Hyundai Heavy Makes Headway for More Than Ships
By Jane Han
Hyundai Heavy Industries (HHI), the world’s biggest shipbuilder, hit a record amount of backlog orders last year, triple that of four years ago and more than 30 percent of its annual target, but the vessel maker has raised the bar even higher for its next race.
With fast growing China looking to nip at its heels, HHI has been looking to spotlight and weigh in more heavily on its non-shipbuilding businesses, hoping to raise its sales by more than 20 percent amounting to some 15 trillion won.
``Although there’s a competitor catching up, at HHI, there’s more than just making ships,’’ CEO of HHI, Choi Kil-seon, said in April.
Among the five non-shipbuilding divisions, including Offshore & Engineering, Industrial Plant & Engineering, Engine & Machinery, Electro Electric Systems and Construction Equipment, Choi noted that some are accelerating even faster than its top business.
``Engine & Machinery and Electro Electric Systems have seen stronger growth than our main shipbuilding sector,’’ said Choi.
The Engine & Machinery division, which mainly produces marine diesel engines and equipment, steam turbines, diesel power plant and conveyor systems, has captured 35 percent of the world’s market share in diesel engines.
Covering a wide range of electrical equipment for both industrial and marine use, the Electro Electric Systems division, having transformers, high voltage circuit breakers, switchgears, motors and generators as its main products, has been a world supplier of electrical manufacturing goods.
Records show that last year’s shipbuilding grew 21 percent, while that of Engine & Machinery jumped 28 percent and 30 percent for Electro Electric Systems.
This means that the gap of sales growth between ship construction and others was at a maximum of 10 percent, which is expected to widen further this year.
``The construction equipment sector may not have such an impressive global market at this time, but there’s strong potential there too,’’ Choi added.
Although business conditions seem to be in good shape, the company sees that a positive outlook isn’t always guaranteed due to shaky oil and steel resources, weak currency, rising labor costs and other domestic and international factors.
To fight off these uncertainties, the world’s top shipbuilder has sketched out a long-term management strategy ``Vision 2010’’ to enhance its technical ability, quality and productivity by securing its competitive edge in the world market.
Pioneering New Tech
On the way to meeting its goal, HHI has been highlighting technological developments as it sees that stirring up innovative products will be key in remaining as a top player in the fierce market.
Starting from 2001, the lumbering giant has been working in five main areas, including revamping existing products to industry’s premium quality, honing core skills, improving production, developing new products and technologies, and inventing fresh business areas.
As a main producer of tankers, bulk carriers, containerships, gas and chemical carriers, HHI has been building a total of 12 mega-size products, including floating production storage and offloading (FPSO) and liquefied natural gas (LNG) vessels, since 2001. But under the Vision 2010 plan, the company will more than double that number to 30 in three years.
HII, the developer of Korea’s first in-house brand new engine, Hyundai HiMSEN, which was named one of ``Korea’s Top Ten Technologies’’ in 2002, is looking for a follow-up, environmental-friendly model.
Anticipating a rising demand for natural gas, the heavy group is beefing up its growth in LNG carriers and floating storage and offtake (FSO), which are oil tankers modified to store and transfer oil.
The plant sector is another continuously eyed industry.
``HHI is expanding its engineering, procurement and construction (EPC) efforts to get a firm footing in the area,’’ said an HHI official.
Its recent big project win was April 2006 to build a $170 million gas turbine power generation plant for Saudi Aramco, the state-run oil company.
``This project has leveraged HHI’s position as a major EPC contractor of the power plant sector in the Middle East and increased HHI’s opportunities to compete for and win more projects in the region,’’ said Suh Young-kil, executive vice president in HHI’s Industrial Plant & Engineering Division, last year.
Developing solar energy business is also an area of interest for the group as it moves to roll out new factories, products and plans in order to participate in the global efforts to create an environmental-friendly future.
The ship maker is gearing up its global management to actively respond to needs of the global economy.
Following works in the Construction Equipment and Electro Electric division in the Chinese market, HHI is moving to find a new leap into other attractive regions by extending its production facilities, R&D centers and subsidiaries.
HHI plans to expand its current network of 15 overseas branch offices and 14 overseas subsidiaries and develop itself as a ``Global Leader’’ in the heavy industry by empowering its overseas networks and focusing on localizing its subsidiaries abroad.
Hyundai Heavy is currently concentrating on research of cutting-edge technology for producing advanced power management and conversion systems at its joint research center with Enova Systems in the U.S., which is Korea’s first overseas research center dedicated to creating electric vehicle equipment and distributed generation systems.
The company is also doing close studies with experts at Hunelec of Hungary, a research and development institute for high voltage rotating machinery, GIS and transformers. The works done here have helped HHI reduce costs through renovation on traditional heavy electrical products.
Hyundai’s existence in China has been successful with the brand’s top quality and competitive pricing, which are highly prized by the Chinese.
Company officials remain positive that the future prospects in China will continue to be well as the demand for heavy electrical products will stay high pushed by the booming of the country’s economy.
Most recently, HHI won turnkey projects to supply industrial robots and facilities to Hyundai Motor’s two factories in Beijing and Czech.
The business will take charge of the entire process from design, production, transportation, installation and test run of the robots. The two plants will have an annual capacity of 300,000 units of cars upon completion.