Hat’s off to ambitious entrepreneurAs if being the chairman of the world’s largest hat manufacturer wasn’t enough, Baik Sung-hak has set his sights on forklifts.
While the two products don’t seem to have much in common, to the owner of YoungAn Hats, in Bucheon, Gyeonggi province, the pairing seemed such a natural fit that he decided to buy the Clark Material Handling Co., an American forklift manufacturer. The Lexington, Kentucky-based company is the world’s seventh largest forklift builder.
The U.S. company has been mired in severe debt since the 1990s, however. The company’s operations in Korea and Germany have also struggled, and Clark’s U.S. headquarters was put up for sale in January by a bankruptcy court.
In an era in which everyone is rushing into advanced information technology industries, Mr. Baik remains stubbornly fastened to the old-fashioned world of manufacturing.
“I set modest goals and prefer the brick-and-mortar industries,” says Mr. Baik. “I place importance on tradition and conservatism.”
Still, a lot of people find the concept of a hatmaker becoming a forklift-maker to be more than a little strange. But not Mr. Baik, who believes the marriage is a natural. “The two industries aren’t really that different from each other,” he says, adding that he considers this a logical evolution for his hat firm. “We’re only expanding.”
According to Mr. Baik, whether it’s hats or machinery, the basic manufacturing processes are the same. To produce a better hat, a company needs to have better manufacturing components. Since YoungAn began in 1956 using cast iron machines, equipment has been a focus of the company. In 1959, Mr. Baik learned all about pressing and cutting skills from a Japanese engineer.
Eventually, YoungAn started making its own hat manufacturing equipment, gaining valuable knowledge about machines in the process. In 1995, it acquired a bus manufacturing company in Costa Rica. “You could say we’ve been preparing to expand into the machinery industry for the last four decades,” Mr. Baik says.
No matter how much money he earns, Mr. Baik says he will never move into information technology. The chairman believes that IT companies are too risky, too easily wiped out by intense competition and innovation. But forklifts will always be necessary because companies will always need to transport heavy loads for short distances. In addition, Mr. Baik sees greater international potential in dealing with physical products.
Mr. Baik’s grandfather had moved the family to northeastern China to escape Japanese oppression during the colonial period, so, Mr. Baik was born in Heilongjiang province, China, in 1940, the only son in the family. In time, Mr. Baik’s sister and father both died from typhoid fever. In China, Mr. Baik’s grandfather ran a small general store called YoungAn, which means “eternal peace.”
The Baik family moved back to North Korea in 1948 after colonial rule ended. Mr. Baik had received only three years of schooling before the Korean War broke out. At age 11, he journeyed to the South in the early months of the war, alone and with nothing to his name. His mother remained in North Korea to attend to his ailing grandfather, the storeowner, and Mr. Baik never saw them again.
An orphan in Seoul, Mr. Baik roamed the streets, always hungry. By 1955, he landed a job at a machine shop that produced school caps. It was a humble start for a man who would go on to be called “King of Hats.”
Working 18-hour days, Mr. Baik built today’s YoungAn Hat Co, named for his grandfather’s store. The King of Hats, his employees say, treats everyone who works for him as if they were members of his family. The company has 8,000 employees working in plants in Korea, Sri Lanka, Bangladesh, Hong Kong and New Jersey, manufacturing 10,000 different styles of hats for a total of 100 million hats a year.
YoungAn Hat claims to hold an astonishing 40 percent of the world hat market, and 65 percent of the Canadian market.
Mr. Baik says the company’s success comes from its 14 factories and sales stores worldwide.
For all his success, Mr. Baik is an example of frugality. Even though he spends six months a year traveling overseas, he always flies economy class. And when he visits the United States, he makes a point of staying in lodgings that are less than $200 per night, which is not easy to do in New York City.
“If the owner of the company is thrifty in his spending, it will earn him the respect of his employees,” he says. “The employees’ love for the company will then soar.”
For 30 years, YoungAn has not had a labor dispute. “If the owner has nothing to hide and is always honest, there is no need to fear a union,” he says.
by Choi Hyung-kyu