Hyundai Construction Equipment (HCE) has been achieving sustainable growth since it was spun off as an independent company from Hyundai Heavy Industries in 2017. Amid rapidly changing markets and the Covid-19 crisis, HCE has strengthened its foundation and competitiveness through constant transformation and innovation and hardened its resolve for quality management by completing the Technology Innovation Center equipped with the largest reliance test equipment in Korea.
We interviewed Ki-young Kong, CEO of HCE, about past footsteps and the way forward for HCE.
1. As industries had a difficult time due to Covid-19 last year, it is assumed that it was not easy for HCE to respond to Covid-19 as well. Please, share your thoughts on the post-coronavirus situation.
Since the Covid-19 crisis started, we have made efforts to lay the foundation for internal stability and sustainable growth. The second and third quarters were truly difficult times amid the global pandemic, but all employees and executives of HCE have worked to overcome this crisis together as we have achieved today’s growth by surviving many adversities. After the fourth quarter, recovery of the global market has been expected along with positive signals centering on emerging markets in 2021. It is time to brace up and devote ourselves to achieve this year’s strategic goals.
2. Please share unexpected strengths or positive aspects that you have discovered amid the difficulties.
HCE has secured basic strength and consolidated its foothold for sustainable growth at the same time since the spin-off in 2017. We have invested about KW 77 billion in total and completed the ‘Technology Innovation Center’ which will be the cradle for quality innovation. Besides, the ‘Global Advanced Quality Center’ started full-scale operation to enhance the quality competitive edge of new models, while investment and cooperation have been carried out consistently for the development of ‘smart products,’ including autonomous excavators · self-driving forklifts, and ‘eco-friendly products,’ such as hydrogen fuel cell forklifts · battery-powered excavators. Moreover, I believe that our efforts – improving product marketing and the S&OP process, and providing support to foster key accounts and dealers – in doubling sales capacity and strengthening competitiveness for a leap forward amid the difficult market situation will be a huge asset.
3. Please share your thoughts on the outlook for the global construction equipment market in 2021.
Although the corona pandemic continues, the global construction equipment market has made a good start this year, mainly in emerging markets, with government stimulus packages and an increase in raw material prices. In fact, it is challenging to meet demand in the first quarter of this year, as the number of orders from dealers, mainly in emerging markets, has dramatically increased since November. Uncertainties, including a resurgence of the coronavirus surely remain, but I think the situation is gradually improving in 2021, if 2020 was the worst. One of Hyundai’s strengths is its capability to agilely respond to the market situation, hence we will act faster than our competitors to take advantage of the market recovery in 2021.
4. Please share HCE’s projects to achieve this year’s goals.
Enhancing profitability is the first priority. To do so, we will expand sales of high-profit product groups, such as large · special equipment, and continue to pursue cost reduction and added-value options for main models.
Preparing the foundation for the continuous expansion of sales by improving global sales competitiveness is our second priority. We will spare no efforts to double the sales capacity through distribution channel innovation, including developing · fostering outstanding dealers for a stable increase in equipment sales.
Third, we will increase customer value via customer-oriented product development and quality innovation. Through global quality management, HCE will improve durability and advanced quality, while increasing customer confidence by reinforcing pre-inspection of products.
Last, but not the least, we will make tangible achievements by establishing on execution-based organizational culture. I believe HCE is now a company equipped with ‘powerful executability,’ abandoning the old habit of proclaiming specious plans or slogans. To that end, we will emphasize goal-related performance management in each division and accelerate execution by establishing a smart work environment.
5. Which markets would be notable or strong targets in 2021?
The Chinese market, the largest global market, is showing solid demand in 2021, and the demand from emerging markets including India/Brazil is sharply recovering. We have huge expectations for emerging markets in which HCE has shown strengths in 2021. Especially with the increase in raw material prices, sales will focus on large equipment. Advanced markets will have a relatively slow recovery compared to emerging markets, but we are preparing for a scenario where investment in infrastructure will be in full swing from the latter half of this year in the North American market with the new the Biden administration.
6. How would you define the HCE brand now, and where do you see in in the future
Customers are at the center of all value. HCE's existence is worthy when customers love the HCE brand. I want HCE to pursue the value of being a group of specialists who see the future that know how to accurately understand and promptly respond to customer needs. I believe that customers will love HCE more if we heed the voice of customers (VOC) intelligently and accurately and can give fast response to customer needs in the future. To do so, ‘people of HCE’ need to work hard to listen closely to the voice of customers. Along with the recent launch of the VOC/CRM system, HCE will be the brand that strives to accurately understand and quickly respond to the voice of customers in any form.
7. Please share the future image of HCE that you will pursue. Where do you see HCE in the future and what points should HCE people focus on to prepare for HCE’s development?
I think the keys to the future will be ‘technological innovation’ and ‘mutual growth.’ Through technological innovation, I want to develop HCE into a company that raises customer value by realizing smart construction sites, which are safe, yet convenient and fast to work for customers, and fulfills its social responsibilities while taking care of the global environment. To that end, we are making concentrated investments in technological innovation like electric power, self-driving, and AI, and eventually, we intend to be a global top-tier company, leading customer-oriented construction sites.
Regarding the recently emphasized ESG management, I understand it as pursuing mutual growth with customers and partner companies. Like a mother taking care of her children with love at home, HCE will pursue a future where we will continue to grow together with customers and partner companies, instead of seeking short-term gains.
For that future, development and internalization of core technology will be the focus through human resource cultivation, while reinforcing networks with relevant companies. Cooperation with various external partners is being stressed as R&D changes to X&D because internal R&D alone can no longer keep ahead of changes of the times. Accordingly, HCE will strengthen cooperation with diverse partners, including construction companies, specialized companies, and venture companies, to accelerate change and innovation.
8. As you have worked abroad in many different countries, those experiences might be helpful these days. Do you have any memorable episodes?
My second overseas post was in India. Perhaps because of personal experience, I have many memorable episodes related to India.
When I transferred to India, my mission was to establish a local factory on wildland in Pune, India, which was a three-hour drive from Mumbai. Back then, the local conditions were very bad, there even was no proper water supply system. I spent three years and six months there, including about two years for building the factory and its initial operation. I had really difficult times, though when looking back it was a precious experience to understand the culture and psychology of the Indian people.
They tend not to trust outsiders against the backdrop of prolonged poverty and disease. To win their hearts, you need to devote yourself to them. That experience has been a huge help in strengthening our business network and building long-standing relationships with customers.
9. It seems that your attachment to recruiting sales specialists is unique. Please share any capacity that you think important for the sales group.
Salespeople are those closest to customers, therefore a pioneering spirit and the persistence to not give up are the most important characteristics. I remember my first overseas post, Chicago, U.S.A., in 1992. Caterpillar dominated the American market back then, so dealers were not that interested in our products when we were introducing them. Passion and persistence were the only two things that mattered in the end. I believed that a door would eventually open if I kept knocking. I constantly introduced HCE products to dealers and customers by going around to dealerships and construction sites. As I continued to believe and knock, the market finally responded. As a result, our dealership network has grown to about 70, and about 3,000 units are sold per year. Sales personnel also have to pursue smart sales. It is necessary to accumulate knowledge and experience on advanced PSI (Product-Sales-Inventory) management and to advance dealer management based on that. With everything else, business activities, including working in the field and market intelligence analysis, should be carried out.
10. Please share a few words with HCE executives and employees.
Employees and executives of HCE! As you all are aware, lately the market environment is changing at an unprecedented speed and almost all industries are experiencing an unparalleled crisis due to Covid-19. However, we, all HCE staff and executives, will adapt to the market conditions through constant change and innovation and grow into a world-class company by turning this crisis into opportunities as our late Founder Chung Ju-yung said, “When you don’t see a way, find one. If you can’t find it, pave the way.” In addition, HCE will faithfully play our role as a business partner for mutual growth with customers, while growing into a trusted and respected company that fulfills its social responsibilities.
We Can Do It!