[Vitamin SME] 30 Years of Dedicated R&D... Breaking the Bias Toward Japanese Products

Vitamin SME <4> Specialized Pneumatic Equipment Manufacturer KCC Jeonggong

There are small but strong companies overcoming the crisis by uniting labor and management despite facing difficulties in management due to the novel coronavirus infection (COVID-19) situation. The source of strength for these companies to overcome hardships amid numerous environmental changes such as economic downturn caused by COVID-19 is coexistence. They are enhancing competitiveness through various methods such as operating in-house welfare systems that help employees enjoy a happy work life and developing and investing in new technologies for sustainable growth. We introduce 'Vitamin Small Giants' that energize by having managers and workers consider each other and move forward together toward common goals.

Park Deok-gyu, CEO of KCC Jeonggong, is explaining the production process of pneumatic and hydraulic devices.

The KCC Jeonggong factory located on Nongsim-ro in Gunpo-si, Gyeonggi-do. Along with large-scale production facilities, there is also a laboratory here, bustling with assembly and testing of pneumatic valves and factory robot parts. Following the production line, which is composed of various processes ranging from manual handling by employees to automated performance tests using robots, pneumatic and hydraulic devices, essential parts used across all industrial fields, are produced. In this field where Japan holds 65% of the market share, KCC Jeonggong has devoted nearly 30 years to research and development (R&D) and domestic product manufacturing. At the Gunpo factory visited last month, the dream of domesticating parts and materials and coexistence was ripening simultaneously.

Park Deok-gyu, CEO of KCC Jeonggong, said, "Due to the nature of the pneumatic and hydraulic device manufacturing industry, production technology cannot be acquired in a short time, and it takes 2 to 3 years from development to product release, and another 5 years for market activation, so it takes 7 to 8 years to recover the investment." He added, "Without determined investment, there is no progress." Considering the capital-intensive nature compared to sales, Park believes that if R&D stops and new products are not launched, employees' jobs could be at risk. He emphasized, "We focus on R&D to stabilize jobs," and "We established a culture that encourages research staff to develop new products without penalizing failures by quickly reading changes, concentrating on development, and leading the market."

KCC Jeonggong, established in 1992, specializes in manufacturing hydraulic cylinders, pneumatic cylinders, pneumatic valves, and purification equipment. CEO Park, who worked in related fields, started the company with the determination to produce these products, which were mostly imported at the time, using domestic technology. He explained, "They are used in all factories such as automobiles, semiconductors, secondary batteries, medical devices, steelmaking facilities, and power plants. There is virtually no industry that does not use them," and "Even equipment costing hundreds of millions of won can cause accidents if parts are faulty, so they are important across all industries."

Product manufacturing and testing are being conducted by robots at the KCC Jeonggong Gunpo factory.

Although the idea started with a desire to domesticize parts, there were many difficulties. Even after strenuous efforts to release products, large companies showed a clear tendency not to use domestic products. Park explained that Japanese products still occupy more than half of the entire domestic market, with Germany holding 10% and the U.S. 7-8%. Domestic products account for about 20%. Park said, "Even when buying office supplies secondhand, we did not spare money on equipment investment such as purchasing machinery," and "We still maintain 16 R&D personnel, which is 10% of the total employees." As a result, domestic market share increased, sales exceeded 30 billion won, and technical skills were recognized, leading to exports to 22 countries to date.

What Park valued most in this process was the growth of employees and the company together, even if slowly. This is why all employees are provided with 50 hours of free annual self-development training. The company is also actively investing in employees' leisure activities. Even now, a photo of an employee unfurling the company flag at the summit of Mount Everest at 8,848 meters hangs in the Gunpo factory. This employee nurtured his dream with company support and is now a professional climber. Park said, "We went through the International Monetary Fund (IMF) foreign exchange crisis, but we have never delayed employees' salaries even for a day, and most of the 170 employees are regular workers," adding, "Many have worked for over 10 years, and employees aging with the company can continue working after retirement if they wish."

The organizational structure also emphasizes employee growth and communication. The organization is subdivided so that employees can set their own goals and take on key roles. Even newly hired employees can participate in major company policies. A representative example is the YouTube channel 'Gongdae Unni' run by first-year employees. This YouTube channel helps sales by explaining KCC Jeonggong’s products, which may seem difficult, in an easy-to-understand way. Park emphasized, "We prioritize the 'value of people,' believing that the company can develop only when employees grow."