From straw to steel and beyond
Dongkuk Steel’s steel plate manufacturing plant in Pohang, North Gyeongsang. [JoongAng Ilbo]
This year is particularly significant for the steel conglomerate as it celebrates its 55th anniversary of establishment.
Dongkuk Steel started off in 1926 as Daegung Company, a small manufacturer of straw bags known as gamani in the middle of a market in Busan founded by Chang Kyoung-ho.
Daegung later changed its name to Namseon Industries in 1935 and expanded into marine products and the storage and sale of rice.
It was during this time that Chang acquired a few wire drawing machines. That gave the young businessman the opportunity to jump into the steel industry.
This new era for Chang’s business came when, in 1949, he established Chosen Wire, which manufactured steel wire and nails.
With the profit he made from that venture, Chang bought a steelmaker in Yeongdeungpo, Seoul, and set up what would later become today’s Dongkuk Steel in July 1954.
There are a number of firsts in Dongkuk Steel’s long history. It became the first Korean company to produce wire rods in 1959.
In 1965, Dongkuk was the first company in Korea to construct a 50-ton blast furnace. It was also the first company in Korea to use a 15-ton electric furnace, in March 1966.
And in 1971, Dongkuk Steel became the first local steelmaker to build a factory capable of manufacturing 150,000 tons of the metal every year.
After Chang Kyoung-ho established Dongkuk’s basic structure, his son Chang Sang-tai embarked on a campaign of aggressive expansions, building a swath of steel plants and acquiring smaller rivals.
Under Chang Sang-tai, Dongkuk Steel became one of the top major conglomerates in Korea.
In 1985 Dongkuk Steel took over the shattered Kukje Group, which included Yonhap Steel, today is known as Union Steel, as well as Kukje Machinery and Kukje Transportation, a logistics unit.
Since Chang Sang-tai passed away in 2000, his eldest son Chang Sae-joo has been in charge of operations at the steel group, taking the conglomerate in a more technologically sophisticated direction.
The third-generation chairman’s business strategy focuses on selling high-value products while strengthening Dongkuk’s areas of unique expertise.
With this in mind, Dongkuk says he has adopted high-tech equipment and eco-friendly technologies aimed at reducing costs. The company also says it has proactively expanded in overseas markets, including securing raw materials from resource-abundant countries like Brazil.
Dongkuk Steel has also strengthened cooperative business ties with foreign partners such as Japan’s JFE Steel.
Chang Sae-joo (56)
Last year the group’s flagship division, Dongkuk Steel, posted the best numbers in its 55 years in business. Revenue was 5.64 trillion won ($4.38 billion), a 51.7 percent jump from the previous year, and operating profit was 856.2 billion won, a 122.4 percent increase.
And the good times are expected to continue as soon as the economy recovers, according to Kim Joong-jae, an analyst at Kiwoom Securities, who said, “The steel manufacturer will continue to show strong performance once the Korean shipbuilding industry gets back on its feet.”
Today, Dongkuk Steel Group has four major business pillars: steel, machinery, logistics and information technology.
The conglomerate has overseas branches in major cities around the world, including New York, Los Angeles, Tokyo and Singapore, as well as several in China.
The next step for the conglomerate’s steelmaking operation is the opening of a plant for steel plates in Dangjin in Novemeber.
The firm is also building a research and development institute at a cost of 40 billion won, which it hopes will secure technological competitiveness on the global market.
Supporting the young chairman is Kim Young-chul, the president and joint chief executive of Dongkuk Steel.
When Kim was promoted to president of the group’s key unit, many changes were expected, as he has long stressed the importance of making Dongkuk into a global company with ownership over its own technology.
Chang Sae-wook, the chairman’s younger brother and vice president of Dongkuk Steel, has the most unique background in the company. He graduated from the Korean Military Academy and was discharged as major before finally joining the family business in 1996. Since then he has been accumulating experience in the conglomerate’s management department and at its overseas branches, offering new ideas.
Vice President Nam Yoon-young joined the steel company right out of college in 1978 and has been working at the company’s branch offices in Japan and the United States, as well as in other major departments, including planning.
He is one of the main contributors to the effort to maintain a steady supply of steel plates to domestic shipbuilders.
Hong Soon-chul, head of Union Steel, started his career at its predecessor, Yonhap Steel, making him a longtime expert in the steel industry.
He has been with the company for more than 40 years, and his main strategic focus today is strengthening its export unit. Every year Union Steel ships out products to 72 countries. Hong is also known to have a keen interest in the environment, and he spearheaded an effort to recycle waste water and other by-products at the company’s factories.
Kang Yong-oh, head of Union Coating, another steel division of Dongkuk Steel Group, is an expert in sales. Known for his aggressive marketing skills, Kang helped Union Coating turn a net loss in 2007 into a net profit of 690 million won last year. In that same time period revenue jumped more than 20 percent to 10.7 billion won.
Kim Sang-jo, chief executive of Kukje Machinery, is an expert in agricultural machinery. Like the other executives at the steel group, Kim has been with the conglomerate for over four decades, starting off at Yonhap Steel. Kukje is the group’s only machinery business, and since he took up his current position in 2003, Kim has been focusing on expanding into the global market. Under Kim, Kukje Machinery hopes to enter the North American small to mid-size tractor market this year. Kim is also known as an avid marathon runner, which colleagues say reflects his spirit of perseverance.
Kim Jung-soo, chief executive of Kukje Transportation, Dongkuk Steel Group’s logistics wing, puts his focus on change and growth. He hopes to expand his corner of the conglomerate into one of the country’s leading logistical firms, with units operating in all aspects of the business.
The life philosophy of Jeong Pyo-hwa, the chief executive of Dongkuk Transportation, is to accept change. Jeong started off at the conglomerate’s smaller steel affiliate in 1979. Then, in 1988, he was transferred to Dongkuk Transportation, where he learned the basics of the logistics businesses. One of his major contributions to the company has been the construction of specialized Dongkuk Transportation shipping docks in Pohang, North Gyeongsang.
Jeon Dong-woo, chief executive of DK S&, a shipping and logistics division of the steel group, is an expert in his business, with prior experience at Dongkuk Steel Group’s shipping division and then later as the head of the DK S&.
DK S& is relatively new, unlike other affiliates of Dongkuk Steel Group, having been established in 2006. DK S& is in charge of Dongkuk Steel’s export and import businesses.
The group’s IT division is led by Park Jong-hum, head of DK UIL, and Jeong Nam-gyun, president of DK UNC. Both majored in electronics and electrical engineering.
Park majored in electronics in college and started his career at Samsung Electronics, which is now the country’s largest manufacturer of mobile phones. He also has research and development experience as the vice president of Samsung Techwin, the technology research lab of Samsung Group. Park joined Dongkuk in 2005.
Jeong, meanwhile, is an expert in IT consulting and outsourcing. Before joining Dongkuk Steel Group, Jeong worked in the IT consulting department at Samsung Electronics and at United States-based computer maker Hewlett-Packard.
By Lee Ho-jeong [ojlee82@joongang.co.kr]
with the Korea JoongAng Daily
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