Local firms going global

More small- and medium-sized domestic manufacturers of auto parts are going global.

According to statistics from the Ministry of Commerce, Industry and Energy, exports from such companies nearly doubled to $4.2 billion last year from $2.2 billion in 2001.

Local parts manufacturers, due to stagnant domestic demand, have been forced to seek out global markets in order to survive. As these companies go global, they have become increasingly recognized abroad for their product quality and developments in technology.

At the forefront of this move are the 280 employees of Daeyong Industry Co., who work Saturdays in order to keep up with demand that will keep them busy into next year. Daeyong Industry has nabbed an exclusive supply contract to build 6 million engine control units, or ECUs, for GM, the world’s largest automaker, starting next year. The 6 million units will be used throughout GM’s production line for North America.

“As a result of continuously improving technology and quality, we’ve secured stable supply channels,” Jang Chan-ho, overseas sales director at Daeyong Industry, said.

Another local parts firm, Komotech Co., a manufacturer of seat belts and airbag systems, recently signed a contract with Delphi, a multinational auto parts firm, to supply 3.6 million seat belts and airbag systems each annually, from next year.

“In spite of rising raw material costs, Korean companies have been able to avoid paying higher material prices,” said Lee Woo-jin, a director of Komotech.

There are about 878 companies that supply parts to domestic automakers. However, only 8 percent are considered large firms, while the others are smaller ones with fewer than 300 employees. And while some of the smaller companies have succeeded in developing competitive products in terms of technology, many of them have had to plead with local automakers in order to maintain their orders and contracts.

In contrast, when those same parts manufacturers go global, they receive the royal treatment.

More local small- and medium-sized auto part makers are producing world-class products, Lee Tae-wan of S. Trade, a promoter of such firms, said.

“The government should support smaller companies because there are still limits in technology development and overseas marketing,” he said.

by Chang Chung-hoon, Park Sung-ha