South Korean steel giant Posco has set up a task force to overcome economic difficulties. Vice Chairman Kim Hak-dong will spearhead the task force, according to industry sources, Thursday.

The task force is expected to focus on reducing costs spent on procuring raw materials, increasing profitability and maximizing business liquidity on the backdrop of difficulties in the global economy.

In an email sent to Posco employees, Kim said, “let’s find out measures to save at least 1,000 won (81 cents).” Kim also stressed that the company needs to start from a "zero base.”

Kim also demanded in a letter he sent to Posco workers: “Ask not what your company can do for you, but ask what you can do for your company.”

Posco’s decision to install an internal task force came after Posco Holdings delivered an earnings shock last year, partly due to one-off costs caused by typhoon-related damages in September 2022.

Posco Holdings last week estimated its operating income last year to reach 4.9 trillion won, nearly halved from a year earlier, 9.2 trillion won. Posco Holdings added the temporary closing of manufacturing facilities in Pohang resulted in a loss of 1.3 trillion won in last year’s operating profit.

Earlier this month, Posco completed the restoration of all rolling mills in Pohang and started normal operations, 135 days after temporarily closing due to flooding caused by Typhoon Hinnamnor last year.

However, recent spikes in prices of iron ore and coal used for its steel products are expected to weigh on the steelmaker, forcing the company reflect temporary high raw materials costs on its products to avoid low profitability.

Global demand for steel products, however, will remain more or less the same this year. According to the latest report released by the Korea Development Bank, global steel demand in 2023 will increase by only 1 percent on-year as China's demand for steel products is expected to remain low.

Meanwhile, Posco Group has been on emergency management mode since July last year to brace for weaker profits amid an expected slowdown of the global economy.