Parts makers may soon see benefit of free trade

World-class automobile, heavy machinery and airplane manufacturers are gathering in Changwon, South Gyeongsang, to explore buying parts made by Korean manufacturers, the Korea Trade-Investment Promotion Agency announced yesterday.
At the first TransporTech, which will open for three days from June 19, procurement people from countries that lead the auto industry such as the United States, Germany and Japan will rub shoulders with representatives from car makers in China, France, India and Malaysia.
Makers of other types of transportation will also be present.
Among them are John Deere, Caterpillar, Yamaha and even the aircraft engine maker Rolls-Royce.
Kotra is expecting more than 200 parts companies and 300 foreign buyers to participate in the event.
“After the Korus FTA was reached more U.S. companies expressed interest,” said Chung Gwang-young, head of the major industries marketing team at Kotra. “GM is expecting to save some extra money by buying more Korean parts when the 2.5 percent tariff is abolished.”
GM will expand its annual procurement from Korea to about $2 billion from less than $1 billion last year, according to Kotra.
Caterpillar, the U.S.-based machinery company, which does not have Korea in its procurement portfolio, will consider putting Korea in if the FTA is enacted, Chung said.
“Parts from Germany and Japan are too expensive while Chinese parts are sometimes low in quality. Korean parts provide the best quality considering the price,” said Chung.
Exports of Korean car parts have gone from $2.2 billion in 2001 to $8.5 billion in 2005.
Kotra, South Gyeongsang Province and the city of Changwon, the co-hosts, expect the event to be a stepping stone for the Korean parts industry. Changwon has one of the largest machine industry complexes in Korea.
Not only manufacturers but also major parts makers including Delphi, Bosch and Honeywell will attend as buyers or to order original equipment manufacturing, in which they buy a product from another company then label and sell it as their own.
Hyundai Mobis will participate in the event.

By Hwang Young-jin Staff Writer [yhwang@joongang.co.kr]