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GKN plc Annual Report and Accounts for the year ended 31 December 2009

The GKN Way

How we sustain and develop our business

GKN’s operations impact a diverse group of stakeholders including shareholders, customers, suppliers, our employees and the communities in which we operate. Our relationships with all these stakeholders are guided by our Values. In pursuit of the Values, the GKN Code together with a series of related policies provides a framework for the behaviour of all our employees, whatever their job and wherever they work.

GKN’s Values and the main principles of the GKN Code

  • We will comply with all relevant laws and regulations wherever we operate and conduct our business with integrity and in such a manner as to reinforce our reputation.
  • We will deal honestly and fairly with our suppliers and subcontractors.
  • We aim to maximise shareholder value whilst safeguarding shareholders’ investment by combining high standards of business performance with high standards of corporate governance and risk management.
  • We aim to provide excellent products and services to our customers and seek to win new business through fair competition.
  • We will treat our employees justly and with respect, recognising their abilities and differences, and reward them for their achievements.
  • We will provide employees with a healthy and safe working environment.
  • We will play our part in the protection of the environment in both the operation of our facilities and the design of our products.
  • We will contribute positively to the communities in which we operate.

Living the Values — the GKN Way

Living the Values diagram

The essence of GKN’s Values has been captured in 12 promises — 6 promises from GKN to employees and 6 promises from employees to GKN. They form a central part of what we know today as the GKN Way — a common set of behaviours which brings all our employees together as one team.

The GKN Way encompasses a culture of continuous improvement, a focus on technology, and development of all our people to raise their capability and achieve their potential. We use a common set of measures Group-wide, based on the EFQM (European Foundation for Quality Management) Business Excellence model, to drive improvements in our business.

Over the next few pages we provide more detail on how we live the Values - the GKN Way.

Conducting our business with integrity

Our ethical standards policy requires all employees to maintain the highest standards of integrity, honesty and fair dealing. We support the Universal Declaration of Human Rights and do not tolerate the use of child labour or forced labour in our own operations and, through our supplier management policy, we require equivalent standards through our supply chain. We will continue to reinforce our reputation through high standards of conduct to underpin shareholder value.

Working with our suppliers

Our suppliers play an integral part in the sustainability of our business and it is essential that they conduct their business in a manner that supports our commitment to world class performance. Our supplier management policy encourages Group companies to develop and maintain value adding relationships with our supply base. It prohibits companies from engaging suppliers that offer inadequate health and safety standards for employees, infringe internationally accepted standards of workers’ rights, use child or forced labour, adopt unsound environmental practices, have poor standards of social responsibility or that fail to comply with relevant laws and regulations. During the difficult trading conditions that prevailed in 2009 we continued to monitor closely the financial health of our suppliers to ensure that we were aware of any issues and could provide assistance where appropriate; we are continuing to work closely with our suppliers as we trade through 2010.

Safeguarding shareholders’ interests

We describe in the Corporate Governance Report the governance and control procedures we have adopted to ensure that strong stewardship of the Group contributes to the sustainability of our business. The Governance and Risk Sub-Committee of the Board plays a central role in this with responsibility for developing strategy and for providing oversight and direction on all matters relating to governance, risk management and corporate social responsibility. As part of our internal control procedures, Group companies are required to confirm compliance with the GKN Code and policies.

A summary of those risks which could have a material impact on the Group is given within Risks and Uncertainties. All Group companies must have a business continuity plan so that, should a risk materialise which threatens GKN assets, employees, production or the environment in which we operate, we are in a position to minimise disruption of our business with the least inconvenience to our customers. Each plan must conform to Group guidelines and be prepared following consultation with all key internal and external stakeholders.

A continuous improvement culture

At the very core of how we operate in GKN is a culture of continuous improvement, which is reinforced through the application of Lean Enterprise techniques in our business and production processes worldwide. All sites are required to develop an annual continuous improvement plan, aligned to their business objectives, which engages every employee in driving the flow of value through the business.

Lean Enterprise

During 2009 there was a strong focus on developing GKN’s leaders to enable them to deploy Lean Enterprise techniques to maximum effect. 110 leaders graduated through the Mastering Continuous Improvement Leadership (MCIL) programme with a further 240 graduations planned for 2010. The programme comprises three phases covering excellence in production, business process and employee involvement and includes on-site learning on a cross-divisional basis to facilitate knowledge sharing.

A key project launched in 2009 focused on inventory management to match the dramatic changes in customer demand caused by the recessionary conditions in many of GKN’s markets. This required a more robust customer demand management process to facilitate a rapid response to market conditions whilst at the same time maintaining a relatively level production schedule. A reduction of some £130 million in productive inventory was achieved during 2009. We are continuing our focus on inventory management during 2010.

GKN’s businesses use the EFQM Business Excellence model to assess their performance in their ‘journey towards excellence’ and to identify improvement actions. These are then implemented through the continuous improvement planning process. More fundamentally, Business Excellence is also an important tool in the development of business strategy.

Delivering advanced technology

One of our key strategic objectives is the delivery of first class engineering capability to our customers. During the year the Group Technology Strategy Board was established, replacing the Technology Sub-Committee, sponsored by the Chief Executive Sir Kevin Smith and chaired by the Group’s Principal Engineer. Its key areas of focus are the Group’s technology plan, development of technologies across the Group and the strengthening of external relationships including access to sources of funding.


In June, as part of the Group’s strategic planning process, some 40 senior executives attended a two day technology workshop supported by Cambridge University to examine major global trends in GKN’s markets and the potential impact of these trends for GKN’s businesses going forward.

GKN Aerospace is a founding member of the UK’s National Composites Network and in November joined tier one industry partners, Vestas, Airbus and Rolls-Royce, in celebrating the Government’s announcement of a new National Composites Centre in the south west of England close to two of GKN Aerospace’s key UK facilities. The Centre will enable UK manufacturing to develop new composite material applications.

The GKN WAY - Living the Values

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