EM Korea Invests 49.4 Billion KRW, STX Engine Invests 36.2 Billion KRW
[Asia Economy Yeongnam Reporting Headquarters, Reporter Song Jong-gu] EM Korea and STX Engine, defense companies representing Changwon Special City, Gyeongnam, have been selected for the strategic parts localization project newly established this year by the Defense Acquisition Program Administration (hereinafter ‘DAPA’), with a total project budget of 85.6 billion KRW over five years for two tasks.
‘Strategic Parts Localization’ is a support project led by the Agency for Defense Development (hereinafter ‘ADD’) aimed at contributing to the technological leap of the domestic defense industry, creating new export markets, and considering the ripple effects and expanded application of weapon system development.
First, EM Korea, selected for the ‘Automatic Transmission for Wheeled Armored Vehicles’ task, is a specialized defense company that has grown through the development of core modules such as the FA-50 and K9 self-propelled howitzer. A total of 49.4 billion KRW, including government funds, will be invested to develop the localization of automatic transmissions for wheeled armored vehicles such as the K806/808 (originally from German company ZF), which are used in various forms including basic models, anti-aircraft guns, and command and control centers. Currently, the need for development has been continuously raised due to parts discontinuation and export restrictions.
In particular, the localization rate of automatic transmissions for wheeled armored vehicles is almost nonexistent. Through the active participation of 110 small and medium-sized enterprises (SMEs) in the Changwon area, the project aims to localize core parts, expecting an economic ripple effect of 176.5 billion KRW and expansion of manufacturing infrastructure including transmission control devices, torque converters, and gears through securing technological capabilities.
EM Korea Executive Director Lee Dong-won analyzed, “The selection for the ADD’s strategic parts localization project recognizes EM Korea’s technological capabilities as a specialized defense company. It will have a high effect in pioneering export markets by preparing for discontinued transmission parts and overcoming export regulations (E/L).”
STX Engine, selected for the ‘Development of Three Types of Electronic Universal Diesel Engines for Tracked Vehicles’ task, is a company localizing the 1,000-horsepower diesel engine for the K9 self-propelled howitzer, which has created export success stories in countries like Poland. A total of 36.2 billion KRW, including 27.2 billion KRW in government funds, will be invested in the development of tracked vehicle engines, which will be promoted to be applied immediately to weapon systems upon completion.
Above all, the development of replacement engines is necessary due to the expiration of durability and discontinuation of diesel engines for K21 armored vehicles, Biho Complex/Cheongma, and K200A1 series armored vehicles operated by the Army. It is analyzed that there will be an economic ripple effect of 900 billion KRW through pioneering markets such as Middle Eastern countries and Egypt, where domestic demand and exports are limited.
STX Engine CEO Park Ki-moon said, “We will do our best to localize the universal diesel engine for tracked vehicles within the schedule to maintain stable military power and grow together with many domestic small and medium-sized partner companies.”
Hong Nam-pyo, Mayor of Changwon Special City, said, “The rapid changes in the international situation are leading to exports of our country’s defense industry, but mutual growth with SMEs is very important at this time. Therefore, the selection for this strategic parts localization project, which can expand SME participation, holds great significance. Changwon Special City will spare no effort to actively support the growth of local defense SMEs.”
EM Korea and STX Engine have more than 200 small and medium-sized partner companies in the Changwon area and receive over 80% of their parts sales from them.
Accordingly, Changwon Special City plans to discover and actively support required parts that SMEs can develop through this strategic parts project, which is expected to greatly help increase sales of local SMEs.
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