This Year as a Turning Point for Defense Industry - (9) Development of Hyunmoo Missile to Strike North Korean Command Headquarters

Hyunmoo Surface-to-Surface Missile Deployed in Combat Since 1987

[Kim Min-wook, Editor-in-Chief of Monthly Defense and Technology]▲ Period of Stability and Growth (1990s ~ Early 2000s) = From the 1970s to 1990, the defense industry achieved significant quantitative and qualitative accomplishments. In terms of force enhancement, starting from an environment without a single production factory, within 20 years, domestically produced weapon systems accounted for 65% of the total acquisition cost. Approximately 900 billion KRW was invested in actual research and development, procuring about 4.7 trillion KRW worth of mass-produced items (estimated about 5.8 trillion KRW if purchased overseas), saving over 1 trillion KRW in acquisition costs. Furthermore, the precision technology developed through defense industry R&D was transferred to civilian industries, leading to remarkable growth in the civilian sector.

However, despite these effects, the situation of defense companies did not improve significantly. As of 1989, in terms of stability, the debt ratio of defense companies was 367%, far exceeding the 257% of general manufacturing companies. Regarding activity, the turnover rate of total corporate capital was 0.7 times, below the 1.1 times of general manufacturers. Profitability was poor, with a total capital operating profit margin of -0.61% and sales operating profit margin of -0.85%, compared to 2.7% and 2.6% for general manufacturers. Productivity-wise, the value added per person was 12.7 million KRW for defense companies, only 85% of the 15 million KRW for general manufacturers. In terms of facility investment, general manufacturers invested 72%, whereas defense companies showed a low 35% performance.

The atmosphere of the 1990s, despite the end of the Cold War, was marked by a global trend toward advanced weaponry and an expanding defense market, which elevated the defense industry as a major sector of high value. Former communist bloc countries, no longer perceived as threats but as potential partners, broadened the market scope. As the value of the defense industry grew in importance, Korea’s defense sector began to enter a new phase.

This background was influenced by the April 1990 announcement of the U.S. Department of Defense’s “East Asia Strategic Concept” report, which proposed the realignment of U.S. forces in Korea, raising issues such as the transfer of wartime operational control and the withdrawal of U.S. troops. At that time, the Korean military felt that such discussions were premature and that they lacked sufficient forces to deter North Korea effectively, creating a sense of crisis. Consequently, it was agreed to transfer only peacetime operational control, but debates over U.S. troop withdrawal and operational control transfer rekindled urgency for self-reliant defense. This awareness led to demands for military structural reform and strengthening the domestic defense industry.

▲ From System Development to Core Technology Development = By the early 1990s, intensified technology protectionism by advanced countries, the modernization of North Korean weapon systems, and limitations in domestic demand highlighted the urgency of proactive R&D, export orientation, and core technology development. There was growing consensus across the defense industry on the need for weapon system localization, civilian-led R&D, and qualitative improvement of defense systems, initiating significant changes in the defense environment.

The weapon system acquisition management regulations were complicated with many overlapping procedures, and the responsibility limits for project outcomes were ambiguous, requiring resolution. To address these issues, the Ministry of National Defense formed the Force Enhancement Procedure Improvement Committee in April 1989, which supplemented and improved the process, implementing changes from March 1990. By unifying the long-term weapon system requirement submission procedures and simplifying acquisition processes, administrative processing times were shortened. For new acquisitions, priority was given to domestically developed or technology-imported production, with overseas purchases considered only when both options were unavailable, promoting advanced technology acquisition and domestic industry development.

Additionally, various review boards and committees were streamlined, and approval authority was delegated downward, enhancing both the speed and accountability of operations. Testing and evaluation methods for technology-imported production and overseas-purchased equipment were improved to ensure reliability. When producing technology-imported equipment, performance was verified before selecting the model, and prototypes were built and tested before choosing the weapon system. These procedural improvements greatly enhanced efficiency and speed by simplifying previously complex processes.

▲ 818 Plan = The “818 Plan,” also known as the “818 Military Structure Reform,” was the “Long-term Defense Posture Development Direction” prepared in September 1990 under President Roh Tae-woo’s directive. The 818 Military Structure Reform originated when President Roh, during a Ministry of National Defense briefing on May 6, 1988, ordered a revolutionary reform comparable to a “second founding of the armed forces” by thoroughly reviewing the overall defense posture. On August 18, 1988, at a meeting attended by Defense Minister Oh Ja-bok, Chairman of the Joint Chiefs of Staff Choi Se-chang, and the chiefs of staff of each service branch, Joint Chiefs of Staff Strategic Planning Director Yong Young-il reported on the “Long-term Defense Posture Development Research Plan.” The plan was nicknamed the “818 Plan” after the date of the report.

Through this plan, the military’s force requirement functions were significantly strengthened to establish a system capable of modern requirement planning. The direction of force enhancement shifted from a quantitative military structure to an information- and knowledge-centered, technology-intensive military structure, while simultaneously preparing advanced forces suitable for future network-centric warfare.

In the 818 Plan, the force enhancement and defense industry sections involved a major strengthening of organizations related to force requirement planning and acquisition. The Ministry of National Defense reorganized its existing Defense Industry Bureau into the Acquisition Development Bureau and established a Force Planning Officer position to reinforce mid-term planning functions.

Particularly, the Joint Chiefs of Staff’s functions and organization were greatly expanded. The JCS grew from one headquarters chief, four bureaus, and one functional office to four headquarters chiefs, eleven departments, and four functional offices. The force requirement planning area expanded from one bureau (R&D Bureau) and one division (Strategic Planning Bureau, Target Planning Division) to one headquarters (Strategic Planning Headquarters) and three departments (Force Development Department, Weapon Systems Department, and Management Department of the Support Headquarters).

Moreover, the requirement submission functions held by each military branch were changed to “opinion submission” functions, while the JCS’s requirement planning functions were strengthened. The requirement submission function was returned to each military branch in 1995 when the JCS’s requirement decision function was enhanced. The 818 Plan significantly reinforced the organizational and functional capabilities of the Ministry of National Defense and the Joint Chiefs of Staff in force requirement planning and defense acquisition, enabling long-term and systematic defense projects.