Huh Chang-soo, Former Chairman of the Federation of Korean Industries, Visits Advisory Excellence Company ORKEM... Emphasizes Win-Win Growth

Huh Chang-soo, Chairman of the Federation of Korean Industries (left), visited ORChem Co., Ltd., a company specializing in the production of chemical materials for printed circuit boards (PCB) and semiconductor package processes located in Ansan, Gyeonggi Province, on the 23rd, and took a commemorative photo with Lee Jae-hyun, CEO of ORChem Co., Ltd. Photo by Federation of Korean Industries.

[Asia Economy Reporter Kim Heung-soon] Huh Chang-soo, Chairman of the Federation of Korean Industries (FKI), visited ORChem Co., Ltd., a company specializing in the production of chemical materials for printed circuit boards (PCB) and semiconductor package (PKG) processes, in Ansan, Gyeonggi Province on the 23rd. He presented an advisory excellence award and praised the achievements made over the past eight years by ORChem and the FKI Management Advisory Group.

Chairman Huh stated, "The case of ORChem is a model of win-win cooperation where three parties?the large corporation, the partner small and medium-sized enterprise (SME), and the FKI Management Advisory Group?collaborated to successfully localize materials, replace imports, and even achieve global expansion." He emphasized, "Co-growth is the core of ESG (Environmental, Social, and Governance) management, which is a recent key topic, and the path our companies must follow."

He added, "The FKI SME Cooperation Center should keep in mind that the competitiveness of partner companies is the competitiveness of large corporations and ultimately the source of national competitiveness, and do their utmost to promote cooperation between large and small-medium enterprises."

ORChem Supported by FKI and Large Corporations Grows Sales 2.5 Times Over 8 Years

ORChem established an in-house central research institute in 2000 to localize PCB chemical materials and devoted several years to basic technology research and development. About 40% of the total workforce were researchers, reflecting CEO Lee Jae-hyun’s strong commitment to R&D. However, applying the developed products to mass production lines to secure reliability and proceed to delivery was another challenge.

Additionally, although they developed a product to localize the 'PCB horizontal chemical copper plating solution,' which had an 89% market share of foreign-made chemicals, they faced restrictions in sales channels because the product could not pass the reliability verification stage of large corporations. Then, in 2013, they received help from the 'FKI Management Doctor Program.' LG Innotek provided production lines and auxiliary materials from its Cheongju, Osan, and Gumi plants and supported R&D and quality experts, assisting the entire process from initial testing to mass production for reliability verification of the horizontal chemical copper plating solution.

During this process, Nam Ki-jae, a member of the FKI Management Advisory Group and former LG Group executive, offered valuable advice to ensure smooth progress and successful outcomes. As a result, ORChem’s sales in 2013 increased by 20.4% compared to the previous year (24.5 billion KRW in 2012), and LG Innotek benefited from cost reduction by replacing German-made products with ORChem’s products.

Mr. Nam explained, "Large corporations support various co-growth programs such as establishing R&D roadmaps and sharing research projects to enhance the technological competitiveness of their partner companies. Through the advisory process, we recognized ORChem’s efforts in technology development and supported them together with LG Innotek to utilize these efforts." He added, "Thanks to domestic large corporations like LG Innotek and Samsung Electro-Mechanics growing into global companies and becoming reliable testing grounds and clients, ORChem was able to enhance its competitiveness, increase sales, and build a foundation for overseas expansion."

Huh Chang-soo, Chairman of the Federation of Korean Industries (center front row), visited ORChem Co., Ltd., a specialized company producing chemical materials for printed circuit boards (PCB) and semiconductor package processes located in Ansan, Gyeonggi Province, on the 23rd, touring the research institute and production facilities.
[Photo by Federation of Korean Industries]

In 2019, Introduced Work Efficiency and Management Systems
Productivity Innovation Including Halving Working Hours

In 2019, although ORChem’s sales and order volume increased, production planning was unclear. Efficient personnel allocation according to production volume fluctuations was not properly implemented, prompting them to seek help from the FKI Management Doctor Program for the second time. They received organizational innovation and technical production support from veteran advisory members Kim Young-duk (former Samsung Electro-Mechanics executive) and Jung Hyuk-jae (former Samsung Corning executive).

The two advisors judged that improving work efficiency was the most urgent issue for ORChem and advised measures to enhance productivity, such as practicing the 3J and 5S methodologies. They transitioned all tasks from manual methods to barcode and mobile systems and promoted the introduction of enterprise resource planning (ERP). Additionally, with the implementation of the 52-hour workweek system, they proposed and established a flexible working hours system to adjust employees’ working hours according to production volume.

ORChem promptly implemented the advice, resulting in increased sales and cost savings. They achieved a 100% equipment utilization rate, increased sales by 4% in 2019 compared to the previous year, and reduced costs by 210 million KRW. They built a system that automatically links work orders and finished product check label printer data, enabling daily management, which significantly reduced equipment and labor hours. Through the introduction of flexible working hours, the total working hours of all employees were reduced by 49% compared to the previous year (4,289 hours in 2018 to 2,212 hours in 2019), and overtime work decreased, improving employee job satisfaction, according to the FKI.

Close Joint Advisory to Strengthen Partner Companies’ Self-Reliance

The FKI Management Doctor Program is a tripartite cooperative advisory involving large corporations, partner companies, and the management advisory group. It is the flagship management advisory program of the FKI SME Cooperation Center, providing six months of on-site advisory services to CEOs of first- and second-tier partner SMEs of large corporations. Since 2007, 75 large corporations including Samsung Electronics, LG Electronics, and POSCO, along with 771 partner companies, have participated.

The FKI Management Advisory Group, launched in 2004 with 40 former CEOs and executives from major groups such as Samsung, Hyundai Motor, LG, and POSCO, has provided 22,265 advisory cases to 10,861 companies from 2004 to 2020.

Going forward, there are plans to strengthen the close joint advisory model demonstrated in ORChem’s case. Upon initial advisory requests, a management diagnosis team will be dispatched with multiple advisors participating in evaluations to broaden the advisory options for companies and provide continuous advisory support until company performance improves.