Episode 55: Taeyang Group
Manager Goo Chang-dong submitted a report.
“President, we have a problem. There’s a report from the field that the pallets are not being properly retrieved.”
“What do you mean by that?”
“It seems that many pallets are being lost along the way. Some companies have a loss rate of up to 25%.”
The main cause was the outdated perception domestically. At that time, the Korean industrial sector did not understand the importance of pallets and usually thought of them as simple floorboards. Despite knowing that pallets were for rental, most companies did not have dedicated personnel to manage them, leading to gaps in management.
Manager Goo, having investigated the situation, clicked his tongue and said, “It’s serious. Some people just throw away the pallets anywhere, or in extreme cases, use them as firewood. These weren’t made for that purpose, for goodness’ sake.”
“We clearly informed them that pallet management was crucial before the rental, and didn’t they promise to cooperate with the retrieval?”
“Yes, we even explained it separately. We emphasized that retrieval was key and that a person in charge was necessary, but it seems they didn’t listen properly.”
It was reported that employees of the companies renting the pallets or nearby residents would take the pallets and use them as firewood or furniture substitutes. Upon hearing the situation, Lee Chang-jin realized the severity of the issue.
“This is indeed serious.”
Since it cost nearly 1,000 won to produce and operate a single pallet, at least 20-30 cycles were needed to recover the cost. However, they were often lost after only 10-15 days, making it impossible to make a profit.
With losses snowballing, Lee Chang-jin couldn’t stay still.
Lee Chang-jin hurriedly dispatched employees to request cooperation from each company representative for pallet retrieval. However, the companies that rented the pallets responded arrogantly.
“Hey, that’s your problem, not ours. You should handle the pallet retrieval yourselves. Why should we care about that?”
At that time, companies considered the cost of packaging as a given, and the pallets used as the base for transporting the packaged products, raw materials, or sub-materials were also seen as part of the transportation cost.
With this perception, no amount of protest was effective.
Manager Goo Chang-dong, who returned empty-handed after visiting several large corporations, also hung his head in a dejected tone.
“I’m sorry. It’s my incompetence.”
“No, it’s not your fault. I gave you a task that was too difficult. Manager Goo, you did nothing wrong.”
Recognizing the severity of the issue, Lee Chang-jin decided to change his business strategy.
“I’ll handle it. For now, send a cooperation request letter for pallet retrieval. Let’s tackle this one by one.”
Lee Chang-jin sent a letter to all the companies that had adopted the pallet pool system.
「Due to the recent issue of pallet loss, we are issuing this notice. Each company is requested to cooperate in preventing the loss and ensuring the retrieval of used pallets. As previously informed, pallets will only be rented to those who make a written promise to compensate for pallets that are repurposed, damaged, or not returned.」
None of the companies readily agreed to Lee Chang-jin’s request.
The companies that received the letter openly rebelled.
“Does that make sense? We are paying the rental fee for the pallets and even covering the transportation costs. It’s only right that you handle the retrieval. Furthermore, asking for compensation for the pallets is unacceptable.”
However, Lee Chang-jin was equally determined. He spoke firmly.
“Did you call it a trivial task? Recall how much you used to spend on loading, transporting, and storage. On the other hand, after adopting the pallet pool system, your logistics management costs have been reduced to less than one-tenth.”
“Then why don’t you send a manager to handle it?”
“We are a third party, not the main party. We cannot station dispatched employees there every day, and considering the dispatch costs, it is an unreasonable demand. All you need to do is designate a person in charge and cooperate with the retrieval. If that’s not possible, we will have to raise the rental fee to consider the loss rate.”
“Are you threatening us? Suddenly raising the rental fee is against business ethics.”
“Our company cannot sustain a business while incurring losses. Pallets and forklifts are like needle and thread. If this is not acceptable, we cannot rent forklifts at the previous price either.”
From the start, Lee Chang-jin took a hard stance. He made it clear that if they did not take responsibility for pallet losses, forklift rentals would also be off the table. Companies that had seen the system’s benefits were angry but could not easily talk about breaking the contract.
They, too, realized that using pallets significantly reduced logistics costs compared to before. They just didn’t want to pay a separate pallet management fee.
Lee Chang-jin first targeted the top 10 companies with high recognition. He attempted to sign a joint usage agreement with 10 companies: Ohsung, Cheongwoo, Taeyang, Yanghoon, Terra, Eunho, Anyang Steel, Mirae, Daewoong, and Songdo. The core of the “Pallet Joint Usage Agreement” was to specify responsibility for the retrieval of used pallets.
The agreement included clauses for compensation if pallets were repurposed, damaged, or lost. Of course, hardly any company readily signed the agreement from the start.
But Lee Chang-jin did not give up. He diligently met with stakeholders, explained, and persuaded them one by one, gradually increasing the number of partner companies. The cooperation of Anyang Steel’s President Yoo Joon-tae and Cheongwoo’s Vice President Kim Joong-oh was a big help. Yoo Joon-tae of Anyang Steel, upon hearing the situation, readily agreed to the agreement.
“It’s a shame that you’re doing something the government should be doing. I hope you push forward with the original intent. I will actively cooperate.”
Once Cheongwoo and Anyang Steel opened the way, other companies found it difficult to hold out. Logically, there was nothing wrong with what Lee Chang-jin was saying.
Thus, Lee Chang-jin succeeded in getting signatures from 9 out of the top 10 companies. However, there was a problem with the company that refused to sign the agreement until the end.
Taeyang Group’s logistics manager, Executive Director Yoo Byung-woo, refused to sign.
“Even if a knife is held to my neck, I cannot sign such an unreasonable agreement.”
“All the other companies have agreed. If only Taeyang approves, the joint agreement will take effect. What will it mean if Taeyang withdraws now? This is necessary for the advancement of logistics. Please reconsider for the greater good.”
“That’s your problem. Our Taeyang Group cannot agree. If you want to proceed, do it without us.”
No matter how earnestly he pleaded, Executive Director Yoo Byung-woo was stubborn. Lee Chang-jin was at a loss.
Then, upon hearing the situation, Jung Pil-joo suggested.
“How about seeking out Hyung Kim Joong-oh? I heard Executive Director Yoo Byung-woo and he are high school classmates…”
“Classmates? That guy?”
“Yeah, didn’t you know? I think he’s also our senior. They should be in the same class.”
Intrigued, Lee Chang-jin sought out Kim Joong-oh for help.
However, upon hearing the matter, Kim Joong-oh also showed reluctance.
“That jerk Yoo Byung-woo is at it again. He’s always been a troublemaker.”
“Are you well-acquainted?”
“Yeah, he’s infamous in this industry as a troublemaker. He was like that in school too. He has an unyielding stubbornness for what he thinks is right, so no amount of talking works. He’s like a mule. We suffered a lot because of him back then.”
He lacked any sense of flexibility.
Even if the sky were to fall, he wouldn’t be satisfied unless he adhered to his principles.
Hearing more disheartening stories, Lee Chang-jin asked worriedly.
“Is there no solution?”
“I don’t know. It’s best to avoid dealing with a madman. He’s not one to be reasoned with, so it’s best to give up on useless persuasion.”
Lee Chang-jin was even more troubled.
“Is there truly no way? Without Taeyang Group’s consent, the joint agreement cannot proceed. If it comes to it, please suggest a way to replace the person in charge.”
Briefly considering pressing through higher-ups or exposing corruption to remove him, Kim Joong-oh’s reaction was negative.
“President Lee, that would be difficult. Executive Director Yoo Byung-woo is a founding member of Taeyang Group. The higher-ups can’t easily touch him. Though he lacks flexibility, his loyalty is exceptional. Chairman Nam Tae-gon, despite being calculative, takes care of his people properly, so replacing him won’t be easy.”
Executive Director Yoo was even clean regarding financial matters. Being someone who only knew how to be loyal to the company, he had no intention of embezzling.
Lee Chang-jin even tried lobbying using close college seniors who were friends with the stubborn executive director, but it was ineffective. No matter how much he plied him with drinks and sweet-talked him, he was immovable.
“No! I’ve said it multiple times; I cannot engage in actions that harm the company!”
However, the naive Manager Goo Chang-dong couldn’t understand Lee Chang-jin’s dilemma.
“President, would it be a significant loss for us if we didn’t rent to Taeyang Group? If they realize the utility of the pallet system, won’t Taeyang adopt the system naturally? We can proceed without Taeyang for now and bring them in later.”
In fact, the pallet rental business itself was meant to promote forklift sales and wasn’t a highly profitable business at the moment. Not renting to them wouldn’t be a big loss, and it was Taeyang that would miss out on the system’s benefits.
But Lee Chang-jin judged it wasn’t that simple.
“It’s not as easy as it sounds. In the logistics field, Taeyang is unquestionably the top-ranking company. If Taeyang doesn’t sign the agreement, we don’t know how other companies might react.”
The problem was the influence that Taeyang Group held in Korea. Along with Mirae Group, Taeyang was a leading force in the industry, having a significant impact on others.
There was a saying that if Taeyang moved, other companies would follow en masse, highlighting Taeyang’s substantial influence.
If Taeyang didn’t sign until the end, the other already agreeing companies might change their minds at any time. If the process dragged on and the representatives of each company changed their minds, the situation would be different.
The pallet pool system that Lee Chang-jin painstakingly promoted might completely fall apart. In that case, it would take much longer to implement the pallet pool system.
Lee Chang-jin’s insides were burning black due to Executive Director Yoo’s stubbornness.
“What should I do?”
After several sleepless nights pondering the solution, he had no answers.
While stressing over the issue, Lee Chang-jin suddenly woke up to the sound of a ringing phone.
Looking at the time, it was already noon.
His secretary Ye Jin-joo also seemed to have left for lunch, leaving a note behind.
Lee Chang-jin reflexively answered the phone.
“Yes, this is Lee Chang-jin from Daese Industries.”
“Oh, you’re still at the office. President Lee, it’s been a while.”
Recognizing the familiar voice, Lee Chang-jin’s voice involuntarily rose. Rubbing his eyes and clearing his throat, he answered.
“Ah, Seon-ah? What brings you to call?”
“Did you forget? Today is the board meeting day. I’m at the meeting place, and what have you been up to?”
“Oh, I’m sorry. I’ve been busy thinking about work… I was in the middle of something.”
“Really? You’re still working? It’s already noon; have you had lunch?”
“Not yet. How about you?”
“Perfect timing, then. Come out now. I’ll be waiting at the front of Yeongcheon Market.”
“Ah… Seon-ah? Seon-ah?”
The call ended, and Lee Chang-jin tried dialing back, but she didn’t answer.
Having no choice, Lee Chang-jin changed his clothes, washed his face, and hurried to Yeongcheon Market.
When he arrived at the market entrance, beneath the sky cover, Jin Seon-ah, wrapped in a long coat and a gray scarf, was waiting.
- To be continued in Episode 56 -
