Overview
As a solutions provider to the worldwide energy infrastructure market, we are responding to our clients' concerns about energy efficiency and regulatory change. As an employer in an industry with high demand for skilled employees, we are responding to our workforce's interests in safe job sites and opportunities for growth. As a company in a global economy, we are addressing certain needs of the communities where we operate. As a company with a flexible manufacturing model that depends upon capable suppliers, we offer viable business opportunities for profitable growth. We believe we are responding equally well to our responsibility to stockholders for creating long-term value.
Responsibility for our sustainability initiatives rests with our Sustainability Council, a cross-functional, senior management team tasked with providing direction on the strategy and implementation of sustainability initiatives across our global operations. The Council believes that by embracing this responsibility, building on a solid foundation of governance, policies and procedures, and by applying diligence throughout our business operations, we can mitigate risks and make positive contributions to the economy, environment and society.
The Dresser-Rand Sustainability Council is directed by the Company's CEO with oversight from the Board. We are guided by our Sustainability Principles, which our Board of Directors approved in early 2010.
Dresser-Rand exercises due diligence in managing risk during operational planning and the development and introduction of new products. Decisions are based on the best information available, but also consider uncertainty and the lack of information or data. Dresser-Rand has a formalized enterprise risk management process and exercises a precautionary approach to risk management. Our safety program is an example of this approach as are our efforts to develop products that address environmental concerns and climate change.
Our Sustainability Principles
Dresser-Rand recognizes that the economic, social and environmental issues that face the world can affect and impact our business and our stakeholders. We also recognize that our business and the businesses of our clients and suppliers can affect and impact these same issues.
Dresser-Rand will accomplish our business mission and build upon our guiding principles and values by adopting a business approach that deals with sustainability issues that intersect our value chain, present opportunities for shared value and are important to our stakeholders and the greater societies where we operate. We will achieve this by:
- Maintaining the highest standards of business ethics, governance, integrity, and safety
- Embracing opportunities and managing risks deriving from economic, environmental and social developments
- Responsibly using material and energy resources
- Providing environmental solutions with economic value for our clients
- Addressing issues of consequence to our stakeholders with sustainable business practices
- Developing technologies, products and services that bring energy and the environment into harmony
- Investing in the development of our employees and the communities where we operate
- Creating long-term stockholder value through sustainable processes, products and services
Environment
Our Approach
Our products, services and operations and the industries we serve all impact the environment, and we are focused on reducing any negative environmental impacts. It makes sense for our clients, who use our technologies, to maximize the globe's limited resources while reducing their environmental footprint. It makes sense in our facilities, where greater efficiency results in both cost reductions and conservation. Our approach is built upon a clearly defined Health, Safety and Environmental (HSE) policy and a commitment to continuous improvement.
Organizational Responsibility
Our commitment to the environment is governed by our Sustainability Council, enshrined in our Guiding Principles and Values and explicit in our Sustainability Principles.
Training and Awareness
Dresser-Rand views employee training and development as a strategic investment that ensures success for our Company, our employees and our clients. We have programs for safety and compliance training, and the technical skills needed to support our corporate mission and the career development objectives of our Company for our employees. As we acquire new businesses to support the Company's strategic objectives, our training programs are vital to seamlessly integrating new employees and achieving consistency throughout our operations. We completed 85,402 training hours dedicated to safety in Dresser-Rand and we expect to increase that number by 10% in 2011.
Monitoring and Compliance
Our primary environmental impacts come from manufacturing our products. The Dresser-Rand HSEmanagement systemprovides a systematic approach to monitoring and managing the health, safety and environmental aspects of our activities or processes. Through the system, we manage material and energy use, emissions, effluents and waste, and our transportation needs. In 2010, we made numerous investments to enhance the efficiency of our operations. We received platinum status under the Fort Collins (Colorado) Climate Wise Program-the highest level this program confers-for the environmentally beneficial renovations made at our Gas Engine Technology Center facility in Fort Collins. Our Naroda, India facility developed environmental programs that resulted in outstanding environmental contributions including rain water harvesting and significant waste reduction. Please read the environmental section of our Sustainability Report for more examples.
We believe that Dresser-Rand is in a unique position to support solutions that address climate change. We are in the business of providing goods and services to the worldwide energy infrastructure and we are aggressively pursuing innovations today to help manage environmental stewardship tomorrow. In 2010, Ramgen Power Systems LLC began constructing a dedicated carbon dioxide (CO2) closed loop compressor test facility at the Dresser-Rand Olean, N.Y. campus. This will be a one-of-a-kind, supersonic CO2 compression test facility in support of Ramgen Power System's recently authorized phase two work for a CO2 pilot scale demonstration. We are working to provide solutions for harnessing renewable marine (or wave) energy and efficiently converting it to electricity for use on land. Dresser-Rand engineers developed the patent-pending HydroAir™ turbine-- a variable radius turbine. An initial prototype was installed in Australia in 2010.
We require that our global operations be in compliance with all applicable laws and regulations. We adhere to certain voluntary global or industry standards, such as those set out by the International Standards Organization (ISO), American Petroleum Institute (API), American Society for Testing and Materials (ASTM), American Society of Mechanical Engineers (ASME), and The National Association of Corrosion Engineers (NACE), to name a few.
Our major manufacturing facilities - in Olean, Painted Post and Wellsville, New York (Southern Tier plants) and Burlington, Iowa, in the U.S., Le Havre in France, Peterborough in the U.K., Oberhausen in Germany and Naroda in India - and our repair center in Cilegon in Indonesia are ISO 14001 certified. We recognize the need for consistency across operations and have, on an ongoing basis, worked toward standardizing our processes and procedures within organizational units and, where appropriate, globally.
Human Rights
Our Approach
The diversity of our employees is a tremendous asset. We provide equal opportunity in all aspects of employment and will not tolerate discrimination or harassment of any kind. Our employees' actions are guided by our Code of Conduct and policies on equal employment opportunities, harassment, workplace violence prevention, and retaliation. More than 40 percent of our workforce is covered by collective bargaining agreements. Dresser-Rand supports the Universal Declaration of Human Rights adopted by the United Nations in 1948. We do not face issues of child or forced labor, nor those relating to the rights of indigenous or other tribal and semi-tribal populations in various independent countries.
Dresser-Rand extended its localization strategy in 2010 that expands our operations and investment in the communities where certain of our clients do business. By manufacturing, sourcing and servicing locally, we will build relationships with local suppliers that will promote local procurement and manufacturing of parts and equipment, provide local employment and provide competitive pricing and improved response time to our clients.
Organizational Responsibility
Reports of breaches to our Code of Conduct are reviewed quarterly by the Audit Committee of the Board and annually by the full Board. An Ethics Committee established by the CEO reviews disciplinary recommendations resulting from significant violations to the Code to determine whether discipline is appropriate and to ensure consistency throughout the organization.
Training and Awareness
Employees receive annual training on our anti-harassment policy and our Code of Conduct. We hold an annual worldwide management meeting with approximately 130 participating managers. At this meeting, we review and discuss infractions of the Code in the prior year and the disciplinary consequences. Our efforts to develop tools to further enhance dissemination of information about the infractions of the Code and consequences on a Company-wide level have been delayed and are expected to be completed in 2011.
Monitoring and Compliance
Reporting unethical or illegal behavior is the responsibility of every employee. Employees who discover a potential violation of the Code are encouraged to call our Ethics Hotline, which permits confidential and, as permitted by applicable law, anonymous submission of reports, or report their concern on a third-party administered website. The Hotline is available to all of our employees with toll-free numbers in multiple countries. Our Whistleblower Policy protects employees against retaliation should they make a proper report.
Labor Practices & Decent Work
Our Approach
Our employees' expertise is critical to the success of our business. Through their work, we are able to offer our clients custom-engineered solutions, proven technical innovation and ongoing service excellence. At Dresser-Rand, we are focused on providing our employees with meaningful work in a safe environment, training and development opportunities to advance within our Company, and a culture of teamwork, dedication and passion that encourages creative contributions.
The health and safety of our employees is of paramount importance and is critical for our long-term success. First, our employees are our most valued resource and we want them to return home every day in the same condition that they arrived at work. Second, our clients demand outstanding safety for their site compliance. They also know that safety excellence indicates the same discipline in quality, on-time delivery and reduced costs, thereby enhancing their reputation and profitability.
Organizational Responsibility
Our commitments to our employees are enshrined in our Corporate Mission, Vision and Guiding Principles and Values and in our Sustainability Principles. These aspects are overseen by our Vice President Human Resources.
Safety is the responsibility of every employee, from senior managers to employees on the shop floor. Our policy requires that our CEO be informed of all OSHA recordable injuries within 24 hours. He receives a weekly update of all injuries and reviews a monthly report that focuses on HSE leadership by looking at five leading indicators, such as attendance at safety meetings, achieving our audit goals and on-time investigation of injuries.
Training and Awareness
We have programs founded on safety and compliance training, and other flagship programs that provide the leadership, business acumen and technical skills needed to support our corporate mission and the career development objectives of both our Company and our employees. As we acquire new businesses to support the Company's strategic objectives, our training programs are vital to seamlessly integrating new employees and achieving consistency throughout our operations.
Under our localization strategy, we focus on hiring locally and creating employment opportunities at all levels of the organization from the shop floor to leadership positions. We also established a recruiting Center of Excellence in 2010. We continue to enhance our well-established relationships with universities, colleges and technical institutes, building research partnerships and developing additional apprenticeship, co-op and intern opportunities for graduates.
More specifically, we invest in employee training through various means including our Code of Conduct, safety, and foreign corrupt practices programs. Safety training serves as an area of common interest with our labor unions, helping to foster cooperation and communication. In 2010, our employees and their families participated in many safety days and week-long safety and health awareness events. These events also included participation by local emergency responders as well as health care providers from local hospitals.
Monitoring and Compliance
Our HSE management system is deployed and rigorously enforced across our operations. It provides the foundation for our behavioral and compliance auditing programs, timely incident investigations to determine root causes and prevent recurrence, employee participation in ongoing HSE training, and frequent communication to reinforce HSE awareness. This information is described in the Health and Safety section of this report.
Our drive to continuous improvement is guided by a zero tolerance policy for non-compliance, a structured disciplinary process and thorough training that includes orientation for new employees, and annual, task-specific refresher programs. These efforts are reflected in our 2010 safety performance, a year in which we achieved a Company record total recordable injury rate of 0.49.
We view our supply chain as an extension of our manufacturing network. Training and knowledge transfer help new and established suppliers provide consistent, efficient and safe delivery of our product and services. Our U.S. supplier diversity program reaches out to minority, women and veteran-owned businesses, businesses operating in underutilized economic regions, as well as disadvantaged and disabled-veteran small businesses.
Dresser-Rand supports the Universal Declaration of Human Rights adopted by the United Nations in 1948.
Society
Our Approach
Our business success is supported by the strength of our relationships with the communities where we operate. We are focused on creating long-term economic, social and environmental benefits through sustainable initiatives, job creation, supplier engagement, research and development activities, and educational support. Our commitment is to broaden these benefits by expanding our local presence in the places where we operate. By doing so, we will extend our legacy and our business success into tomorrow.
We promote the highest standards of governance. They are at the core of our Company's reputation and stability, and through them we are able to serve our stockholders, employees, clients, suppliers and other stakeholders with passion, hard work, confidence and an innovative spirit. Beyond our longstanding commitment to abide by laws and regulations applicable to us, we work hard to engender a culture of conducting ourselves ethically. Simply put, our management team continually encourages our workforce to do their jobs the right way. Our employees appreciate how quickly a company's goodwill can be destroyed by not adhering to this standard. Our governance systems are the cornerstone of our corporate management and, in conjunction with our Corporate Mission, Vision and Guiding Principles and Values, guide the decisions and actions of all employees.
Our limited lobbying activities, with total expenditures in 2010 of less than $175,000, are used to support sales and community relations in the U.S. Dresser-Rand has not made political contributions and does not currently have a political action committee. However, certain management members make political contributions.
Organizational Responsibility
The business and affairs of the Company are managed by or under the direction of its Board of Directors, as well as by our Vice President, Human Resources.
Training and Awareness
We conduct cultural awareness training as part of any Expatriate assignment.
Monitoring and Compliance
Our Ethics Hotline is accessible to individuals outside the Dresser-Rand organization and serves as a means by which citizens in the communities where we operate can and have expressed their interests or concerns.
Product Responsibility
Our Approach
Dresser-Rand technologies support our clients' competitiveness by improving process efficiencies and reducing emissions to meet increasingly stringent environmental regulations. We take an aggressive approach to innovation, advancing the performance of our current equipment and adapting it to environmentally beneficial applications.
Product responsibility includes the safe use and handling of products at all stages of their lifecycles. Health, safety and environmental protection is an integral part of designing, manufacturing, marketing, distributing, using, recycling, and disposing of Dresser-Rand products.
Dresser-Rand products are designed to operate reliably in the field. Our class of rotating equipment has a typical operating life of 30 years or more. We follow recognized industry standards such as ASTM, API and NACE in the design and manufacture of our products, and many of our products can be revamped to extend their service life.
We are upgrading our service response by integrating the expertise of our factory-based product engineers with the client-oriented service personnel in the field through our Client Interface and Response System (CIRS). CIRS significantly enhances our ability to rapidly and accurately respond to any technical support or service request from our clients.
We have a number of policies that promote the adherence to laws related to marketing communications, such as advertising, promotion and sponsorship. Among these are our Code of Conduct, our Media Contact and Communications Policy and our Policy on Fair Disclosure.
Organizational Responsibility
We have established a Product Safety Council to review, address and communicate issues related to product responsibility. This council is chaired by our Chief Safety Officer and is cross functional with members from operations, field operations, engineering, design, legal, and HSE.
Training and Awareness
Dresser-Rand, in partnership with Coastal Training Technologies, has developed training programs on Dresser-Rand product lines. Training on product lines and CIRS is provided to appropriate Dresser-Rand employees and is available to clients as well.
Monitoring and Compliance
Dresser-Rand operates the CIRS which significantly enhances our ability to rapidly and accurately respond to any technical support or service request from our clients.
Economic
Our Approach
Dresser-Rand creates economic benefits through its sales and service revenue, supplier purchases and the wages, benefits and taxes we pay to and on behalf of our employees. Since becoming a public company in 2005, Dresser-Rand experienced significant growth. Our manufacturing model allows us to adjust, or "flex" our capacity to adapt accordingly to business conditions without incurring significant costs associated with expanding plant capacity during periods of high demand, or substantially reducing in-house manufacturing hours during periods of reduced demand. Our business model requires strong, enduring supplier relations. In 2010, we spent approximately $750 million with suppliers for engineering, manufacturing and services.
As a solutions provider to the worldwide energy infrastructure market, we are responding to our clients' concerns about energy efficiency and regulatory change. Many opportunities lie ahead in our traditional oil and gas markets as well as in emerging markets where "green" energy solutions such as CO2 sequestration, wave energy, combined heat and power, biomass, turbo-compound systems, and CAES are gaining momentum.
We contribute to the communities where we operate by creating long-term benefits through job creation, supplier contracts and partnerships. Our community philanthropic programs are focused on building our future workforce. Through our partnerships and funding initiatives, we want to excite and educate students, from middle-school to college, in the opportunities that are founded in science-based learning.
Dresser-Rand also creates indirect economic benefit through the savings our clients achieve by using our products. For example, Dresser-Rand is supplying two sets of centrifugal compressors to safely address the disposal of CO2 for a client operating a floating production, storage and offloading (FPSO) system for the production of oil and gas off the coast of Brazil. The gas that is gathered onto the platform has a CO2 content that is approximately 40 percent of the total flow, which equates to 1.8 million standard cubic feet per day. The CO2 content is too high for the gas to be exported directly for commercial use. The result of the project will be the injection of about 1.3 million tons per year of CO2 safely into a nearby reservoir. Dresser-Rand DATUM® centrifugal compressor technology is key to reaching this gas density. The advanced design of the compressor results in improved rotor dynamic stability that is necessary to operate under these conditions. The Dresser-Rand solution for the CO2 compression at those elevated pressures and densities eliminated the need for the client to purchase CO2 pumps, for a cost savings of about $8 million.
Organizational Responsibility
The Company's executive staff operates within, and is measured against, the Annual Operating Plan, which is approved by the Board of Directors.
Monitoring and Compliance
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles (U.S. GAAP) and include the accounts of Dresser-Rand Group, Inc. and its consolidated subsidiaries. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) under the Securities and Exchange Act of 1934, as amended (the "Exchange Act") as of December 31, 2010. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2010, our disclosure controls and procedures were effective. Additional information is available in our 2010 Annual Report.
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