The Chaebol Who Flies From Space - Chapter 104



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The Tycoon Who Flies Into Space Episode 104

Episode 104: Ssangyong Motors Acquisition (3)

The gasoline engine was an upgraded version of the DOHC engine that was popular in the past. It was a product that would cause a stir when it was released because of its fuel efficiency of over 30 km per liter, but it was within the tolerance of global oil companies. The production volume was not that large.

However, the SUV model that WD Automobile plans to push as its main vehicle was different.

“How fuel efficient per liter is a diesel engine?”

“The medium-sized one has a range of 45 km and the large one has a range of 38 km.”

“… … That’s incredible. How is that possible? GM has tried repeatedly to improve fuel efficiency, but ultimately failed.”

“I did it, but it worked.”

“How did you do the road test? I have never heard of WD testing a new car engine.”

There was no way I would have known, because the information was thoroughly prevented from leaking for security reasons.

“We removed the engine from the existing vehicle, installed a new engine, and conducted a driving test.”

“Is the new engine that reliable? No, it is illegal to drive on the road with an unlicensed engine.

So what do you want me to do?

Are you telling me to go around the neighborhood and spread the news of the new engine development in advance?

If news had spread that a new engine had been developed before the acquisition of Ssangyong Motors, would the acquisition process have gone this smoothly?

“Ahem, I’m not saying that’s a bad thing. It’s just not well known, but other car companies actually use this method when developing new engines. But we need to think about how many cars will sell if we replace them with new engines.”

Before conducting the road test, we simulated the possible sales volume with Ariel and the results were shocking.

There were over 5 million cars available for sale.

In particular, sales in the commercial vehicle sector, where fuel efficiency is extremely important, are expected to be enormous.

It was a revolution when a 25.5-ton truck could get over 10 km/L when fully loaded and driving.

Even the vehicles currently on the market have the best fuel efficiency, but they do not get more than 2 km per liter.

If the fuel economy difference was five times, it was obvious which vehicle the consumer would choose.

This was a product that would become a bestseller and shake up the existing truck market as soon as it was released.

Executive Director Cho stared intently at the documents in front of him.

No matter how I looked at it, the numbers related to the new engine were too tempting to look at in my right mind.

The global large truck market (including heavy-duty trucks and dump trucks with a gross vehicle weight of 4.5 tons or more) recorded sales of 2.95 million units last year. SUV sales were 8.24 million units.

WD cars initially had a hard time selling due to low global recognition, but after three years, the story changed.

“There’s no need to say this. We need to buy up idle car companies and idle factories around the world from now on. Even if we create a global parts network and start producing cars in earnest, it will be difficult to meet the increasing demand.”

“It will be difficult to meet the demand of the domestic market with existing production facilities.”

“Of course. The SUV market is growing rapidly every year. This means that the SUV market is growing bigger than the sedan market. In particular, the United States, which has the largest car sales in the world, has a huge demand for trucks. 35 km per liter? That’s not something we can sell because there are no cars to sell.”

“So you’re saying we should bring our main market to the United States?”

“What can I say? The domestic market is not the problem. If the engine problem is solved, the existing negotiations with Benz will be invalidated. We need to make a new model and enter the US market as soon as possible. You have made a new engine, but do you not have a car design in place?”

This was obvious even without saying anything.

He showed me the car blueprints he had put in a corner.

“Ah! This is so beautiful at first glance. It is clearly differentiated from existing vehicles from the exterior. It is not an angular 90s style, but a sleek SUV model.”

“The vehicle design may deviate from the existing macho sensibility, but it was designed to increase fuel efficiency.”

“I get it. I get it. This is truly an amazing blueprint.”

“I have shown you the blueprints of the new car, so please ask Executive Director Cho to establish a growth plan for WD Automobile.”

I forcibly removed Executive Director Cho from the blueprint.

“This is top secret for the time being. You can come and see it whenever you want, but it is only available here. It cannot be taken outside.”

The look of regret was evident in his eyes, but he had no choice. He didn’t know what would happen the moment the new car design was exposed to the outside world. He planned to hand over the design after the newly acquired car company’s security system was completely in place.

“Mr. Chairman, is it possible for someone other than me to read this?”

“Someone else?”

“We have a car design expert coming in. He’ll be amazed when I show him this.”

“Are you a trustworthy person?”

“He is someone I have worked with for nearly ten years. I put a lot of effort into getting him out of the GM Research Center this time.”

“Then bring him.”

At first, only two people were allowed to view the blueprints, but a separate space had to be created in one corner of the office where the blueprints could be viewed.

The number of people rushing to see the blueprints has increased.

* * *

St. Louis in midsummer was stiflingly hot, unbearable without the occasional breeze from the Mississippi River.

The final signing of the document for the acquisition of 49.8% of Bush Beer’s shares was completed. Including the shares acquired in advance, the final acquisition of 63% of the shares was completed.

I had dinner with Senator Harry Portman for the first time in a long time.

“Yongwon, it’s hard to see your face.”

“I’ve been so busy lately. I went to Korea and took over a new company, so I’ve got a lot of work to do.”

Senator Portman’s eyes sparkled at my words.

“I heard you acquired a car company.”

“It’s still a small company.”

“Haha, Mr. Joe, I can hear it too. They say they are expanding their production facilities in Korea tremendously.”

I’m not sure how he knew what was going on in Korea, but it was true.

They were expanding their factory production facilities in Pyeongtaek and building a new factory in Mokpo. The goal was to build a factory with a production capacity of one million units per year.

So while we’re on the subject, Harry Portman told me the story I really wanted to hear.

“We are also planning to build a 300,000-unit car manufacturing plant in St. Louis.”

Portman slapped his knee, apparently excited by my words.

“That’s exactly what I want. So how much are you willing to invest?”

“We are planning to invest $1 billion to build a factory. We were thinking of going to Detroit, but because of our friendship with the congressman, we decided to build the factory here.”

“Okay! I’ll push you as hard as I can. Don’t worry about the administrative processing.”

It was understandable that Portman, a wily politician who rarely reveals his true feelings, would be excited.

With 5,000 direct employees and the parts company joining in, the direct employment effect will be at least 10,000 people.

In addition, there were plans to build an engine plant in a special steel plant to produce automobile steel plates.

Considering the number of factories that would come in together, it would be like creating a small new city.

“That’s the first investment. As sales of new vehicles increase, we plan to expand the factory capacity by an additional 1.2 million units.”

Senator Portman’s face turned red as he heard me.

He stopped cutting his knife while eating and touched his forehead.

“Huh, your investment plan really exceeded my expectations.”

“Think of a little Detroit in Missouri.”

“St. Louis fell into decline when the railroads ceased to be the primary means of moving goods. If the auto plants grow as planned, Missouri will be revived.”

“I know. Even though St. Louis is in decline, it boasts a population of 3 million when you combine the surrounding metropolitan area. We’ll start by quickly finding a factory site in the surrounding area.”

“I say again, as long as you stick to your investment plan, I will do my best to help you.”

Since dinner with Senator Portman, plans to build the plant have moved forward at a rapid pace.

The factory site recommended by Rep. Portman was a barren field along the river.

* * *

We toured the factory where construction is underway with Youngsoo Cho, who was inaugurated as the president of WD Automobile.

“It’s wider than I thought.”

“That’s because we’re building the infrastructure with additional expansion in mind. Wouldn’t parts companies also come here?”

“That’s right. We are in the process of selecting parts suppliers in preparation for the launch of a new car model, and it’s a headache. We plan to acquire some of them and make equity investments to secure financial resources, but many companies are hesitant.”

“We need to embrace existing parts companies as much as possible.”

“It seems that existing parts manufacturers are reluctant to trust others because they have been squeezed by the conglomerates.”

“I guess you’re worried that the company will go under.”

“Yes, there have been many such cases before. Moreover, setting up a parts factory in the United States is something that has never been done before.”

“If you don’t like it, don’t force it on me. If you directly manage the parts company, that’s fine. It might take a lot of work, but the supply of parts will be stable.”

There is a pros and cons to everything.

If they couldn’t keep up with the investment that was made with their massive financial resources, they would just cut them off.

I wasn’t so generous as to forcefully bring someone who didn’t want to go.

If you hesitate even after being offered technical guidance on upgrading existing parts, you can create a new parts company.

“Parts suppliers with many problems will not have their contracts extended.”

“Are these companies that were previously in collusion with the owner?”

“Yes, we will not extend the contract once the long-term supply contract period ends.”

“It’s going to be noisy for a while. Any other issues?”

“Parts manufacturers are paying close attention to Hyundai Motors.”

“There’s nothing I can do. From their perspective, it’s an absolute win.”

“Because of the difference in the number of vehicles sold, the amount of parts they need is enormous. That’s why they are hesitating even more. They said that if we supply parts to them, they will stop doing business with us.”

“Hmm, that’s quite a restraint.”

“The domestic market is basically an oligopoly of Hyundai cars. GM and Renault are still left, but they are no match for them. They are acting aggressively, perhaps because they are concerned about our company’s financial strength.”

“In what way?”

“From what I heard, they are pushing forward their new car launch plans and planning a large-scale discount sale at the end of the year.”

“That’s typical.”

“I think they were stimulated by our active participation in installment sales. They are also greatly expanding their production facilities.”

What else could there be to do with so much money?

By creating capital under the automobile company, the installment sales interest rate when purchasing automobiles was significantly lowered.

“Oh, no, I guess it would be better not to do that.”

“That’s right. They want to fight us once. I think there’s going to be a lot of crying next year.”

It was obvious who would cry.

The vehicles made by WD Automobiles were incomparable to existing cars.

Fortunately, there is little overlap between the vehicles they make, but who knows what the future holds.

“Even though I explained that it was for export, is that why?”

“I think it’s part of a competition for supremacy among conglomerates. This time, they overtook Samjeong to take the title of the nation’s top conglomerate.”

“I heard that our group is the second largest in size, but have we already surpassed Samjeong?

I didn’t know about it because I didn’t pay much attention to Korea.

“I think modernity was pushed to third place, which hurt my pride a lot.”

“Why do Korean companies like lining up so much?”

“Wasn’t the Federation of Korean Industries one of the reasons for the IMF? Since they were competing among themselves, didn’t they try to increase their size by increasing their debt? They were talking about the top five companies or the top ten companies.”

Although the number of companies within the group was small, each and every one of them was a very large company. When Toad acquired Bush Beer, it became the overwhelming number one company in terms of both sales and assets.