Invest KOREA

Building a Powder Powerhouse in Busan
With a new plant in Busan, Höganäs Korea aims to become a supply hub for Asia

Last January, Korea became home to the most modern mixing plant of the world’s largest producer of powdered metals. Why Korea? Its dynamism. The rapid growth of its industries. The fact that Korea’s automotive industry, in particular, is seeing a rapid rise in not only production volume, but also innovation and therefore needs new and high-quality technologies.

Another key factor that led Höganäs to choose Korea – specifically, Busan – for its latest plant is the ability of Koreans to produce more with less, to make better-performing products while using less energy and natural resources, which is in line with Höganäs’ vision.

“Many powder metallurgy part makers in Korea are highly innovative and consider environmentally friendly products,” said Frank Song, Country Manager of Höganäs Korea Ltd.

Based in Sweden, Höganäs develops and markets powders for the metallurgical industries, with its products and services focusing on sintered components, brazing, electromagnetic applications, surface coating and other powder applications including additive manufacturing and welding. With subsidiaries worldwide, the company has manufacturing plants in 12 countries and sales operations in 75.

Höganäs made its first investment in Korea in 1991, after the local economy experienced a post-Olympics boom and more people started buying cars. Today the company considers Korea the best location to support not only the auto industry of Korea, but also that of Southeast Asia, said Song.

Höganäs’ first business activities with Korea date back to the 1970s, when it worked with Korea’s welding consumable makers in the country’s shipbuilding industry, which is number one globally today.

The company has two entities in Korea – the main Höganäs Korea office in Seoul and the Busan plant, called Höganäs Korea Production Ltd. Both are managed by Song and will be combined into one company next year. Sales for the Seoul office reached USD 8 million last year. The sales forecast for 2015, for the two companies combined, is USD 40 million.

The main customers of Höganäs’ Korea operations are some of the nation’s best-known automotive system and component suppliers, including Sinteron, Halla Stackpole, Korea Sintered Metal, Hyundai Welding, Kiswel and Chosun Welding.

“We have worked in Korea many years and we learned Korea has big potential to be a world leader in many areas,” said Song. “Global trends have clearly shown that the next growing area is Asia, and Korea has been a leader in many industrial areas, so we can grow in Korea and [it is] also strategically the best location to serve Asia.”

The speed and efficiency with which Korea’s engineers develop applications also makes Korea an important market for Höganäs.

“I heard many times my colleagues say that Korea is one of the best countries to communicate and faster, because good communication makes it move faster,” said Song.

“This makes Höganäs Korea stand front in many development within Höganäs group. This is one of the reasons why we built the plant.”

With the launch of the Busan facility has come the transfer of an important process from Sweden to Korea. In the past, the company’s headquarters would take care of the full metal-powder manufacturing procedure and then mix the product with other alloy elements to improve component performance. Now, the mixing happens in Busan. Höganäs Korea Production imports raw metal powder from Sweden and produces the mixes locally.

“We already have mixing plants in China and Japan. But we think Korea is the best location,” said Song.

Though Höganäs Korea currently supplies for only the Korean market, it plans to start exporting its products to the Asian region in three years.

“Höganäs Korea will serve as a gateway for Taiwan, Thailand, Malaysia, Indonesia and Australia,” said the country manager, citing the Busan plant’s logistical advantages.

In the short term, Höganäs Korea aims to become a strategic partner of Korean companies and help them save on logistics-related costs and increase efficiency through supplying all products through the Busan plant.

“Our long-term goal is to be a great supplying hub in Asia,” said Song.

By Chang Young (young.chang@kotra.or.kr)