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North American Distributors Tour Hyundai Asian Facility

Mon October 04, 2004 - Northeast Edition
Pete Sigmund



In 1940, Chung Ju Yung ran an automobile repair business. Through hard work and enterprise, he established Hyundai Engineering & Construction Company in 1947. In 1972, the company broke ground for what is now the world’s largest shipyard.

Today, the companies, which Chung began include Hyundai Heavy Industries Co. Ltd. (HHI). This high-tech leader holds approximately 35 percent of the world’s market in diesel engines, operates the world’s largest shipyard, engineers and builds utility, processing and other industrial plants, is the largest supplier of offshore drilling facilities and is a growing presence in construction — manufacturing hydraulic crawler and wheeled excavators, wheel loaders, forklift trucks, skid steer loaders and other equipment.

Also well-known, of course, are Hyundai cars and trucks that are produced by the company’s robotic systems in totally-automated plants. Hyundai also runs its own hotels and resorts and seems to be part of everything in Korea, from buses to gas stations and department stores.

Modern Pilgrims

Eighty-four people from United States and Canadian dealers, or contractors using Hyundai equipment, began a sojourn to Korea on Sept. 18 to personally observe what has grown from Chung’s original enterprises.

In many ways, this group from throughout North America resembled medieval pilgrims. Don’t laugh. The trip covered approximately 6,400 mi., in jets and buses instead of on horses, but each person was on an individual quest for more insight into his equipment, and the Korean culture.

(To make the analogy complete, Peele Dunn, president of Virginia Forklift, Richmond, VA, even quoted the first few verses of Chaucer’s “Canterbury Tales” in Old English as he struggled up a steep rock path in the gardens of the ancient King’s Palace in Seoul.)

Some in the group had left the busy demands of their dealership or contracting operation with some doubts about losing time. There were several father-and-son duos, and three brothers. All had stories to tell. Often, like Chung, they had built their businesses from scratch. Almost everyone was visiting Korea for the first time. They flew non-stop (First Class) from New York, NY, Chicago, IL, Los Angeles, CA, and other points.

George Anderson, president of Woodland Equipment Inc., Kamloops, British Columbia, came with 10 customers. Chuck Evans, field sales representative of Nasser Heavy Equipment Inc., Lawrenceville, GA, came with three, all excavator users.

Hyundai Construction Equipment (HCE) invited Construction Equipment Guide (CEG) to join the group. Though HCE has run similar trips in the 1990s, this “2004 VIP Korea Tour” was the first since 9/11.

What happened was nothing short of astounding.

Making It

The group assembled in Seoul after flights lasting approximately 14 hours, then took a one-hour flight to Ulsan near the end of the peninsula, and traveled on a final bus hop to the luxury Kyongju Hyundai Hotel in Kyongju.

Chuck Mason Sr., founder and chairman emeritus of Chuck Mason Equipment Sales Inc., Johnson City and Knoxville, TN, reminisced on the final leg.

“I started out in the automobile business years ago, wholesaling cars. Then I began selling farm equipment and started buying bulldozers and used construction equipment. I went all the way into construction about 34 years ago. My four boys grew up in the business and I turned it over to them about 10 years ago. If I had to live my life completely over again, I would probably change a few little personal things, but as far as my wife, family and business, I wouldn’t change a thing.”

We arrived at the hotel at about 10:30 p.m. Back in Philly, it was 9:30 Sunday morning.

After a sandwich, everyone turned in, being awakened at 6:30 a.m. for a sumptuous buffet breakfast.

Balconies on each room overlooked a lake where white birds flew in the morning.

The Tours Begin

At 8 a.m., three buses took us to HHI’s headquarters in Ulsan, a 45-minute drive, for a film presentation on the company, then to the company’s shipyard, which turns out 70 ships a year. Here the world’s largest container ship, the length of three football fields, is being completed while a giant, yellow crane towers overhead. Hyundai builds a ship in approximately two years.

Modular sections of ships are built in the shops here, and then put together in one of nine drydocks.

The group toured the shipyard’s engine shop, where workers in grey uniforms and white hard hats used special equipment to press together heated steel crankshafts for 55,000-hp engines. Other engines being produced are as high as 98,000 hp.

A sign on the production line read: “Clear Eye and Clear Mind = Customer Satisfaction.”

Inside Look at Construction Equipment Factory

Dealers were, of course, most interested in seeing construction equipment. After a buffet lunch (covering about 25 yards of food) in HHI’s guest house, we walked along two of the three production lines at HCE’s construction equipment factory in Ulsan. The yellow bodies of medium-size excavators moved down the line in a slow, almost dignified procession with hardly any sound. Workers added parts, or made adjustments, with polished movements. They swept the place periodically.

Three lines — for small, medium, and large equipment — turn out one unit every 30 minutes. The Ulsan facility produces 35 to 40 excavators, eight to 10 wheel loaders, and 25 to 30 trucks each day.

“It was a world-class manufacturing operation,” Jerry Tracey, owner of Tracey Road Equipment, East Syracuse, NY, said after the tour. “I’ve been through a lot of manufacturing facilities, but this is one of the best ones.”

Tracey had started his business in 1976 with a couple of snowplows, and built it up to $100 million in sales revenues and 250 employees. Now, he was seeing excavators assembled, a new insight.

Rean H. Wessels, project manager, of Lee Construction, Garden City, KS, a customer of Victor L. Phillips (VLP), uses two Hyundai excavators in landfill and building construction.

“I was fascinated by the obvious attention to detail and the way everything works together in the manufacturing process,” he said

Watching forklifts being produced exhilarated Fred Berger, president, of Berkshire Forklift, Morris, CT, and Gary Bicknell, president, of Quality Lift Truck, Stockton, CA, because forklifts are its business.

“I started my business with nothing but $1,400 and an old truck,” said Berger. “Now, 16 years later, we have 45 forklifts in our rental fleet. Now that I’ve seen the quality of the latest Hyundai model here in the plant, I have a strong selling point against the competition.”

Bicknell expressed similar sentiments. He started his forklift business, which he runs with his wife, with $20,000 three years ago. This year, as the Hyundai forklift dealer in Stockton, CA, revenues were $1.6 million.

“Knowing the culture will really help sales,” he said. “Now I really feel close to my product.”

Established in 1985, Hyundai’s Construction Equipment Division markets in 70 countries through 419 local dealerships and four global operation centers in the United States, Europe, Changzhou, China and Beijing, China.

China is the division’s biggest market. It holds approximately 25 percent of the excavator market there, and this year expects to gain approximately 5 percent of the North American market for excavators and wheel loaders, approximately 9 percent of the worldwide market for excavators, and 2 percent of the worldwide market for wheel loaders. Sources said HCE had considered a U.S. manufacturing plant before the market turned down, but still plans to build one sometime in the future.

Robotic Production of Cars

The group next witnessed Hyundai cars being assembled by Hyundai’s huge robotic arms, which inserted components as the shells of the autos moved down conveyors. A car would be automatically lifted to a second level for a different operation.

White-uniformed workers stepped out to quickly place some pieces, but robots performed the majority of the work. Workers were on five 10-hour shifts. Some poured over checkers, apparently on standby or waiting for shifts to begin. Hyundai produces 5,600 cars a day. Its automotive operations employ 34,000 people. The company is to open a United States plant next year.

Sumptuous Food

J.K. Kim, chief operating officer for the Construction Equipment Division, hosted a sumptuous welcoming dinner after the plant tours. He stressed that Hyundai wanted its guests to not only observe the company’s quality production, but also learn more about the culture of Korea. A giant ice sculpture of an excavator dominated the banquet in the Kyongju Hyundai Hotel.

POSCO Steel Mill

POSCO, an independent company, operates the world’s second-largest steel mill at its Pohang and Gwangyang Works. Here, on the second day of the tour, we witnessed a staggering sight.

In the company’s hot-strip mill, a red-hot strip of steel is approximately 7 yds. long and at least a foot thick when it emerges from the furnace. The glowing strip rumbles like a freight train down a ramp through presses, which stretch it out while tons of water cool it amid clouds of steam.

After passing through eight rollers and a finishing mill, the strip, now a cold gray, is five-eighths of a mile long and only a fraction of an inch thick. Automatically rolled, it goes to users throughout the world, including Hyundai’s manufacturing operations.

POSCO’s strip mill produces 620 rolls, and uses 4.8 million tons of water, per day. Established in 1968, it employs 19,000 people, 10,000 of whom are at Gwangyang.

Trees line the streets at the huge site, which also includes three utility plants.

Machines Put On a Show

That afternoon, the second day, the three tour buses rolled through beautiful hills, past bright green rice fields, to a site where five excavators moved their giant arms in unison with music, including the theme from the movie “2001 A.D.” Wheel loaders did half-rolls and other contortions.

The demo concluded with fireworks from two excavators, which had climbed to the top of a tall hill of dirt.

Then HCE rolled out a strange sight — a large mystery-piece wrapped in white plastic. Almost on cue, as music played, fireworks shot, and pieces of tinsel flew into the air, the plastic was pulled off. Here was the Hyundai’s new 24,690-lb. R110-7 crawler excavator, which will enter production early in 2005. It will be introduced in the United States at the ConExpo Show March 15 to 19, 2005.

Operating the machine’s hand controls, “Budge” Brown, owner of Brown Sand Inc., Lathrop, CA, delicately picked up a football and placed it in a basket.

“Machines seem to like you or not like you,” he commented. “This one likes you. It responds beautifully and easily.”

HCE also showed an improved model of its R55-7 crawler excavator. Incorporating new design features for better performance, it weighs 12,450 lbs. Also at the demo was a new model forklift — the HLF25C-5.

The gray-uniformed HCE people who had put on the show lined up and waved as the buses departed — another display of the family spirit that seems to be part of the Korean business culture.

Next the buses rolled though mountains and valleys, and along a rocky coastline, to a job site where five or six giant excavators mauled the sides of a mountain, clawing down gravel for a cement plant in the valley below. The sun was setting as the buses returned. Stephanie Kim, the guide on our bus, said Korea means “most beautiful country.”

Stephanie taught us such Korean words as An Nyung Ha Se Yo (good morning), Kam Sa Hap Ni Da (thank you), and An Nyung Hee Ga Se Yo (goodbye).

Visiting the Past

Especially in the country, Korea is a land where the past is always present. We were approaching the second major holiday of the year, when people honor their ancestors, bowing towards their burial locations, which are often in the mountains.

Approximately 35 percent of Korea practices the Buddhist religion. Before leaving Ulsan for Seoul on the third day, the group visited the Tomb of King Michu, which is one of approximately 230 large stone-and-earth mounded tombs (22 or more yards high) built during the Shilla Dynasty, or other dynasties, at Kyongju in Kyungsangbuk-do Province. The ancient tombs, built in clusters and covered by grass, resembled smaller versions of some modern landfills, but they date from as early as 57 B.C.

King Michu lived in the 7th century. Inside his tomb, burial objects, including personal ornaments and weapons, were displayed.

Next, the group climbed a mountain to a Buddhist shrine inside a multi-colored single-story temple overlooking valleys and hills. Stephanie suggested we make our prayers here, where we could stand outside and observe a large seated white-stone-and-gold Buddha, who looked straight ahead with an expression of great peace, while brown-vestmented Buddist monks bowed and prayed.

Groups of Korean school kids passed us often, smiling and saying Hi or Hello.

Before flying to Seoul, we also visited the Tomb of King Shilla at Cheonmachong, drinking from a spring for long life before climbing another hill to the multi-hued wooden (pine) structure, which is painted every 100 years.

The group also saw the three-story stone “Pagoda of Many Treasures” decorated with a lotus flowers and other ornaments, which stands beautifully on the stone enclosure in front of the structure. Pagodas marked burial sites.

Doney McSwain, owner, with his wife, of Lone Star Forklift, Garland and Fort Worth, TX, saw it all with his son, Josh.

“Josh will take over the business, and this helps his training,” he said. “He is learning more about the culture so the trip is very important.”

The Korean culture also includes terrific food. We enjoyed such specialties as Bulgoki (sliced beef) with Kimchi, a vegetable.

Seoul

Seoul is a city of more than 10-million people. The group stayed at the opulent Plaza Hotel. HCE gave us another banquet, then brought everyone to a special show of Korean folk dancing and songs.

On Thursday, we toured the War Memorial of Korea, with its vivid reminders of the battles of the Korean War, with their 160,000 Korean and 33,000 American servicemen who gave their lives, and visited Changdeokgung Palace, which was a royal residence for the kings of Korea until late in the 20th century. Here, the group walked through the famed Secret Garden, past a lake, under Never Get Old Gate, and through acres of century-old trees where royalty once took evening strolls.

Finally, dealers and contractors shopped. Stephanie taught us the words for “too much.” Salespeople clutched us and wouldn’t let go. We bargained. Many purchased hand-tailored cashmere suits for $200 or so, silk shirts for $25, delicately engraved white-jade necklaces, Korean Celadon vases, and suitcases.

HCE brought everyone to a Korean barbecue. Beef was cooked over charcoal in the middle of the table. Using chopsticks, you put it on lettuce and then spread garlic, peppers, onions and other condiments over it. The beverage was Soju. There were many toasts of “Kunbae!” (to your health). Someone yelled “Fire in the Engine Room!” It was a great evening.

The tour was a remarkable foray into the culture of Hyundai and of Korea. Tom Schultz, managing member of Advanced Forklifts LLC, Union, NJ, said, “They say a picture is worth a thousand words. The picture of Hyundai, which we received, translates to millions of words. You can’t describe it. Their manufacturing operations, and their professional courtesy and dedication to dealers and customers, are beyond belief.

“I found the Korean people very warm and respectful. I couldn’t get a taxi and a well-dressed businessman gave me a ride on his motor scooter. I was too heavy so, after about a mile, he brought me to a taxi. Then the driver wouldn’t take a tip. There’s a big world out there. Once you accept it warmly and open-mindedly, you realize how nice it really is.”

Tracey Road Equipment’s Jerry Tracey said on the plane home, “Taking a week off was a hard decision to make, but it has been well worth it. It was a great experience. Now I’ll go back and energize our troops.”

The final banquet before everyone flew home included champagne sherbet. We will miss our HCE hosts and our fellow guests.

An Nyung Hee Ga Se Yo (Goodbye).