Laying a path to future growth

LS Cable & System’s Donghae Plant employees last Friday check submarine cables that will be exported to Qatar. Provided by the company

DONGHAE, Gangwon - At first glance, it looks like a giant, coiled black and yellow striped anaconda.

At 50 kilometers (31 miles) long and weighing 3,800 tons, this “creature” sits in the submarine cable production plant of LS Cable & System, Korea’s largest cable manufacturer.

The submarine power cable transmits electricity underwater and is known in the industry as the “flower of cables” because it uses the best technologies in the field.

LS Cable is the world’s third-largest cable maker, but when it comes to submarine cables, it’s a newbie, having entered the business just five years ago.

The big names in submarine cables are Prysmian of Italy, Nexans of France, ABB of Sweden, NKT of Germany, and J-Power Systems and Viscas of Japan.

Nevertheless, LS Cable expects submarine cables to be its next growth engine.

“We currently have a 7 percent to 8 percent share of the global submarine cable market, but we aim to secure 10 percent next year,” says Hong Jin-Young, general manager of LS Cable’s global submarine sales and marketing.

In 2009, the company posted 12 billion won ($11 million) in revenue from the submarine cable business, but next year it hopes to get 330 billion won. That means a bigger role for LS Cable’s Donghae plant, the first facility in Korea dedicated to manufacturing submarine cables.

“Previously, Korea had to import submarine cables from foreign companies,” says Park Kyung-il, senior vice president of LS Cable. “With this plant, we are making the regional economy healthier by providing jobs, as well as offering an opportunity for the country to become a powerhouse in the ocean business.”

The biggest challenge in building the submarine cable factory in Donghae, 270 kilometers east of Seoul, was acquiring equipment. “Foreign companies were reluctant to sell their production machinery and, furthermore, it was too expensive,” says Kim Won-bae, who manages the submarine cable production team at Donghae. “So we asked local companies and put our best effort into R&D on manufacturing submarine cables and we designed and made the equipment ourselves.”

The Donghae plant can produce 860 kilometers of submarine cable a year, which the company says is the largest capacity of any plant in Asia. It also has a massive turntable that can store 10,000 tons of cable.

“In cable manufacturing, when a defect is found in the middle of a cable, we can’t just cut and fix that part. We need to discard all the cable, even if it is 10 kilometers long,” says Kim. “That’s why maintenance of the facility is the key. Even if the factory is not running, we always focus on maintenance.”

In order to be recognized as a global player, LS Cable knows its reputation hinges on its first major submarine cable project in Qatar.

In November 2012, the company secured a $435 million order from state-run Qatar Petroleum to install two 100-kilometer power cables from Ras Laffan Industrial City and Halul Island. It is the largest ever cable export contract for a Korean company.

The project is big challenge for LS Cable because the company is in charge of the entire process, including the engineering, procurement, installation and commissioning of onshore construction in Ras Laffan, as well as the laying of submarine cables, construction of a substation and the integration of an existing substation on Halul Island.

The first shipment for this project - 100 kilometers of submarine cable - was loaded last week on a vessel chartered from Hanjin Shipping. It is scheduled to leave Donghae Harbor tomorrow and arrive in Ras Laffan on Oct. 14.

In Dongae, it took seven to 10 days to load the 50-kilometer cable on the ship. The cable is strung from the plant to a platform on the ship via a railway, which company calls a “gangway,” that connects to the plant 400 meters away. The process is similar to moving thread from spool to spool. When each cable is coiled on the 25-meter (82-foot) diameter turntable, it stands about four meters high.

“When moving cable from the plant to vessel, the most important thing is to maintain the correct speed between the two points,” says Kim. “Moving five to 10 meters per minute is a safe speed.”

After the Qatar order, LS Cable secured submarine cable contracts from Venezuela, the Netherlands and Denmark. It previously won orders in Malaysia and Indonesia, as well as a project for supplying power between Long Island and Captree Island near New York City.

Domestically, the company has completed a 105-kilometer high voltage direct current 250-kilovolt interconnection project between Jindo and Jeju Island.

Although the company’s brand recognition in submarine cables is relatively low, LS Cable said it will keep knocking on doors and is confident in its technology and pricing strategy.

“We have more than 50 years of experience and abundant technology in underground cables,” says Lee In-ho, LS Cable’s senior vice president managing production at the Donghae plant. “Because of that, we are a natural for the submarine cable business.”

BY JOO KYUNG-DON [kjoo@joongang.co.kr]