Episode 130: The Chemical Plant Inauguration Ceremony
With the smoke signaling the start of the plant’s operation, Manager Gu Chang-dong whispered in Lee Chang-jin’s ear.
“Boss, you need to go now. The first batch is about to come out.”
Receiving the news, Lee Chang-jin bowed his head to excuse himself.
“I guess I should get going now. Executive Director, thank you for your kind words.”
“Haha, no problem. You should hurry and check the first operation.”
“Yes, then I will excuse myself.”
Lee Chang-jin, now changed into his work clothes, entered the operating plant. The sound of grinding from the crusher was heard, and pure white organic powder poured out like snow. The first batch was finally produced.
Employees, wearing masks and white work clothes, cheered.
“Wow, it’s so white. It’s like refined sugar.”
Lee Chang-jin touched the piled powder with his gloved hand. He put some powder on his glove into his mouth as if tasting salt, but felt no taste. Odorless and tasteless.
The quality was perfect.
The sight of the white powder pouring out looked like a gold vein bursting out.
The bags, now piled up neatly, were ready to be loaded onto trucks.
Forklifts roamed inside the plant, carrying the bags one by one.
Watching the scene with satisfaction while wearing a safety helmet, Lee Chang-jin asked Jeong Ho-seong.
“What is the production volume?”
“About 20 tons per day. Since many of the employees are still unfamiliar with the machinery, we plan to refrain from full-scale operation for now. As the order volume increases, we will gradually increase the production volume.”
“Now we just need to ensure quality control and pay attention to safety.”
“That’s right. By the way, boss, have you chosen the engagement ring?”
“Oh, I commissioned an Italian jeweler to custom-make it. It will take some time to be made. We will proceed with the engagement ceremony as soon as the ring arrives.”
“Oh, a custom-made one. Wow. As expected, you are different, boss.”
As Gu Chang-dong, who was next to him, gave a thumbs-up, Lee Chang-jin looked embarrassed.
“Haha, honestly, I need to show at least some sincerity to Seon-ah, don’t I? Given the circumstances. Moreover, I feel sorry as I’ve received so much from my father-in-law.”
Receiving an island as an engagement gift was nothing.
Which father-in-law in the world would give an island and a yacht as a gift?
In fact, as soon as the engagement ceremony was over, he planned to return to the Middle East, so his current leisure time was temporary. Feeling sorry, Lee Chang-jin planned to spend his time with Jin Seon-ah rather than focusing on work for the time being.
But then, Section Chief Seo Yo-han came running in a panic.
“Boss, something’s wrong! You need to go to the office right now.”
“What? Did something happen?”
Seeing Seo Yo-han’s serious expression, Lee Chang-jin sensed that something was amiss.
Upon hurrying to the office, he found the phone ringing off the hook.
Manager Lee Chang-sik reported with a serious expression.
“You’re here, boss. The situation seems serious. We are receiving a series of order cancellations.”
“What do you mean?”
It wasn’t just one or two companies. Companies that had agreed to contracts with Lee Chang-jin were now canceling their orders as if they had been waiting for this moment.
“Cancellation of contracts? Didn’t they agree to purchase our products? Canceling now is against business ethics.”
“I’m sorry. It wasn’t my intention either. But honestly, the costs are burdensome. I need to make a living too.”
The main reason given by the companies was a change in circumstances. The recent increase in electricity costs was forcing them to reduce their order volumes. The continuous cancellations rapidly dampened the company’s atmosphere.
“Canceling orders so suddenly doesn’t seem to be just a change in circumstances. What’s really going on?”
“Yes. Upon investigation, it appears Taeyang Chemicals has halved their supply prices. They are aggressively pursuing a low-price strategy, even offering breach-of-contract fees to the companies we have contracts with.”
As news of Daese Industries’ chemical plant operation spread, Taeyang Chemicals began to flex their muscles as if they had been waiting for this moment. Listening to the selling prices, Manager Lee Chang-sik couldn’t help but let out a bitter laugh.
“This is complete cutthroat competition… Are they trying to take us down with them?”
“One hundred won per kilogram? That’s an absurd price. Even with the cheaper sulfuric acid process, it’s impossible to match that price. It seems they are deliberately dumping.”
“It’s possible, but it would be at a no-margin level for them. On the other hand, for us, it’s practically impossible to match that price.”
It was clear that Taeyang Chemicals intended to crush the fledgling Lee Chang-jin. However, the chlorine process using electric furnaces consumed a lot of electricity compared to the sulfuric acid process, making the production cost relatively higher. Angered, Gu Chang-dong muttered.
“Those scum, we can’t just sit back. Isn’t there a legal way to resolve this?”
But Jeong Ho-seong shook his head.
“It’s no use. They can just claim they lowered production costs through management improvements. Moreover, resolving this through a lawsuit takes a long time.”
Under the current legal system, it’s difficult to receive substantial compensation if a contract is terminated due to unfair practices. Especially if the counterpart is a top domestic conglomerate, enforcing the contract terms is practically impossible.
Lee Chang-jin understood this situation better than anyone.
“First, we need to clearly understand the situation. How is the market atmosphere?”
“Even our existing clients are wavering. The price gap with Taeyang Chemicals is too big.”
Already, more than thirty percent of the companies had paid the breach-of-contract fees and canceled their contracts.
“Then, how long do you think Taeyang Chemicals can maintain this price?”
“That’s uncertain. Taeyang Chemicals has a solid financial status, and with their parent company backing them, they can sustain this cutthroat competition for several years if they decide to.”
Upon hearing this, Jeong Ho-seong made a firm decision.
“In this case, shouldn’t we also respond? If we give up our margin, we can match their prices.”
“That’s right. We have sufficient funds. Even if we incur losses, we must not back down.”
To this, Lee Chang-jin firmly shook his head.
“That’s not an option. That would mean playing into their hands. If we start with too low a selling price, that becomes the standard price. Even when the situation normalizes, it will be difficult to raise the price.”
Operating without a margin in a situation where the investment cost exceeded 2 billion won was an act unacceptable to Lee Chang-jin’s management philosophy. Considering the investment in facilities and employee wages, it would be a complete loss. No matter how much surplus funds he had, he had no intention of joining in such a foolish act.
Gu Chang-dong questioned.
“But boss, if we do that, we lose our price competitiveness. No matter how good our quality is, who would buy our products?”
“If there isn’t a market, we create one. We don’t have to stick to our existing sales channels.”
“Do you have any plan in mind?”
“Yes, we can create new applications. Titanium dioxide has very diverse uses. It can be used not only for ink and paint but also for non-industrial products.”
“Your words are very reasonable, but developing new products takes time. What will we do with the production until then? Our factory warehouse doesn’t have space to store it, boss.”
“That’s right. Wouldn’t it be better to reduce production?”
“That’s not an option. Please endure the hardship for now. We will soon find a way to exhaust the stock.”
Lee Chang-jin had a good reason for not stopping the process.
Chemical plants, like other plants, generally operated 24 hours a day. Once the process was stopped, it was difficult to restart due to its characteristics. If the production facilities were stopped for a day, it would result in a net loss of 10 million won, but restarting would incur a loss of up to 100 million won.
Moreover, if the fixed costs increased, the issue of higher shipment prices would arise. Lee Chang-jin reassured the anxious employees.
“Don’t worry. I will take care of that. For now, all of you focus solely on product production. Stopping the chemical plant increases fixed costs, making it a loss. I will find the demand, so Manager Gu Chang-dong and Manager Park Seung-hoon, follow me.”
“Yes.”
“Me too?”
“Yes. We have somewhere to go together.”
Lee Chang-jin headed to a cosmetics company near Bupyeong.
As the vehicle approached, a man waiting at the iron gate came out to greet them.
“Please show your ID and access card for verification.”
When Lee Chang-jin handed over the access card, the security guard checked his details and saluted.
“Confirmed. You may enter.”
Entering the building reminiscent of a military base, the first thing they saw was a laboratory equipped with ventilation systems. Inside, flasks, beakers, various vacuum tubes, fume hoods, and waste containers were lined up.
From auto-filling and capping lines to quantitative filling machines, air compressors, steam shrink tunnels, and purified water manufacturing equipment.
Gu Chang-dong saw equipment he had never seen before. Among them, employees wearing goggles, thin white gowns, and rubber gloves were engrossed in mixing something.
The scene reminiscent of a chemical complex left Jeong Ho-seong and Gu Chang-dong wide-eyed.
“Boss, what is all this?”
“It was originally a pharmaceutical company that went bankrupt about a year ago. Following the recommendation of Choi Tae-seop, an accountant at Yoram Accounting Firm, I acquired it to reduce corporate taxes and then remodeled the equipment. Now it operates as a cosmetics development lab instead of developing new drugs.”
“Have you been running something this big all this time without telling anyone?”
“I didn’t exactly hide it. After obtaining the establishment permit for the titanium dioxide plant, I sought ways to diversify the product’s uses. Research concluded that the most versatile use of titanium dioxide was in skincare. So, about six months ago, I contacted the German cosmetics company Dr. med. Christine Schrammek and received technical cooperation.”
The product Lee Chang-jin aimed to commercialize was none other than Blemish Balm (BB) cream. Originally created to protect and regenerate skin after peeling treatments, BB cream was perfect for covering blemishes, brightening skin tone, and serving as a makeup base or foundation.
This particular aspect caught Lee Chang-jin’s interest.
- To be continued in Episode 131 -
