Episode 83: Ulsan Shipyard
“What did you say? Chairman Joo from Mirae Construction is coming to our company?”
“Yes, that’s correct. He has some inquiries about the crane. The chairman is urging us to come as soon as possible…”
For Lee Chang-jin, this was an unexpected opportunity.
He also wanted to be involved in this project, but Mirae Construction’s heavy machinery contracts were primarily with Mido Machinery, which had secured the deal early on, leaving him with no other option but to watch.
Sensing that this was the right timing, Lee Chang-jin responded immediately.
“Understood. I’ll go right away.”
That very day, Lee Chang-jin drove down to Ulsan.
As his car approached the destination, the shipyard, illuminated brightly even at night, looked as bright as daylight.
Chairman Joo Il-hwan had not left the site until then.
Dressed in work clothes, Chairman Joo himself was operating a forklift, dismantling broken equipment and supervising the site.
Wiping his sweat with a handkerchief, Joo Il-hwan turned to Lee Chang-jin and smiled.
“Are you Lee Chang-jin from Daese Industries? It must have been a lot of trouble for the president himself to come.”
“The honor is mine to meet you.”
Chairman Joo Il-hwan, whose work clothes were soaked with sweat, extended his hand.
The handshake conveyed a vigor that belied his age.
Chairman Joo Il-hwan, known as the “King Chairman,” was the founder of Mirae Group and a living testament to South Korea’s rapid economic growth, considered a legend in the construction industry.
As a symbol of industrialization that paralleled South Korea’s rapid economic growth and a figure who left behind legendary anecdotes, Chairman Joo was one of the most respected businessmen of the 20th century in Korea.
Lee Chang-jin looked around the shipyard where the accident had occurred.
Despite the chaos caused by the accident, the sight of hundreds of workers moving in perfect unison within the more than ten-yard-long shipyard was nothing short of spectacular.
Who would believe that this massive shipyard was built in just 2 years and 3 months?
As he shook hands with Chairman Joo Il-hwan, Lee Chang-jin recalled the story of Mirae Heavy Industries’ challenge in the shipbuilding industry.
Securing foreign capital was a crucial factor that determined the success or failure of the shipyard construction.
Back in 1968, the shipbuilding industry was booming. The nationwide orders for plants and tankers created a golden opportunity.
A Japanese shipbuilding company earned $200 million from just one steel structure project.
It was natural for Chairman Joo Il-hwan, a construction entrepreneur, to covet the shipbuilding industry.
However, when it came time to build a shipyard, there was no suitable place to borrow money from. Shipbuilding, being a capital-intensive industry, required ports and docks to start, which necessitated a massive amount of loans for these facilities.
But most of Mirae Construction’s executives were against the investment.
“Where can we get such a large loan? It would be better to excel in what we already do rather than covet other fields.”
At the Mirae Construction headquarters, which had won the contract to build the Gyeongbu Expressway, they couldn’t handle the flood of work, so they worked overnight half of the weekdays.
Thus, Chairman Joo’s mindset of expanding aggressively was not well received. However, Joo Il-hwan thought differently.
“What are you talking about? Shipbuilding and construction are just a hair’s breadth apart. If we own a shipyard, we can also engage in steel structure projects, plant construction, and bridge construction. We can win projects ten times larger than what we have now. Shipbuilding is the future of Mirae Construction.”
Most domestic and foreign banks unanimously refused, citing Mirae Construction’s lack of shipbuilding capability and technology. But Joo Il-hwan was not one to give up.
After much inquiry, Joo Il-hwan sought out Chairman Longbottom of A&P Appledore, who could influence Barclays Bank in the UK, and asked for an introduction.
However, the deputy head of Barclays Bank’s overseas department, whom they visited with great difficulty, shook his head after looking at the documents.
“A company like Mirae Construction is very common in our country. Moreover, there is no shipowner yet who will place an order for a ship. We cannot lend such a large sum of money based solely on the Korean government’s guarantee.”
In other words, they could not lend money based solely on South Korea’s repayment capability. Disheartened by the response, Joo Il-hwan felt dejected.
But just as he was about to give up, he suddenly remembered the 500-won bill in his pocket. Taking out the 500-won bill with a turtle ship illustration, he showed it and said,
“Look at this. We built ironclad ships as early as the 16th century, 300 years before the UK built ironclad ships in the 19th century. It’s just that our ideas have rusted due to delayed industrialization, but our potential remains intact.”
His words moved the deputy head. As a result, Mirae Construction secured a loan of $43 million (about 51 billion won) from Barclays Bank, which was the top bank in the UK at the time.
Although Lee Chang-jin had no previous connection to such encounters, meeting the legend in person felt like reuniting with an old friend. Chairman Joo Il-hwan blushed at Lee Chang-jin’s praise.
“Let’s skip the pleasantries and since you’re here, take a look at the site.”
Lee Chang-jin closely inspected the site where the crane had collapsed.
Standing next to Lee Chang-jin as he examined the crane, Chairman Joo asked worriedly.
“How does it look? Can it be repaired?”
“Yes. For the crawler crane, we need to replace the hydraulic system, three boom sections, hydraulic pistons, braking system, trolley reduction gear, wheel, and gear with new parts. However, for the tower crane, it is in good condition. We only need to partially replace the wheel and horizontal boom.”
Chairman Joo’s previously gloomy expression noticeably brightened.
“So, we don’t need to buy two new cranes?”
“Yes. The other parts below the counterweight are intact, so we can just repair and use them.”
Although Chairman Joo was very pleased, he tried to hide his joy.
“So, how long will the repairs take?”
“Let’s see… It will take at least two months. We need to organize the site first, then assemble the new boom parts and transport them. Given the size of the equipment, transporting and assembling it will take some time. The estimate will be about 800 million won.”
Chairman Joo glanced at Lee Chang-jin.
“Let’s do it for 500 million won. The timeframe will be six weeks.”
“Five hundred million won? That’s too low. Besides, the timeframe is too tight. In fact, no other company could meet that price other than ours.”
Firmly, Chairman Joo responded to Lee Chang-jin’s opposition.
“That’s non-negotiable. If the construction delays, the penalty fees alone will be tens of millions of won daily. Think from my perspective. Wouldn’t you want to normalize the site as soon as possible? Instead, if you shorten the original delivery time, I’ll pay an additional 100 million won per week. How about that?”
This unexpected proposal made Lee Chang-jin ponder. Could they meet the deadline within six weeks?
Luckily, Daese Industries also manufactured equipment based on Mido Machinery’s specs, although slightly different.
Lee Chang-jin calculated. The crawler crane scheduled for delivery to Cheongwoo still had about three months left before the deadline.
Since the size was a 450-ton class, they could disassemble and deliver the existing parts if they managed well. After finishing his calculations, Lee Chang-jin replied.
“Ha, 100 million won per week… Alright. Then let’s state that in the contract.”
“Good. Trust is my business, so you can count on me.”
Immediately, Lee Chang-jin took detailed photos of the crane parts and assembly drawings, then sent them to the Seodaemun office via fax.
Then, he instructed Manager Seo to assemble the boom and wheels directly from the Incheon Port materials storage yard.
Although he inquired about new hydraulic systems through President Kim Cheol-ho of Guro Shopping Mall, importing them would take time. As an alternative, he sought secondhand identical military cranes from Shinsin Heavy Industries and decided to replace the remaining parts, wheels, and gears with Daese Industries’ self-manufactured components.
The gathered parts were transported to the dock by ship. Given the heavy weight of the equipment, it was challenging to transport them by vehicle without disassembling the parts.
After organizing the site, Lee Chang-jin used a separate mobile crane to transport the boom and parts.
The ones who played a significant role in installing the tower crane were none other than the riggers.
First, they built scaffolding up to the height of the tower crane and then slowly disassembled the horizontal boom. The riggers, working in teams of four to five, were veterans who could lift several tens of tons of heavy materials to the top of the steel tower using only ropes, pulleys, wrenches, and makeshift tools.
From the beginning of the crane installation, Lee Chang-jin had appointed the most skilled of them as permanent staff.
The riggers climbed the boom, which was over several tens of meters high, without any safety equipment. They tied four ropes and, coming down, held onto the ropes to prevent anyone from falling.
Clink, clank!
After checking the joints of the broken crane, they hammered and straightened the bent parts, replaced them with new ones, welded the damaged parts, heated, straightened, and hammered them to repair.
Their work was truly remarkable. Watching them work at high altitudes with just a rope was like watching a circus.
Thus, Lee Chang-jin completed the crane repairs two weeks ahead of the scheduled date.
After finishing the repairs, Lee Chang-jin spoke to Chairman Joo Il-hwan.
“We have increased the heavy lifting capacity by over 50 tons. We have also installed a separate sensor on the crane’s upper part, so even if something similar happens, we can prevent major accidents.”
Chairman Joo was also satisfied with the newly installed crane equipment.
“Thank you. You are quite capable. I will transfer the 500 million won to your account right away. And the additional 200 million won will be given in promissory notes. We are short on cash at the moment.”
To Chairman Joo’s reply, Lee Chang-jin shook his head.
“There’s no need for the incentive. Instead, how about substituting it with a new order?”
“A new order? What do you mean?”
“Actually, we also want to be part of this project.”
Chairman Joo smiled broadly at Lee Chang-jin’s request.
Giving up 200 million won and asking for a new project instead was quite a bold proposal.
“Young man, you are quite audacious. What do you want? If it’s not an unreasonable request, I will consider it.”
“We need a 1,600-ton marine crane. I understand that you are planning to proceed with its construction. Please leave that project to us.”
A marine crane is a crane ship designed for offshore operations, mainly used for loading and unloading cargo at docks or ships.
Using the principle of distributing weight with steel cables and the principle that the larger the hull, the greater the buoyancy, it is mainly used in shipyards, offshore bridge construction, and marine plant construction like OSST.
Chairman Joo looked at his secretary and asked.
“Secretary Oh, has the marine crane order been finalized?”
“We are currently in detailed negotiations with Mido. Once we finalize the supply conditions and construction period, we will immediately proceed with the production.”
“What is the promised deadline from Mido?”
“Twelve months.”
Chairman Joo glanced slightly at Lee Chang-jin, as if asking how he could handle it.
Understanding Chairman Joo’s intent, Lee Chang-jin immediately replied.
“Our side can deliver within 10 months. We will match the cost to 37 million dollars.”
The price suggested by Lee Chang-jin was over 3 million dollars lower than Mido’s.
However, Chairman Joo was still not satisfied.
“Then, can you do it in nine months?”
Lee Chang-jin confidently replied.
“We can complete it in eight months.”
“Eight months? Can you really guarantee that?”
“Yes, it is entirely possible. However, if we do so, we will have to focus all our resources on this project, making it difficult to take other corporate orders. Therefore, there is a condition.”
“A condition? What condition? If you can shorten the construction period, speak up.”
“Please allocate the jacket fabrication for transportation by marine barge to us as well. If you do that, we will do our best to shorten the construction period.”
For the construction of a harbor capable of docking four 300,000-ton tankers simultaneously, a steel structure called a “jacket” was needed.
Each jacket weighed 550 tons and stood 36 meters tall, comparable to a 10-story building.
Each jacket cost about 500 million won to produce, and a total of 89 jackets were needed, making it a massive undertaking.
The question was where to manufacture such jackets. If they were to be made locally, the production cost would be astronomical, and it was uncertain whether the deadline could be met.
If Brown and Root Co., which rented the equipment, threw a fit again, the success of the project itself would be in jeopardy.
Thus, Chairman Joo Il-hwan’s idea was to manufacture the jackets at Ulsan Shipyard and transport them to the Jubail site by sea.
From Ulsan, across the Indian Ocean during monsoon season, to the Gulf.
A grand plan to transport not only equipment but also the jackets needed for offshore structures by large barge.
It was akin to a “raft transport operation.”
The problem was that he had never once voiced this plan.
Chairman Joo’s expression hardened momentarily, realizing his plan had been uncovered.
- To be continued in Episode 84 -
