볼보는 어떻게 한국에서 성공했나?

Changwon plant has become example for group’s factory operations

Sweden-based firm to focus on BRIC markets

Korea’s construction equipment market expected to shrink 10% in 2012

Volvo Group Korea CEO Suk Wi-soo

Over the past few years, a lot of major Korean companies, including Samsung, Hyundai and LG, have globalized successfully, emerging as a major force on the world scene. Their products have been exported everywhere and you can easily find Korean products overseas.

Now they are trying to go one step further to become truly multinational firms through “glocalization.” The term is a combination of the words “globalization” and “localization” used to describe a strategy to sell products and services globally but manage each operation based on the local market’s practices and culture.

Glocalization sounds easy but it is difficult to implement it as global standards often conflict with local culture and practices. Against this backdrop, companies are seeking ways to customize content to appeal to individuals in different locations.

There are several successful glocalization cases, such as Yahoo and Coca Cola, that Korean conglomerates can model themselves on but they may also take their cue from Volvo Group Korea, which turned the troubled construction equipment affiliate of Samsung Heavy Industries into a profitable entity.

Volvo Group, the world’s fourth largest construction equipment maker, acquired the unit for $500 million in 1998, which then suffered from chronic deficits. Now Volvo Construction Equipment Korea, it is the main production base of the Korean arm of the Sweden-headquartered group.

Volvo Construction Equipment develops, manufactures and markets equipment for building and related industries. Its products include a comprehensive range of wheel loaders, hydraulic wheeled and crawler excavators, articulated haulers, road machinery and a wide range of compact equipment.

Volvo Group Korea and Volvo Construction Equipment Korea President and CEO Suk Wi-soo cited its Changwon plant’s unique production system as a major success factor. He indicated that his dual approach in management has led to creating a Korean-style system, which was a key driver for robust growth. As CEO, he heads Volvo Group Korea.

“The key success factor for Volvo Group Korea’s rapid growth is that we tried to seek localization while following the group’s globalization efforts,” Suk said in a recent interview with Business Focus at his office in Seoul.

“By complying with principles and rules, we try to follow global standards when doing business outside of Korea but in managing local operations, we respect Korea’s culture and practices.”

Suk, a graduate of Korea University, began his career at Samsung Heavy Industries before joining Volvo Group Korea in 1998. His management principles are based on core values of the parent company _ safety, environment and quality, better known as the “Volvo Way,” but he also respects Korea’s business practices and culture, which have helped local employees embrace Volvo with little protest.

Korea’s unique production system

The Changwon system is seen as a successful example of “glocalization.” It is an example not only for Volvo’s other production factories abroad but also for Korean firms’ overseas operations seeking localization.

The system in Changwon, designed to reduce production periods, minimize inventories and boost quality, has been adopted in the group’s factories in other countries, including Germany.

“Since 2004, Volvo’s excavator production lines across the globe have tried to model themselves after our system. It has become the core factory of the group,” Suk said.

The epitome of the so-called Changwon production model is its“Sold One, Make One” system, better known as “Lean Six Sigma” that was created by combining Japan’s Toyota system with GE’s Six Sigma.

“The biggest strength of the Changwon plant is its high productivity. In terms of man-hours, the number of work hours needed to produce one excavator, the factory is two times more productive than its counterparts in Europe,” Suk said.

He explains that at the plant, individuals work and rest together with no one person relaxing individually during work hours, which makes it possible to minimize losses. He also noted that accidents there are 10 times less than in the United States and Europe.

“At first, the Changwon system was underestimated due to communication problems. However, after our track records have proved the strength of the system, the group selected the factory as a model plant and makes field trips here to learn our model.”

R&D center

The 61-year-old chief executive of the Volvo’s Korean outfit, which encompasses Volvo Construction Equipment and Volvo Truck here, cites research and development (R&D) as another competitive edge.

“Volvo’s production lines across the world, including the China plant, only have capabilities to produce excavators. In contrast, the Changwon factory is equipped with design technology and R&D capabilities as well, which enable us to adapt better to market changes,” he said.

Currently, around 250 engineers there concentrate solely on developing excavators. In 2006, the Korean operation established the Virtual Product Development Center through a 15 billion won investment.

Suk became the first Korean to head the local operation of the multinational firm in Nov. 2009, as he has been credited with ramping up the global status and competitiveness of the Changwon plant.

Capitalizing on advanced technology and R&D ability, Suk has increased the factory’s production capacity to 25,000 units per year in 2011 from the previous 17,000 by investing a total of 75 billion won last year.

“We plan to increase our capacity to 30,000 units by 2016, which will be the largest annual production in the world among single production lines. We also aim to raise the portion of exports to 95 percent from the current 85 percent,” he said.

Market outlook

Suk, who also serves as president of Asia operations by overseeing the company's business in Korea, China and India, said Volvo will continue to focus on Asian markets to seize opportunities in rapidly-growing markets.

In his view, the power of global economy is shifting to the East after the United States and eurozone have been suffering in the wake of the global financial crisis.

“We are making continuous efforts to get the upper hand in promising BRIC markets, including China, by setting up more production lines and research facilities since we believe that Asian markets will play a pivotal role in the growth of the world economy.”

The veteran CEO forecast that the global construction equipment market will remain sluggish this year, citing the debt crisis in the eurozone and a slowdown in the Chinese economy.

“In Europe, the market is expected to move sideways, while the U.S. market is likely to make some headway. Asia is likely to suffer a mild setback due to China’s tightening policies,” he said. “Our goal is to increase our market share by 10 percentage points even in the sluggish market.”

He expects that the Korea’s construction equipment market will shrink by five to 10 percent in 2012, while the U.S. will see 10 to 20 percent growth. He forecast the Chinese market will contract by 20 to 30 percent in the first half of the year but will bounce back in the second half.

Although he is very confident about Korea’s operation, he is at the same time very cautious about rapidly-changing market environments. He is seeking to have the Changwon plant maintain its competitive edge over other emerging market factories, at least for the next five years, by strengthening its productivity and research capabilities.

“In the coming three to five years, it is likely that emerging markets will catch up with our plant by capitalizing on rich natural and human resources. To maintain our competitiveness, we have to secure ‘plus alpha’ capabilities.”

_ 창원공장 볼보그룹 핵심공장으로 성장
_ 향후 브릭스 등 신흔 시장에 초점
_ 국내 건설 경기 시장은 올해 10프로 축소

지난 몇 년간 삼성, 현대, LG 등 국내 주요 대기업들은 글로벌화에 성공하면서 명실상부 새로운 강자로 등장했다. 그들의 상품은 전세계로 수출 되었고 이제 해외 어디에서나 한국 상품을 쉽게 마주하게 되었다.

한국 기업들은 여기서 멈추지 않고 “글로컬라이제이션 (glocalization)”을 통해 진정한 의미의 다국적 기업이 되기 위해 노력하고 있다. 글로컬라이제이션이란 세계화 (globalization)와 현지화 (localization)의 합성어로 세계화를 추구하는 동시에 현지국가의 기업풍토를 존중하는 경영방식이다.

글로컬라이제이션 전략은 이론은 쉬우나 현실에서 실현해 내기는 쉽지 않다. 글로벌 스탠다드와 각 시장의 문화와 관행이 충돌하기 때문이다.

야후나 코카콜라는 글로컬라제이션의 좋은 성공 사례이다. 하지만 국내 기업들은 볼보 그룹 코리아의 전략을 눈여겨 볼 필요가 있다. 세계 4위 건설기계 제조업체인 볼보그룹은 글로컬라이제이션을 통해 한국 시장에서 성공적으로 안착했다.

1998년 적자에 허덕이던 삼성중공업의 건설기계 부문을 5억달러에 인수한 후 1년 반만에 흑자기업으로 돌려놓았고 현재 볼보그룹의 핵심 생산기지로 부상했다.

볼보그룹 코리아와 볼보건설기계의 대표를 겸하고 있는 석위수 사장은 볼보 코리아의 성공요인은 글로벌 스탠다드에 기초한 “한국식 생산 시스템”이라고 잘라 말했다.

“원리 원칙을 지키면서, 국내에서 만들어져 해외로 나가는 것은 글로벌 기준을 지키고 내부적인 운영에 있어서는 한국적인 관습이나 정서를 살리는 노력이 주요했다고 봅니다,” 한남동 볼보코리아 본사에서 진행된 코리아타임스 경제섹션 비즈니스포커스 (BusinessFocus) 와의 인터뷰에서 이같이 말했다.

볼보그룹코리아의 '창원식 생산시스템'은 '굴삭기 1대가 팔리면 1를 만든다 (Sold One, Make One)'는 개념의 생산방식이다. 하나의 생산라인에서 수십 가지 모델을 동시에 생산하면서 조업시간을 단축하고 팔리는 만큼만 생산해 공장 내에 재고가 쌓이지 않게 유지했다.

석 사장은 "커뮤니케이션 문제로 처음엔 창원공장 생산시스템이 저평가돼온 게 사실"이라며 "하지만 몇 년 전부터 그룹에서 창원공장을 모범공장으로 선정, 견학을 올 정도입니다. 창원공장이 볼보 굴삭기의 글로벌 핵심공장으로 자리 잡았고 지금은 볼보 내의 다른 공장들에게 벤치마킹 대상입니다.”