effective manner

  • Exec Committee identifies, evaluates and monitors risk

  • Continuing processes in place to assess major strategic, commercial, and financial risks

  • Social responsibilities are monitored, managed and controlled

  • Processes summarised in a risk map, revised on an on-going basis and reviewed annually by audit committee

  • Requirement to confirm annually all statutory and regulatory compliance as well as compliance with Group policies

  • Regular Board review of key processes

More detail on systems and the roles of the Board and its Committees can be found on pages 72-74 of the Annual Report

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Group policies1

Group Policies

  • Application and audit

    • All policies are applied globally even if in excess of legal requirements

    • Appliance of policies scrutinised annually by internal corporate audit as part of internal control procedures or, in the case of the integrated loss prevention policy, by Corporate Centre specialists.

    • Internal corporate audit report submitted to parent company audit committee and reported on to the board.

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Community and charitable activities

Community and Charitable Activities

  • Total Group donations (2001) £1.31 million

  • Founder member of Per Cent Club

  • Giving is focused on education and community welfare

  • Active education/business partnerships include:

    • Technology Tree

    • Year in Industry

    • Young Enterprise

    • West Midlands Engineering Scheme

  • GKN Millennium Trust sponsors the chair of Manufacturing Engineering at Cambridge University

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Community and charitable activities1

Community and Charitable Activities

  • PRINCE’S TRUST: sponsorship of 5 business teams of socially disadvantaged young people each year which undertake community projects

  • GKN EVERGREEN ASSOCIATION: providing post retirement care to 16,000 pensioners utilising the services of 400 volunteers

  • GKN SANKEY EMPLOYEE CHARITABLE TRUST: has now raised over £500,000 since inception

  • MEXICO: initiatives to provide education to families of employees (some 700 people attend most weekends)

  • BRAZIL: initiatives include building bakery for children’s home and providing housing and

    furniture by use of waste wood

  • GERMANY: policy of sub-contracting work to disabled workshops

  • US: community service teams in all US

    Automotive Driveline plants

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


Contacts

Contacts

Dick Etches

Human Resources Director

Grey Denham

Company Secretary

David Rood

Investor Relations

+ 44 (0) 1527 533313

[email protected]

GLOBAL FOCUS ON AUTOMOTIVE AND AEROSPACE


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