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April 16, 2013 02:00 AM

Korea press makers invest domestically

Steve Toloken
Assistant Managing Editor
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    Plastics News photo by Steve Toloken
    Woojin Plaimm Inc. at Koplas in Seoul, South Korea

    SEOUL, SOUTH KOREA — Several of South Korea's largest plastics equipment makers are making sizable investments to expand their domestic factories, making a bet in part that they can maintain competitiveness by improving efficiency at home rather than building more factories in lower-cost markets.

    Dongshin Hydraulics Co. Ltd., for example, said it's spending $30 million on a new Korean factory to handle demand for more energy-efficient injection presses, and its larger rival Woojin Plaimm Inc. is building a new headquarters factory that will expand capacity from 1,800 injection presses a year to 3,000.

    The investments stand somewhat in contrast to their rivals in the Japanese plastics machinery industry, which have been expanding their factories in China and Southeast Asia. Manufacturing costs in Korea are lower than Japan, and the Koreans seem to be betting on finding efficiencies at home.

    Speaking in an interview at the recent Koplas 2013 show in Seoul, Dongshin President Philip Kim said his company sees strong Korean demand for energy-efficient machines, in part because of tax incentives the country's government is giving to help companies replace power-hogging equipment.

    "Korea right now is struggling with how can we reduce [carbon dioxide],"said Kim. "In order to save energy, the government pays you back a lot."

    Since the tsunami and nuclear power crisis in Japan in 2011, pressure has grown on the Korean government to rely less on nuclear power, and that's increased its focus on energy efficiency, he said.

    Busan, South Korea-based Dongshin hopes to finish its 161,000-square-foot factory by the end of the year.

    "We are constructing right now a new building," he said. "Right now we are making 60 or 70 machines a month. I could have double of that."

    Both Dongshin and Woojin opened factories in China about seven years ago — Dongshin's factory in Ningbo, China, makes components it sends to Korea for final manufacturing. But the focus now seems to be more on Korea domestically, with Kim saying rapidly rising wages in China are narrowing the cost gap with South Korea.

    "I'm trying to make my company more productive so I don't need any manufacturing in China at all," Kim said. "It's time to reconstruct my company ... For three years now, I'm trying to give [my employees] more training, give employees more education."

    He said he believes Dongshin has improved its competitive position with the Chinese, but he said he's more concerned about Japan, now that the Japanese yen is weakening.

    Like Dongshin, press maker Woojin is in the midst of an expansion of its Korean factory.

    The company is moving its headquarters factory from Incheon, the site of the main airport serving Seoul, to Boeun, and will expand capacity to 3,000 molding machines a year, said Andrew Kim, a sales manager with the company.

    "Our factory is already too small," he said in an interview at Koplas, held March 12-16 in Seoul.

    He said the company is choosing to expand in Korea, rather than its China factory, in part because of quality: "To maintain the quality of the machines in China is very difficult," he said.

    Unlike Dongshin, which is very focused on Korea's local market, Woojin is seeing significant business pick up from export markets and has made a strong push overseas.

    The company is establishing two new direct sales offices in the United States — in Chicago and Atlanta — in part to target the U.S. automotive market.

    Also, he said Indonesia is becoming a strong market for the company.

    "The Indonesian market is getting huge now," said Kim. Exports to Indonesia were $4.5 million last year, about double the 2011 figure.

    South Korea's domestic press market is about 3,600 molding machines a year, equal to the U.S. market in number of machines, and it is attracting interest from foreign equipment suppliers that are motivated to tap into the expanding global supply chains of Korean multinationals like Samsung and Hyundai.

    An executive with Korea's industry association, the Korea Plastics Processing Machinery Industry Cooperative, said the country's plastic equipment market has been flat for the last two or three years.

    Han Ki-Yoon, secretary general of the Seoul-based cooperative, said that although some firms are investing, the overall market remains somewhat soft. He suggested that recovery could come when the global economy regains strength.

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