Episode 53: Forklift Division
A total of 36 people were selected. Initially, the plan was to recruit around 30 people, but since this was an open recruitment to secure and nurture talent, anyone who scored over 60 on the written test and exceeded a comprehensive score of 85 was accepted. Unless there were any significant disqualifying factors in the interview, they were all hired.
The successful candidates were assigned to various departments such as the Yeongcheon factory research lab and the headquarters planning office, based on their majors. Simultaneously, an industrial vehicle division was established within the company, and the forklift business team was launched.
Lee Chang-jin expedited the visa application process for the overseas training program at Clark and had them prepare in advance for the training period, accommodations, various textbooks, and training guides.
As part of the OJT (On the Job Training), a one-month practical training course in steel and mechanical industries was arranged for all newly hired experienced employees through an agreement with the Anyang Steel Training Institute. Due to scheduling, the training was divided into two groups of 18 people each.
Before departure, Lee Chang-jin conveyed some important points to the new employees.
“During the commissioned training period, you will live and eat together at the training center for a month. Consider it an extension of the group interview. The top 10 performers in each group will be prioritized for the Clark training program. Also, remember that this course is graded on a relative scale, not an absolute one. Your performance in this training will be reflected in your evaluations, so I expect everyone to work with utmost dedication.”
“Yes, understood!”
The employees, brimming with enthusiasm, understood the significance of this training opportunity, especially since they were all experienced hires from other companies.
The 36 employees boarded the vans in turn. Lee Chang-jin’s gaze lingered on the seat where his brother had been. Before the commissioned training, Lee Chang-jin had a serious talk with his younger brother, Chang-sik.
“Your selection this time was entirely based on your skills. As long as you work here, you won’t receive any special treatment or advantages because you are my brother. It’s inevitable that people will find out, but be careful not to become the subject of gossip.”
Chang-sik lowered his head.
“I understand, hyung. I know that much. Thank you for the opportunity. I will do my best not to disappoint you.”
“Good. It’s true that being related to the owner can invite unnecessary suspicion. It’s better for you to be recognized for your abilities. I believe in you.”
“Yes, hyung! I won’t let you down.”
Although Lee Chang-jin spoke sternly, he actually had high hopes for his brother, Chang-sik. After all, who else could be as reliable as a sibling?
If Lee Chang-jin were to get caught up in an unexpected situation or if there were a managerial gap, there would be no one other than his brother to take the lead. With confirmed basic qualifications, he planned to nurture him from the ground up.
Shortly after the forklift division was launched, Clark sent an invoice via express mail, indicating that the first batch of parts would be shipped to Incheon Port.
Robert, back in the U.S., had succeeded in obtaining final approval from the Asia-Pacific headquarters and the main office.
At a strategy meeting before starting sales, Lee Chang-jin said, “Before we formulate our sales strategy, let’s first change the product name. The term ‘forklift’ is a foreign word, which might be difficult for people to recognize. From now on, we’ll call it ‘지게차 (jigecha)’ to make it easier for people to refer to.”
The employees were skeptical. Seo Yohan responded with a hint of uncertainty, “Really? Does that make a big difference? ‘지게차 (jigecha)’ sounds a bit rustic. Isn’t ‘forklift’ more sophisticated?”
“Haha, I understand how you might feel. But people tend to prefer familiar terms. Changing it to ‘지게차 (jigecha)’ will be more beneficial for generating profits.”
“It does have a catchy ring to it, but will changing the name alone really increase sales? Won’t it cause confusion?”
Gu Chang-dong, who was in the meeting, supported Lee Chang-jin.
“No way. When I was at Gimpo Airport on a business trip, I noticed the staff there were already calling forklifts ‘지게차 (jigecha).’ I think it’s a good idea.”
“I agree. The term ‘forklift’ is basically just a description of its function. While foreigners might find ‘fork’ familiar, it’s not the same for us. ‘지게차 (jigecha)’ seems more intuitive.”
With Yeo Jin-joo’s support, Lee Chang-jin pushed his opinion further.
“Exactly. ‘지게차 (jigecha)’ is more friendly and accessible. Let’s use this name universally, regardless of the size. Understanding the product’s features right from the name will make sales easier.”
From that point, the team was managed by Gu Chang-dong, who had extensive experience visiting clients with Lee Chang-jin since the company’s inception. The new recruits joined the sales team.
“We manufacture products to sell them. No matter how good they are, if they don’t sell, it’s pointless. Outstanding salespeople will receive plaques and bonuses. I expect everyone to give their best.”
Lee Chang-jin’s prediction was spot on. Just two months after changing the name to ‘지게차 (jigecha)’ and launching the sales effort, they experienced an overwhelming surge in orders.
In just over a month, all 100 units assembled domestically were sold without any remaining stock.
Simply by making the product name more familiar, the market expanded significantly.
In response to this change, Lee Chang-jin quickly increased production facilities and output.
However, the production expansion couldn’t keep up with the demand, leading to a backlog of orders.
But this competitive edge didn’t last long. As Clark forklifts sold like hotcakes, other companies quickly followed suit, releasing their products under the name ‘지게차 (jigecha).’
It was a classic fast-follow strategy.
Hearing this, Gu Chang-dong was enraged as if it were his own issue.
“Look at these people. They have no shame.”
“Already copying us…”
“There’s nothing we can do. Common nouns are hard to patent. Since it started as a slang term, it’s tricky to claim priority.”
However, Lee Chang-jin had anticipated this outcome. Given the vague concept of copyrights and patents at the time, he wasn’t discouraged or angry at the reckless actions of other companies. His focus was elsewhere.
“Don’t worry about that. By the way, Ms. Yeo, has the cargo from Japan arrived yet?”
“Not yet. The customs process isn’t complete, so it might take a few more days.”
“It’s late. I hoped it would come sooner.”
Seeing Lee Chang-jin’s anticipation, Gu Chang-dong also became curious.
“What is it? I haven’t heard about any imports.”
“Haha, you’ll find out when it arrives. I’ll explain then.”
Lee Chang-jin just smiled without revealing more.
A few days later, a large GMC truck delivered the goods to the factory as scheduled.
Lee Chang-jin unpacked the delivery himself.
Having seen him eagerly waiting for days, the employees were curious about what the president had imported. Lee Chang-jin gathered the employees and proudly introduced the item.
“This is it. This will dramatically increase our forklift sales.”
With Lee Chang-jin’s confident statement, everyone turned their attention to the unwrapped item.
It was a square-shaped item. The upper plate was folded from all four corners to form a single unit, and there was an inlet at the center. A reinforcing beam connected the side plates across the upper plate, and there were multiple holes in the side plates for bolts or nails.
Despite their high expectations, most employees were disappointed.
Seo Yohan, examining the item, skeptically remarked, “Isn’t this just a pallet?”
Indeed, what Lee Chang-jin had made according to the assembly instructions was nothing other than a wooden pallet.
The employees, disappointed by the seemingly unimpressive item, murmured amongst themselves.
“It doesn’t seem much different from the wooden pallets we usually see. Is this all?”
“What’s the use of this?”
However, Lee Chang-jin didn’t hide his pride.
“It’s not just any pallet. The official term is ‘pallet.’”
“Pallet? What’s that?”
“It’s a product that will revolutionize logistics. Carrying goods on this will reduce logistics costs by up to one-tenth.”
“Really? Is it that important?”
“You’ll see. This is the key to standardizing logistics.”
Despite Lee Chang-jin’s explanation, employees like Gu Chang-dong looked puzzled, unable to grasp the significance of the pallet.
In Korea, forklifts were primarily seen as equipment for carrying large items or stones that couldn’t be lifted by humans. Therefore, most forklifts in Korea were diesel-powered, 3-5 ton cargo forklifts.
However, the situation was different in other countries. In other countries, smaller forklifts under 2 tons had been commercialized for logistics for over a decade.
There were no limitations on what could be carried with a pallet: cement, rice, paper, books, etc. As long as it was humanly manageable, it could be transported in bags or boxes.
With the introduction of the pallet pool system, Japan’s forklift demand exceeded 50,000 units annually by the early ‘80s, and including exports, it surpassed 100,000 units.
Korea followed a similar trend. After the late 80s, when the pallet pool system was introduced, Korea’s forklift market also saw a dramatic rebound.
Post-adoption of the pallet pool system, the domestic market sold over 15,000 units annually, up from less than 1,000 units.
If forklifts became central to logistics, there would undoubtedly be significant market changes.
With a neighboring country to benchmark from, there was no need to research the system separately. Lee Chang-jin explained further.
“With the introduction of the pallet pool system, we can replace manual loading and unloading with machinery. Using standardized pallets for transportation will not only increase efficiency but also significantly reduce logistics costs by shortening transportation times.”
Despite Lee Chang-jin’s enthusiasm, Seo Yohan raised another concern.
“But these are made of wood. Won’t it be costly to use timber instead of plywood? There’s also the issue of pest control and fumigation.”
“Haha. High-quality wood isn’t necessary for pallet production. We can use scrap wood with no commercial value. The samples are already standardized, and we’ll place orders with woodworking shops according to international standards.”
The production was planned to proceed via OEM. After hearing the explanation, the employees began to understand the intent. Gu Chang-dong responded as if he finally got it.
“I get what you mean now. But a pallet rental business is unfamiliar territory. Besides, system improvements are hard to quantify. To establish the system, we need a way to make investors and employees easily understand it.”
“Exactly. That’s why I’m discussing this with you. Is there any way we can promote the use of these pallets? Any ideas are welcome.”
Introducing something unfamiliar requires a trigger.
Despite brainstorming, no particularly good ideas emerged.
Then, Yeo Jin-joo proposed an idea.
“How about initiating a pilot rental business in rural areas?”
“What do you mean?”
“We could inquire with the Rural Development Administration. There are subsidies allocated for the Saemaul Movement. Renting forklifts to soil and fertilizer companies could prove efficient. If we can demonstrate its effectiveness, it would be good publicity for the pallets.”
The idea was to pilot the rental of small forklifts through soil and fertilizer companies. Given the rapid industrialization, rural areas were already struggling with labor shortages. If the demonstration of transporting soil from soil companies to farms proved successful, other companies might also take an interest. Lee Chang-jin was highly impressed.
“That’s a great idea. Let’s proceed with that.”
Lee Chang-jin quickly took action. In times like these, connections are crucial. He visited the county governor of Iksan, his hometown, to discuss the matter and seek assistance.
- Continued in Episode 54 -
