Episode 17: Changwon Industrial Complex
In the 1970s and 1980s, South Korea experienced a construction boom. While many people boarded deep-sea fishing vessels to earn foreign currency, the real substantial dollars came from construction in the Middle East.
After the 1973 oil crisis, Middle Eastern countries, having secured vast financial resources, used oil money to implement domestic development projects. South Korea, which had acquired construction technology by securing COE construction projects during the Vietnam War, became an attractive partner with the right technology and cheap labor that appealed to Middle Eastern countries.
Although still relatively quiet, the construction of the Kaiba-Al Ula highway marked the beginning of South Korean construction companies rushing into the Middle Eastern market.
“For the next several years, the construction industry will be booming. Now, when demand is skyrocketing, is the perfect time to expand the business.”
The heavy equipment industry is linked to the construction economy. After the 2000s, the domestic heavy equipment market became a red ocean due to the proliferation of numerous small and medium-sized enterprises, but the situation was completely different now.
During South Korea’s high-growth period, construction signs were everywhere in the country. As such, the heavy equipment business, with items costing anywhere from hundreds of thousands to millions of won, was truly a golden goose. Moreover, given the nature of heavy industries that pursue stability, once a leading company position is achieved, it is easy to maintain due to the difficulty of market entry.
Lee Chang-jin decided to invest in a CNC machine with high value-added product production in mind. However, the first client was the problem.
It is incredibly difficult for a company with no track record to secure its first project. So, Lee Chang-jin chose Changwon Industrial Complex.
Changwon Industrial Complex was a region created under the industrial restructuring policy following the heavy and chemical industrialization policy, with a large industrial complex spanning 25,302,000 square meters.
In 1972, Won Jong-pyo, the chief economic advisor, visited the Hitachi factory in Japan ahead of the heavy and chemical industry promotion policy and briefed at the national meeting as follows:
“The largest machinery factory in Japan is Hitachi, which produces everything from electrical products to machine equipment. From trains and weapons to large engines used in power plants and warships, they make everything. They are a comprehensive machinery manufacturer. Besides Hitachi, Japan also has comprehensive factories like Mitsubishi and Ishikawajima Harima. If our country wants to become an advanced nation, we need to build comprehensive machinery industrial complexes like Japan.”
The proposal was to create a comprehensive industrial complex capable of producing industrial machinery and equipment, ship parts, locomotive and ship engines, chemical plants, and even military and civilian products.
The reason Changwon was chosen for the industrial complex was its location within the industrial belt connecting Pohang, Gumi, Ulsan, and Busan, making it easily accessible from major cities. Additionally, the vast factory site of 5,000 hectares and the proximity to the Nakdong River made it easy to secure industrial water.
With transportation infrastructure at the junction of the Gyeongbu Line and Jinhae Line, and the convenience of maritime transportation from Masan Port and the coastal wharf, it was the optimal choice in terms of security, surrounded by hills standing 500-800 meters above sea level during tense relations with North Korea.
The government’s decision to build the industrial complex in Changwon was largely thanks to Won Jong-pyo’s opinion.
However, the only downside was that its exterior was flat and desolate, seemingly focused solely on efficiency. For Lee Chang-jin, who had lived through the 2020s, this was somewhat regrettable.
“It would have been nice if they had paid more attention to the exterior.”
While thinking about this and that, the car took a path into Changwon Industrial Complex.
Dust billowed behind as the vehicle traveled on an unpaved road.
The sight of the industrial complex standing alone in the desolate field was far from beautiful. Upon arriving at the construction site in front of the complex, construction workers wearing safety helmets were unloading materials here and there.
Lee Chang-jin headed to the Changwon Cheongwoo Automotive Plant No. 2. The Cheongwoo Automotive Plant, which had just begun construction, was frantically transporting construction materials.
On a low hill, Kim Jung-oh, wearing a silver safety helmet, was seen directing the site.
“Hyung, it’s been a while. As expected, you were here.”
“Oh, what brings you here?”
Lee Chang-jin waved happily.
Kim Jung-oh, adjusting his safety helmet, looked incredulous.
“How did you know to come here?”
Lee Chang-jin replied nonchalantly.
“Haha, how could I not know? Congratulations on your promotion. I heard you were appointed vice president this time?”
“Huh, what promotion? They just gave me the title to make me work harder. But how did you already know? Did you plant a spy in our company?”
“Haha, don’t you know the saying that good news should be shared? I have my own connections. I know everything.”
Kim Jung-oh, seemingly displeased, asked bluntly.
“Ha, you have quite the skills. Did you come here to get something else?”
“Haha, of course not. I came to inspect the CNC machine ordered by Hanseong Electronics, and I heard you moved to the Changwon plant, so I came to see you. Also, to thank you for the last time.”
“Hmm, just with words?”
“What do you take me for? Here, I brought a housewarming gift.”
Lee Chang-jin put down the load he had brought with both hands.
The boxes were filled with fruits and meat.
Kim Jung-oh, who received the gift, rubbed his nose in embarrassment.
“This guy, I thought you’d just say thanks, but you know how to take care of your senior.”
Seeing the marbled beef, Kim Jung-oh’s tone softened.
Lee Chang-jin smiled subtly at his apparent intentions.
“It’s fresh meat, so it melts in your mouth even as sashimi. Isn’t Kobe Wagyu the kind of thing that some conglomerate chairman would really enjoy? I brought it by plane so you could have a taste. Oh, and this is a special herbal medicine I brought for you. It’s made from deer antlers and is good for vascular diseases and boosting immunity. Please take one dose every day.”
“Haha. Why did you bring such things? Thank you. I’ll make sure to take it.”
Kim Jung-oh’s expression softened at the mention of health. He was always keen on health, often taking various herbal medicines while participating in mountain climbing activities.
As such, Lee Chang-jin’s gift was a perfect hit.
After handing over the gift, Lee Chang-jin looked around the empty factory and spoke.
“But wow, this place is really huge. But it doesn’t seem like there are many people except for the construction workers.”
“It’ll be a long time before it’s completed. It’s not fully occupied yet.”
The Changwon Industrial Complex was scheduled to be completed in late 1977, so only a few companies had moved in. Cheongwoo also rushed to move in due to the tax benefits and advantages from government policies. While looking around, Lee Chang-jin spoke to him.
“More importantly, I’ve had a hard time coming this far. Could you give me a cup of tea? I’m thirsty.”
“Alright, alright. Don’t embarrass me. Come on in.”
Kim Jung-oh’s office was on the third floor of the newly established factory.
As they entered the newly made office, a light scent from the new wallpaper filled the air.
On the white-painted wall, photos of Cheongwoo’s history were displayed in frames.
“Hey, I need to call Secretary Go to get some coffee. Wait a moment…”
Kim Jung-oh picked up the receiver and dialed a number.
When there was no answer even after pressing the extension number, Kim Jung-oh apologized.
“Is Secretary Go busy? I’ll be right back.”
“Take your time.”
While Kim Jung-oh went to get coffee, Lee Chang-jin admired the photos on the office wall.
A moment later, Kim Jung-oh came out with coffee himself.
“How courteous of you to make it yourself.”
“Actually, I’m the best at making coffee.”
“Indeed, hyung’s coffee-making skills are top-notch.”
Handing him a paper cup, Kim Jung-oh subtly asked.
“What were you looking at so intently? There’s nothing much to see…”
“I was just envious. But hyung looks great in photos, then and now.”
Looking back at the photos of Cheongwoo’s history, Kim Jung-oh laughed awkwardly.
“The photos just came out well. I’ve aged a lot since then.”
“Haha, you still look the same. By the way, Cheongwoo’s momentum these days is no joke. Wasn’t the recent performance the best ever?”
“Doing well? We’re just pouring all the money made from the clothing side into this.”
Kim Jung-oh sighed deeply. In fact, Cheongwoo had recently undergone aggressive expansion. The expansion was across various fields. In the early 1970s, Cheongwoo grew into a large group by acquiring several affiliates, including Chosun Leather, Seonwoo Precision, and Seongsin Trading.
In 1972, they expanded into the heavy and chemical sectors by acquiring a steel company and Masan Petrochemical, and further advanced by acquiring an automobile company and Mokpo Shipyard, transforming into a heavy and chemical group. Due to Chairman Kim Jung-yeon’s penchant for taking bold actions, Cheongwoo Group’s sales skyrocketed day by day. However, it was questionable whether such expansion was truly practical.
“I’m a bit worried. I understand hyung’s intention to act while the opportunity is there, but reckless expansion can lead to downfall. It’s time to focus on strengthening the core rather than expanding. I think we need to adjust the speed.”
“Hyung isn’t someone who acts without thinking. Let’s trust him.”
“Maybe… Am I getting old and soft? I’m feeling more anxious these days.”
Kim Jung-oh’s concerns were not entirely unfounded. Considering that Cheongwoo Group collapsed during the IMF crisis, his foresight turned out to be correct. But that was a story for the distant future. At this point, Lee Chang-jin, still a fledgling, was in no position to offer advice.
Just then, there was a knock on the door, and a man with a coal-black face wearing a safety helmet entered the office. Kim Jung-oh turned to him and asked.
“Manager Kim, what’s the matter?”
“Yes, I need to discuss the crane order issue…”
His hesitant tone suggested he was conscious of Lee Chang-jin’s presence.
In response, Kim Jung-oh answered nonchalantly.
“The crane? Just contact Mido Machinery. It’s handled by Deputy Manager Shim over there, so find and contact him.”
“I’ve already contacted them, but they said it’s difficult to match the schedule due to a backlog of work.”
Manager Kim’s cautious tone made Kim Jung-oh’s expression slightly harden.
“What? What does that mean? Don’t they know we need to match the schedule to complete the production? What about other companies? Have you checked?”
“The situation is roughly the same. Due to the influx of orders from the Middle East, they said we have to wait several months to receive the equipment.”
“What? Are they kidding? Call Mido right away.”
Quick-tempered, Kim Jung-oh immediately picked up the phone.
The ringing tone. No connection.
“Ha, that bastard President Jeon, he knows it’s me and is avoiding the call. Damn quick-witted.”
“So, what should we do now?”
“How should I know? Is he playing games to raise prices again? Not getting the crane on time will be a big problem…”
Seeing the anxious Kim Jung-oh, Lee Chang-jin suddenly had a good idea.
If handled well, this could be an opportunity for him.
Quickly calculating the pros and cons, Lee Chang-jin smoothly interjected.
“Let me see the estimate too. I can make cranes.”
“Why are you butting in? Don’t you know how serious our situation is?”
“It’s true. I can do it, hyung.”
Kim Jung-oh snorted in disbelief.
“Do you think anyone can just make cranes? Including Mido, only a few companies in Korea can make them. Besides, you don’t even have the personnel to design and manufacture them. Don’t talk nonsense.”
“A crane isn’t anything special. I assembled and installed a hoist at our gear factory too. What’s the difference between the two? As long as it can lift the weight, it’s fine. We have the equipment and assembly technicians, so there’s no reason we can’t do it. If needed, we can get the parts and blueprints and just assemble them.”
In response, Kim Jung-oh retorted, unable to believe it.
“You idiot, do you think cranes and small hoists are the same? The size is different, the size. If it’s poorly made, it can kill multiple people. Will you take responsibility for that? You seem to be getting arrogant after making some money recently, but keep your nonsense in check.”
Despite Kim Jung-oh’s scolding, Lee Chang-jin didn’t back down.
Instead, he replied nonchalantly.
“Hyung, I didn’t want to say this, but… do you know?”
“Know what?”
“Actually, I have experience supplying to the Ministry of National Defense. The lifting gear and pinion wheel parts for tanks and artillery vehicles at the National Defense Science Research Institute are from our company.”
“Hey, don’t lie, you punk. Do you think I’ll fall for that? Then show me proof.”
“How can I say that? It’s a state secret. If this is revealed, both you and I will end up in jail.”
Lee Chang-jin’s sly joke made Kim Jung-oh chuckle.
It was a transparent scheme, but it wasn’t annoying.
“So, you want me to give you the order based on your word?”
“I swear I can do it. I can make this with my eyes closed. Trust me and give it a try.”
“Nice try. To cut to the chase, can you even read a crane estimate?”
“Why do I need to read the estimate? If I get the manufacturing blueprint, the estimate will be similar anyway. Just place the order. I’ll even give you a discount of 10,000 won per ton off the market price.”
Hearing this, Kim Jung-oh chuckled.
“You’ve become quite the con artist, haven’t you? Where did you learn that?”
“Learn? I learned it all from watching. Isn’t there a great role model right next to me?”
Logically speaking, Lee Chang-jin’s words were absurd. If it were that easy to make cranes with just blueprints, companies like Mido wouldn’t monopolize the crane market with their hefty prices. However, Kim Jung-oh didn’t hear it as mere bluffing. Considering the gear supplies and the CNC machine he had acquired, Lee Chang-jin had managed to establish himself as an emerging force in the domestic market.
‘This guy might actually be like my hyung…’
Kim Jung-oh’s mind overlapped Lee Chang-jin’s face with that of his older brother, Chairman Kim Jung-yeon.
After pondering for a while, Kim Jung-oh finally handed over the estimate.
Seeing the estimate right in front of him, Lee Chang-jin’s eyes widened.
“Really, you’re giving this to me?”
“Yes, this is just for you. If you mess it up, it’ll be a disaster.”
“Thank you, hyung. You’ll be blessed for this. Truly.”
“You’re only grateful now… If you hadn’t brought gifts, I wouldn’t have given it to you. Geez, I’m falling for you again.”
Though Kim Jung-oh grumbled, Lee Chang-jin was genuinely grateful.
With a light heart, Lee Chang-jin returned to his office and called Mannheim.
- To be continued in Episode 18 -
