E&M focus for Hyundai Rotem

Hyundai Rotem, the nation’s leading manufacturer of trains and tanks, will boost its railway electronic and mechanics (E&M) business to further compete in the global market.

The affiliate of Hyundai Motor Group said yesterday it plans to quadruple its E&M orders to 2 trillion won ($1.7 billion) by 2020. The company currently has annual sales of about 500 billion won in E&M projects, which builds signals or communication systems to control trains and manage passenger transportation.

Earlier this year, Hyundai Motor Group Chairman Chung Mong-koo urged the company to take a leading role developing the nation’s railroad industry through research.

“Until now E&M systems for local trains were mainly managed by foreign companies, but as our technology and performance develops, we believe we can not only lead growth in the industry but also pave the way to exports,” the company said in a release.

According to Hyundai Rotem, the annual global E&M market for trains is estimated at 56.9 billion euros and about 27 percent of that is related to signals and communications. The company said the E&M business promises steady revenue as maintenance and repair work accounts for 58 percent of all E&M projects.

Industry insiders said Hyundai Rotem is on the right track because railway projects increasingly combine train and management systems. The world’s top three train manufacturers - Bombardier, Alstom and Siemens - have already boosted their E&M businesses.

According to Hyundai Rotem, there are about eight train companies worldwide that can compete in the E&M business. Hyundai Rotem first entered the E&M market in 2004 after winning an order for Seoul subway’s Line No. 9.

It also supplied its E&M system for line No. 2 of the Incheon subway, the Sinbundang Line and the Gimhae Light Rail Transit system.

In 2011, the company exported its signal system to the Almaty Metro in Kazakhstan. Over the last four years, it has had 800 billion won in E&M revenues.

Hyundai Rotem said yesterday it signed a 200 billion won contract with the Korea Rail Network Authority to supply light rail transit trains and operating systems for Gimpo and Gyeonggi.

The Gimpo City Railway Project, which will cost 1.6 trillion won, will have nine stations, one train maintenance depot and 23.61 kilometers (14.67 miles) of tracks. Since the average distance between stations is more than double that of usual railways, Hyundai Rotem said the average speed of the train should be at least 10 kilometers per hour faster than usual.

Hyundai Rotem said it will supply 23 trains by 2017 and set up an automatic signal system.

Hyundai Rotem said for signal and train control systems, it formed a consortium with SMEs and tried to share growth with its business partners.

Meanwhile, Hyundai Rotem said it also signed a contract with New Zealand’s Greater Wellington Rail Limited to supply 70 subway trains.

The deal is worth 130 billion won and the company will deliver the trains by 2016.

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