Employees

To transform the Gerdau Group into a global steel company, and among the most profitable in the sector: this is what motivates the more than 30,000 professionals working for Gerdau in South America, North America and Europe. By combining technical, industrial and commercial expertise, the organization shares values and know-how, bringing together the best of each business operation and seeking out the most efficient management models in the market.

To achieve this, the Gerdau Group is increasingly involved in developing global human resource management systems, with the aim of training excellent professionals who can add value to the business.

Recognition

The Gerdau Group spares no effort in offering its professionals the opportunity to grow, broaden their view of the world, accept risks and responsibilities, take pleasure in striving for results and look forward to the future.

In order to encourage these desired behaviors, the Gerdau Group believes that it is important to recognize its employees, for recognition leads to personal and professional satisfaction.

In 2006, the Gerdau Recognition System was revised for application at all levels. The new system that will be used by Gerdau units in 2007 is based on the following principles:

• To be fair and impartial to all, and to be seen as such;

• To give positive reinforcement to expected behaviors;

• To be systematic and recognize achievements and results immediately, strengthening behaviors and attitudes;

• To associate the effective celebration of achievements with formal and informal actions.

Compensation

The Gerdau Group’s compensation policy seeks to value outstanding individual and team performance. For this reason, in addition to a fixed salary, employees also receive a monthly sum that varies according to the goals achieved and results obtained in each Business Operation and each facility. This transparent practice encourages professionals to develop and contribute to the growth of the Group as a whole.

Employee communications

The Gerdau Group maintains a frank and direct dialogue with its employees. It has a global internal communication system based on the principles of consistency between discourse and action, freedom of expression, respectful and dignified treatment, transparency and frankness. In 2006, the system was expanded to include the companies in Argentina, Chile, Colombia and Uruguay and four plants in North America, ensuring speed and efficiency in disclosing information to employees.

Employee satisfaction survey

Each year, the results of the Employee Satisfaction survey show improvements in the main indicators. In 2006, the general satisfaction index reached 88%, with 78% of the responses being favorable. A total of 18,111 people participated in the survey, representing 92% of employees in Brazil, Argentina, Chile, Colombia and Uruguay.

In 2006, the Gerdau Group was chosen as the company with the best organizational climate in Brazil by the Hay Group, a major international consultancy in this field.

Education and training

Over the year, investments in training totaled R$ 40.3 million, representing a growth of 23% on 2005. Training hours totaled 1.6 million in 2006.

The Gerdau Group has professional development programs at all levels. Each year, it encourages the honing of leadership skills on the part of its executives, an essential aspect in the consolidation of the businesses in the global context. In 2006, more than 40,000 hours of training were held under this initiative. A Coaching Program was also created, which aims to establish an ongoing, structured training process. In the coaching program, leaders and employees work together for the development of less experienced professionals. In the same spirit, the Gerdau Group believes in the fundamental concept that each employee is responsible for seeking their own improvement, growth, training and personal development.

Another example of this is the Gerdau Business Program, an MBA begun in 2006 with a group of 30 executives, with a view to offering training and development in Gerdau Business Theory. The most modern administrative concepts and practices are covered, accelerating the executives’ ability to take on global leadership challenges appropriate to the company’s rapid growth and expansion.

The Group also has structured programs for the development of industrial and commercial skills. In 2006, the Industrial Training System was intensified among employees in the production area in Brazil, Argentina, Canada, Colombia and the United States, with a total of 1.4 million training hours. In Brazil, the Commercial Training System continued, totaling 17,800 hours of training.

In 2007, the Gerdau Group will implement a program for the training of engineers. The initiative seeks to perfect the technical training model, in a way that prepares professionals for a global operation.

New talent

One of the main initiatives in the attraction and development of new talent is the trainee program. In 2006, 15,724 candidates competed for 139 positions in Brazil. In North America, 33 young people were selected, with another 33 chosen in Argentina, Chile, Colombia and Uruguay.

Over a period of two years, the new graduates work alongside experienced professionals, which helps them to learn the day-to-day running of the business and prepares them for future challenges.

Safety and well-being

The Gerdau Group believes that no emergency, production need or results situation can ever justify a lack of safety for personnel, be they employees or service providers. All units adopt the Total Workplace Safety System; a strict set of practices with internationally recognized standards of excellence, whose aim is to reach a zero accident rate. Ongoing investments are also made in protective gear and materials, and in safety awareness and training campaigns.

As a result of this work, the number of accidents with loss of time per million hours worked was 2.3, representing a 41% reduction in relation to 2005.

In 2006, a Policy of Consequences was introduced with the aim of establishing the appropriate procedures for any situation on the basis of the identification of safe and unsafe behaviors among employees. To encourage compliance, the ‘Nothing Is Worth More Than A Life’ campaign was staged, involving training of the Group’s employees in Brazil. In 2007, the program will be expanded to the other units in South America.

The Gerdau Group also promotes regular disease prevention campaigns, dealing with issues such as AIDS, alcoholism, nutrition and obesity.

Benefits

Improving the quality of life of employees is one of the Gerdau Group’s priorities. In every country, the company has benefits programs that meet the main needs of employees and their families, in keeping with local characteristics. Benefits offered include medical and dental care, educational and housing loans, life insurance, assistance for time off work and private pension plans.

Labor union agreements

In all the countries where it operates, the Gerdau Group relies on open dialogue, respect and a broad exchange concerning expectations, positions, and motives to guide its labor union negotiations.

In North America, Gerdau Ameristeel continues to work to resolve its labor agreements. In 2006, the company reached agreements at the Manitoba Metals scrap collection and processing facility, in Canada, in the third quarter, and at Gerdau Ameristeel Perth Amboy, United States, in the fourth quarter. In March 2007, new agreements were reached at Beaumont (Texas), St. Paul (Minnesota) and Wilton (Iowa). The company believes that the negotiations are progressing and remains optimistic concerning the possibility of reaching agreement at other North American facilities, reconciling the interests of both parties.

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