Minister holds meeting with defense firm CEOs

Defense Minister Jeong Kyeong-doo, third from right, speaks during a meeting with the heads of 13 defense firms, at the Ministry of National Defense Convention Center in Seoul, Friday. / Courtesy of Ministry of National Defense

By Lee Min-hyung

Defense Minister Jeong Kyeong-doo met with the heads of 13 defense companies to address their declining sales and profits, Friday.

The meeting was arranged amid growing uncertainties in the Korean defense industry, with a number of firms here posting a steep drop in their operating profit in recent years.

According to data from the Korea Defense Industry Association, ninety-three defense companies have reported falling profits in recent years. Their combined sales dropped to 12.76 trillion won ($11.29 billion) last year, down 13.9 percent from the previous year.

The defense minister listened to the ongoing difficulties the local defense industry is facing both here and overseas.

“The ministry will do its best to vitalize the local defense industry and help companies export more by enhancing defense diplomacy with other countries,” Jeong said.

Participants in the discussion included Defense Acquisition Program Administration (DAPA) chief Wang Jung-hong, LIG Nex1 CEO Kim Ji-chan and the heads of invited defense companies.

Among the players, the Korea Aerospace Industries has been particularly hard hit by falling profits. KAI is the only domestic company that manufactures aircraft here using its own technology.

But the firm's sales last year almost halved to 909.5 billion won, compared to 2016 when it reported 1.9 trillion won, amid weakening overseas sales.

LIG Nex1, the nation's leading defense firm, also suffered a setback, reporting 1.76 trillion won in sales last year, down from 1.85 trillion won the previous year.

Tough regulation from the government is cited as one of the reasons hampering growth in the industry.

DAPA claims compensation for any delayed delivery of defense products. Defense companies, however, complain about the legal system, as they have to take responsibility even if the delay was caused by subcontractors designated by DAPA.

The defense minister pledged to hold meetings on a regular basis to enhance defense companies competitiveness here and abroad.

“I will hear from the industry by continuously holding these meetings, and the ministry hopes to build a mutually cooperative relationship with local defense players to develop national security and the economy,” Jeong said.