Central Europe 1997 Automotive Executive
of the Year: Daewoo Group Chairman Kim Woo-Choong
This years "CEAR
Central Europe Automotive Executive of the Year" award is presented to Daewoo
Group Chairman Kim Woo-Choong. The CEAR chooses Chairman Kim to receive this
award because of his dynamic leadership and active involvement in Daewoos massive
investment program for the Central European automotive industry.
Under the guidance of Chairman Kim, Daewoos strategic assault on Central
Europe has had a profound impact on the competitive dynamics of the regions auto
sector. The boldness and sheer magnitude of Daewoos attack surprised many and has
forced competitors to speed up and bolster their own activities in Central Europe.
Chairman Kim is a man of action. In 1997, he spent a total of 233 days overseas,
which included 23 business trips to 42 countries. He spent an incredible 775 hours in the
air and traveled some 520,000 kilometers.
Daewoo Fortifies Position in 1997
In 1997, Daewoo fortified its activities in Central Europe with the investment
of over $1 billion into its local operations -- this is money actually spent, not just
promised. The investments primarily funded new equipment and buildings in Poland and
Daewoo also strengthened its sales in Central Europe during 1997. In Poland, for
instance, Daewoo closed the gap with its rival Fiat. At the end of November 1997,
Daewoos market share in Poland was almost 26%, compared to Fiats 35%.
Chairman Kim didnt direct Daewoos efforts from a comfortable office
suite in Korea. He traveled to Eastern European countries 18 times during the year,
including visits to Poland, Romania, Hungary, Czech Republic, and Bulgaria. He also made
16 trips to CIS countries such as Uzbekistan, Ukraine, Kazakhstan, Russia, and Belarus.
$660 Million Invested Into Warsaw Factory
In 1997, Daewoo pumped $660 million of its planned $1.5 billion investment into
its Zeran factory in Warsaw. About $556 million has been set aside for production of a new
model for the Polish market -- the Lanos -- and assembly of the Nubira and Leganza.
Daewoos investment program at the Zeran factory will fund a new press
line, a new line for die stamping, welding shop modernization, construction of the second
half of the paint shop, and a new hall where the Lanos will be assembled.
$450 Million Invested Into Engine & Transaxle Production
Daewoos operations in Romania were hit hard by the political and economic
turmoil experienced in that country in 1997. Spiraling inflation and interest rates and an
unstable currency forced Daewoo Automobile Romania to lower its production targets
for 1997 due to poor domestic sales prospects. Union troubles also rocked the company
early in the year.
Despite these problems, Daewoos assembly line revved up to full speed in
1997 and the company invested $450 million into new machinery for in-house production of
engines and transaxles.
New R&D Center In Warsaw
In 1997, Daewoo also started preparing for the opening of its R&D center in
the buildings of the former State Motoring Institute in Warsaw. So far, 200 of the
1,000 engineers planned for the center have already been hired. The center will specialize
in projects for the Central and Eastern European markets.
Components Group Established
Daewoos activities in Poland in 1997 also included the inauguration of the
Daewoo Automotive Components Group in September. This new group should
substantially improve the quality of components available to not only Daewoo but other
auto makers in Central Europe.
The components group is comprised of the many sub-assembly production plants
that Daewoo acquired when it purchased the FSO plant in 1995. By the year 2001,
Korean firms are expected to have invested $364 million into these plants in the form of
joint ventures with Daewoo, sales of the companies should reach $735 million, and total
employment will rise to over 8,500 workers.
Commercial Vehicle Sales & Production Up in Czech Republic
Daewoo Avia in the Czech Republic expected to produce and sell 5,500 Avia
commercial vehicles in 1997, up 23% compared to sales of 4,448 units in 1996. Some 2,800
Avia vehicles were expected to be exported, an 80% increase compared to 1996.
Is Daewoos Pace Sustainable?
Indeed, Daewoo was busy in 1997. And certainly, Chairman Kim is not likely to
slow down the companys efforts in 1998. Critics and competitors, however, wonder
just how long Daewoo can keep up the furious pace, and whether there are enough consumers
to buy the 1.1 million vehicles the company plans to produce in Central and Eastern Europe
by the year 2000.
Chairman Kim is confident. And he says the severe economic crisis Korea is
currently grappling with will not change Daewoos plans for Central Europe. Time will
tell. The company must overcome many obstacles before it can reap the rewards of its grand
strategy for the Central European auto industry.
The Central European auto industry is a remarkable market. Billions of dollars
are being plowed into the auto sector and scores of the worlds leading automotive
companies have established strongholds throughout the region. The market is rich with
talent and expertise. Dynamic executives such as Chairman Kim ensure that the future holds
great promise and excitement.
This article is from a past issue of the CENTRAL EUROPE AUTOMOTIVE
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