2 years of HATLAPA Korea: Growth in the largest shipbuilding market in the world
Uetersen / Busan – expressions such as Anyoung-Haseyo and Gamsa-Hamnida” come easily to Ralf Nicolaisen. The 34 year old industrial engineer is head of the HATLAPA subsidiary which was set up 2 years ago in South Korea. Mr Nicolaisen is in daily communication with the Korean Managing Director, Young-Hyun Roh in the pulsating port of Busan (4.5 million inhabitants) by phone and can frequently be heard saying “Good Day” and “Thank You” in their national language. In 2007 the North German manufacturer of ships equipment invested 4 million dollars in this Joint Venture.
Mr Nicolaisen flies out to Korea approx 5 times a year to ensure that everything is working correctly over there. This is practically unnecessary though, as the Korean off-shoot is developing magnificently. 35 employees turned over EUR 9 million in 2008. This year the projection is 12 million EUR with 45 employees.
HATLAPA has also invested a further 3 million dollars in a 2nd 2000m² factory in Busan. In addition to steering gear, ships winches will also be produced in Korea for the Asian market. Until 2006 HATLAPA was reliant on a joint venture with Samsung Heavy Industries. They were selling HATLAPA’s German designed steering gear under license in South Korea. “This was a good partnership and it enabled us to break into the Korean market” explained Mr Nicolaisen. However, this partnership soon reached its limitations. “We were unable to reach the largest shipyards Hyundai, Daewoo, Hanjin and STX as HATLAPA-SAMSUNG as for them SAMSUNG was a competitor and could therefore not be accepted as a supplier.
At the turn of the century Korea had developed into the largest shipbuilding market in the world, knocking Japan from the top spot. At present South Korea’s market share of the commercial shipping industry is 20% by number of ships (2303) and 37% by the gross weight tonnage (137,597 Tonnes). China builds more, but much smaller ships. Japan’s shipbuilding industry has fallen to a half of Koreas based on GWT. Combined these 3 countries produce 7 out of 10 of the world’s ships, and worked out on a tonnage basis, 9 out of 10 ships.
“If we want to grow in the Asian market we had to start our own manufacturing plant there.” Mr Nicolaisen explained that this strategic decision was reached 3 years ago. The Japanese market was never really an option, as this is practically closed to any overseas companies.
Development in Korea has been with HATLAPA’s longstanding partner DONG SUNG, who had been their sales agent in Korea since 1993. Together they created a new company in Busan, with 60% being owned by HATLAPA and 40% by DONG SUNG. “This was absolutely the right decision” Mr Nicolaisen exuded. We have excellent Korean co-workers, we are very close to the largest shipbuilding market in the world, and are very well supported within the region, and we can also rely upon cost effective structured suppliers. The 8 hour time difference is no longer an issue. Previously when we had enquiries for the Korean market, it would take a day to reply. Now we can reply the same day.
In the past 2 years the sales of steering gear has increased from 35 to 55 on the previous year. For 2009 83 units are scheduled. The year after that in excess of 100 steering gear are to be produced for the Asian shipbuilding market. HATLAPA currently have a market share of 10% and we are intending to increase this rapidly.
The Koreans are very helpful, friendly and kind, the HATLAPA Manager has discovered. They are not afraid of hard work, working 08.00 – 20.00 hrs, 6 days a week Nowadays it is no longer possible to talk about a low wage earning country. Wages today are currently about 80% of the German level. It is important for us to be able to rely upon people and that we have Korean counterparts, is how Mr Nicolaisen explained the successful model. The Korean market is rough – all ship suppliers are forced to discount prices in a very competitive market. The shipyards are unwilling to compromise and have incredibly high expectations with regards to quality and delivery time for the products. We cannot allow any compromises ourselves. The steering gear is one of the most important pieces of equipment on board. If this stops working, the ship is unable to move any further. Here HATLAPA obviously enjoys the full confidence of its customers, as the constant growth of its young subsidiary has shown. In this way the 480 co-workers in Uetersen have also profited, explained Joerg Tollmien, one of the 3 partners of the company, which this year celebrates its 90th anniversary. The steering gear are manufactured in Korea, however, we design, sell and provide service from Germany. These are orders which we never had before.
No wonder that HATLAPA is now focusing on expanding through Winch production in Korea. As this product has to be specially designed to fit each ship, in comparison to Steering gear which are standard products, it means a much more complicated manufacturing process. We are now in a position to get involved with this in Korea.
HATLAPA’s Korean MD, Ralf Nicolaisen, “For us it is important to be able to reply upon people and that we have Korean counterparts.