Following is the second in a series of articles on promising foreign-invested companies in Korea. ― Ed.


PYEONGTAEK, Gyeonggi Province ― In 1862, Alexander Parkes presented the first man-made plastic at the Great International Exhibition in London. Since then, this revolutionary material has become an indispensible part of life.

Every single plastic product we use ― soda bottles, plastic ware, plastic bags ― has to be heated and molded into shape.

But even a small plastic injection mold for smartphone covers, weighing about 400 tons and costing between 200 million won to 300 million won ($175,500-$263,300), is still a massive investment.

Austria-based Engel Machinery, the world’s largest of its kind, has manufactured injection molders and plastic processors since 1945.

The company chose to start its first expansion to Asia in Korea, and in 1997, the company became the first foreign company to invest in Korea through the state-run Korea Trade-Investment Promotion Agency, or KOTRA.

“Korea is a very important market that Engel cannot lose,” Engel Machinery Korea executive vice president Lee Seung-kyu told The Korea Herald during a group tour arranged last month by Invest Korea, a KOTRA affiliate. 

Expressing confidence in Engel’s continued operation in Korea, he said, “In Korea, we have a swarm of corporate customers, including Samsung and its vendors. To make one smartphone model, they need countless parts, such as lenses, rear covers and a whole lot of other small connectors.”

Engel Machinery Korea currently has 141 local employees and purchases about 90 percent of its materials from local parts suppliers. The growth potential of Samsung Electronics and Hyundai Motor only add to Engel’s assessment of Korea’s investment value.

Injection molders for mobile phone covers and the bumpers for automobiles are two of Engel Machinery Korea’s best-selling products here.

The executive vice present ensured that the competition is natural and market-driven, stressing that Korean conglomerates’ whims in partner selection will not affect Engel’s market share.

“In most cases, we do not directly sell our injection molding machines to Samsung. We sell them to Samsung’s first and second suppliers,” he said. “Samsung may want new partner suppliers, who will still need our products to process plastic.”

Valuing buyers in this tech-driven country, Engel has kept up with the investment in its Korean unit. In March, it infused an additional 8 million euros ($10.4 million) to increase the size of its manufacturing facilities in Pyeongtaek by about 20 percent.

Growing overseas demand, especially from rapidly developing China, for plastic products has fundamentally resulted in soaring demand for plastic molding machines.

Engel Machinery Korea exports about 70 percent of its finished products. About 80 percent of these end up in China, while Engel runs factories in China as well.

While Engel Machinery Korea mostly produces small injection molding machines for components for smartphones and automobiles, Engel China produces larger ones.

Thanks to the growing demand in China, Engel Machinery Korea in 2012 won “The $30 million Export Award” presented by KOTRA.

Overall, Engel Machinery Korea’s production capacity soared by about 20 times over the past decade, from 64 machines in 2002 to 1,200 in 2013. The March expansion more than doubled the production rate, Lee said.

The challenge in Engel’s competition with other local and foreign makers is strictly about product quality.

“If our machine can crank up 10 smartphone rear covers when other brands make five to six, for instance, the vendors will come to us,” Lee said.

Meanwhile, Engel’s Austrian headquarters is particularly keen to keep up the high level of human resources. When Engel’s Austrian headquarters launches a new machine, it invites about five to 10 designers and engineers for special training.

This is partly because injection molders are highly customized products ― different auto brands display bumpers of different designs, for instance.

Concerning future strategy, Engel Machinery Korea’s managing director Lee Byoung-hong said it will continue to “aim high.”

“It is our strategy to take the high-end market. This is how we keep our marginal profit and market share (high),” he said.

By Chung Joo-won (joowonc@heraldcorp.com)