News and Updates on HD Hyundai
HCE to Invest KRW 200bln in Ulsan Production Plant to Expand Capacity by 50%
Hyundai Construction Equipment (HCE) will invest about KRW 200 billion in its Ulsan plant, the main production base, to strengthen competitiveness amid a boom in the global construction equipment market.
On December 14, 2021, HCE unveiled through a corporate disclosure its plan to invest KRW 194.1 billion over the next four years into the Ulsan production plant to expand capacity and streamline the manufacturing process.
This marks the largest investment since HCE was spun off from Hyundai Heavy Industries (HHI) and launched as a newly established corporation in 2017.
The investment will be focused on maximizing production efficiency through an overhaul of its aging and thus less efficient production lines and expanding production capacity for construction equipment such as excavators and wheel loaders.
Until now, the production and assembly functions of processed metal products have been dispersed between Factories 1 and 2 of the Ulsan plant. HCE plans to merge these functions into a single factory, namely Factory 2, to improve production efficiency.
Once streamlined, the new manufacturing process is expected to help reduce manufacturing lead-times and logistics costs, leading to an increase in annual profitability by about KRW 17 billion.
Subsequently, HCE plans to install new equipment and expand the existing assembly lines, which should increase the plant’s annual capacity by 4,800 units and bring the total to 14,400 units per year.
The company will also integrate ESG factors into the plant, such as using eco-friendly sub-materials for interior/exterior finish work and reducing risk factors between each stage of the manufacturing process by setting up a production line with due consideration of worker safety.
HCE expects the planned production capacity expansion, implemented in an effective response to the current boom in the global construction equipment market, to drive up its market share across different regions.
According to Off-Highway Research, a UK-based consultancy specializing in the research of construction equipment markets, the annual global sales volume of construction equipment is forecast to reach 1.08 million units by 2025 amid a continued boom.
Further, it is relevant to note that the US has recently made official its launch of the “Build Back Better World (B3W)” initiative for developing countries, which is expected to help expand construction equipment markets in the emerging world.
HCE’s investment decision comes after six months of thorough discussions and examinations, backed by the favorable global market conditions and HHI Group’s strong commitment to growing its construction equipment business.
In May 2021, HHI Group appointed Choi Cheol-gon, HCE’s the-then vice president, as the head of the Global Production Innovation Center, and entrusted him with the task of examining measures to maximize production efficiency of the Ulsan plant as an expert in construction equipment production.
Mr. Choi, upon his appointment as CEO of HCE in November 2021, embarked on an urgent mission to improve production efficiency of the Ulsan plant to ensure HCE is poised to create synergy with Hyundai Doosan Infracore, now under the umbrella of HHI Group, through healthy competition.
“I believe enhancing the competitiveness of our Ulsan plant is the first prerequisite for the Group to be able to achieve its goal of becoming a global top five player in the construction equipment market,” said the new CEO, adding, “The investment will enable efficient manufacturing of construction equipment at HCE and elevate the brand competitiveness to a new level.”