Photo courtesy of POSCO Pohang Steel Works · POSCO -0.9%. This year’s economic growth forecast was released by nine foreign investment banks, including Goldman Sachs, in April. The International Monetary Fund (IMF) has forecast south Korea’s economic growth rate of -1.2% this year.
But not all industries and businesses have been plunged into darkness. Companies that proactively invested before the Corona 19 incident and prepared for the untact and non-face-to-face flow did a rather good job in the first quarter of this year.
Hyundai Motor, which has been working on the development of new vehicles for many years, reported a 5.6% year-over-year increase in sales to KRW 863.8 billion in the first quarter, despite the impact of overseas market sales due to the Corona 19 incident. Hanwha Solutions also added a surplus in the solar sector, increasing its operating profit by 61.7% (KRW 15.9 billion) year-over-year. Over the past few years, CJ Cheil Has been working hard to develop home-made alternative foods (HMR) and target overseas markets, and in the first quarter sales increased by 16.2% (KRW 5.8309 billion) and operating profit by 54.1% (KRW 275.9 billion) compared to the previous year due to the corona 19 crisis.
Global Future Automotive Market Preemptive Paving the Way
There is also an active movement for companies to find new opportunities that cannot be caused by the economic shock of Corona 19. We are preparing for the post-corona era by stating that the Corona 19 situation is accelerating the gradual changes that have occurred or creating new opportunities. On May 13, Samsung Electronics Vice Chairman Lee Jae-yong and Senior Vice Chairman Of Hyundai Motor Co., Ltd. met to discuss ways to cooperate in the next-generation electric car battery business, which is interpreted as an aim to pre-op the global future automotive market that will begin in earnest after the end of the Corona 19 crisis.
Starting in 2018, the World Economic Forum (WEF) will announce the “Light Factory” as a “Light Factory” for companies that demonstrate the future of manufacturing by utilizing the core technologies of the Fourth Industrial Revolution. Last year, POSCO was selected as the first Korean company to be selected as a lighthouse factory. Posco recognized the world’s first implementation of smart factories in continuous processes. A smart factory is a high-tech intelligent factory that combines artificial intelligence (AI), big data, and the Internet of Things (IoT) with manufacturing technology. While most smart factories of global companies such as GE (General Electric) and Siemens are targeted at assembly processes, POSCO is targeted at continuous processes. Assuming the steel manufacturing process from A to Z, POSCO’s smart factory tracks the cause of defects in Z to A.
POSCO is making significant gains in terms of productivity and quality through smart factories. For example, small order processing that took an average of 12 hours to calculate by hand was shortened to one hour using AI technology. Accuracy reaches 97%. The operator checks the metal temperature every two hours and checks the state of the raw material, which the AI now checks and controls itself. POSCO plans to expand its smart factory to the entire steel mill by 2022.
SK Declares ‘High-Value Deep Change’
The leading company in POSCO’s smart factory project is POSCO ICT, a company specializing in information technology (IT) and engineering. However, in the Corona 19 crisis, POSCO ICT had the opportunity to expand the success experience of the steel works to the entire manufacturing industry. Sales (KRW 26.8 billion) and operating profit (KRW 11.2 billion) increased by 21% and 4.7% year-over-year, respectively. It is analyzed that the increase in sales of the smart factory business has driven this performance.
The industry expects corona 19 to accelerate the company’s transition to a smart factory. “When demand normalizes after the Corona 19 crisis ends, the strongest competitive ness of the company is to ensure high production efficiency,” said Egan Jae, a researcher at IBK Investment & Securities. The corona 19 crisis also brightens the prospects of the smart factory sector, as the risk of placing a production base overseas is revealed, and the reshoring phenomenon of overseas companies returning to their home countries. An industry insider said, “The surge in operating costs, such as labor costs, is a big concern for factories returning to their home countries, and they will try to increase efficiency by introducing smart factory solutions.”
In line with this trend, smart factory-related companies are also making rapid moves. Posco ICT signed a business agreement with Hyosung Group on May 20 and agreed to cooperate in the spread of smart factories. We decided to apply the smart factory to hyosung Group’s chemical and heavy industry sectors, and jointly develop integrated production management system (MES) and supply chain management system (SCM) operating in the smart factory environment with Hyosung ITX, an IT solution affiliate within Hyosung Group. A POSCO ICT official said, “We plan to cooperate with Hyosung to spread smart factories to various manufacturing industries such as chemicals, heavy industry, textiles, etc., following the existing steel industry.”
Petrochemical is korea’s leading industry, ranking fourth in the export sector after semiconductors, automobiles and general machinery. The combined contribution of petrochemicals and refineries exceeded semiconductors (10.7%) by 12.6%, but in the Corona 19 crisis, oil prices collapsed, and refineries as well as petrochemicals were hit directly, according to the Ministry of Industry, Trade and Energy, and petrochemical exports plunged 33.6% year-on-year in April.
But there is no way. The domestic petrochemical industry finds hope in the high-efficiency high-value-added packaging market. An official of the Korea Petrochemical Association said, “As non-face-to-face consumption trends spread after the Corona 19 crisis, the demand for packaging materials that can store food safely and long-lasting is expected to increase significantly.”
In March, SK General Chemical was the first korean petrochemical company to declare a “deep change to a high-value chemical company.” The company intends to use its high-value packaging business as the next-generation focus growth area and preempt the market through global mergers and acquisitions (M&A). For this “choice and concentration”, the NCC process, the first naphtha decomposition process in SK Ulsan Complex, which produces general-purpose product raw materials such as synthetic rubber and synthetic resins, was decided to be shut down for the first time in 48 years. IN 2017, SK General Chemicals, which acquired its core materials business for high-value packaging from Dow in 2017 for 800 billion won, plans to complete its acquisition of the high-performance polymer business of Arkema, the no.1 manufacturer in the French polymer industry, in the first half of this year.
SK General Chemistry officials said, “The Corona 19 situation has made the utility of plastics such as masks and sterile packaging more prominent, and we will develop not only high-performance plastics, easy-to-recycle plastic technologies, and engineering plastics used as automotive exterior materials, we are actively engaged in r&d in line with this Green Balance Strategy.”
Remote Working Solutions Market Vibrancy
In the post-corona era, telecommuting and other remote work is expected to become a daily routine. This is because remote work is considered to have increased the efficiency of work as well as the prevention of infectious diseases during the Corona 19 crisis. According to alsupport, a remote service company, the use of remote video conferencing in early May, which was switched to life-saving distance, fell 75 percent compared to April. However, that’s 10 times more than corona 19. In Korea, where there is a strong corporate culture that favors face-to-face meetings, it is assumed that remote working will become a new normal.
Accordingly, the solution market that supports remote working is booming. Alsupport will soon present a non-face-to-face video consultation program and an online conference. Instead of visiting each home when an electronic product fails, the repair technician can solve the problem through video consultation, and up to 1000 people can connect at the same time to present and answer questions. The company official said, “It is a service that has been prepared since the Corona 19 incident, and we believe that the Corona 19 situation has made the market more marketable, and it is expected that in the future, a variety of services will emerge to support non-face-to-face business in the teleconferencing solution market.”
It is expected to grow in the post-corona era, but there are some industries that are uncertain about the future due to regulation. The telemedicine market is the most representative example of the telemedicine market, but the ruling party has “never pursued a concrete telemedicine policy or consulted with the Ch’ongwadae,” and unlike the Ministry of Planning and Finance, which intends to foster a non-face-to-face health care industry, the Ministry of Health and Welfare has “not discussed expanding non-face-to-face care at the central disaster response headquarters.”
An official in the telemedicine industry who recently attended a government-sponsored telemedicine conference said, “??. Next year, we expect the regulations to be released for the eighth year in a row,” he said, “to respond to infectious diseases that may be prevalent after the end of corona 19, and to accommodate the growing demand for non-face-to-face medical care. If we miss the time, we are concerned that the telemedicine market will be taken away by overseas companies.
Park Sang-geun, head of the Industrial Research Division of the Korean Chamber of Commerce and Industry, said, “It is unfortunate that many companies are focused on overcoming the crisis right now,” and that “as the world evaluates that South Korea is successfully conducting corona 19 prevention, we need to consider how to use this trend.” Kim Hak-kyun, director of Shinyoung Securities Research Center, said, “In line with the industrial environment that has changed in the corona 19 situation, each company has a lot of concerns about how to increase productivity and efficiency,” adding, “It is true that technology needs to be advanced in a way that increases productivity, but as there are limits to creating employment, measures to compensate for this should be discussed socially.”
Kang Ji-nam Reporter firstname.lastname@example.org
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