Hyundai Construction Equipment will invest KRW 200 billion (approx.) in it's Ulsan factory

⏺ Company’s largest investment since its launch as a newly established corporation, capable of producing 15,000 units of construction equipment.
⏺ HCE anticipates profit improvement effects, such as reduction of work hours and logistics costs.
⏺ HCE decided investment according to booming global construction equipment market and plan to develop a construction equipment division within the group.

Hyundai Construction Equipment (HCE) will invest approximately KRW 200 billion in its Ulsan factory, its major production base, in a drive to strengthen its competitiveness in light of the boom in the global construction equipment.

HCE publicly announced its plan to invest KRW 194.1 billion over a period of four years, with the aim of expanding the production capacity and simplifying the manufacturing processes of its Ulsan factory, on Tuesday, December 14. This is HCE’s largest investment since its split from Hyundai Heavy Industries and its launch as a newly established corporation in 2017.

HCE will carry out the investment with the focus on restructuring the production lines, which had become inefficient due to the overall deterioration of the factory, in order to maximize their efficiency and expand the factory’s production capacity of excavators, wheel loaders, and other types of construction equipment.

HCE is planning to merge the construction equipment production and assembly functions dispersed in Factories 1 and 2 into one in Factory 2. The simplification of the flow of the factory’s manufacturing processes is expected to generate profit improvement effects by enabling a reduction of work hours and logistics costs, as well as maximizing efficiency.

As a result, the factory will be reborn with an annual production capacity of over 15,000 units by adding the capability to produce 4,800 pieces of construction equipment. Furthermore, HCE plans to reflect ESG factors, such as the use of eco-friendly sub-materials when conducting interior and exterior finish work, in the factory and to reduce risk factors between work processes by configuring the production lines in a way that further improves workers’ safety.

HCE also expects to increase its market share in each region by effectively responding to the current upward trend of the global construction equipment market by expanding its production capacity with this investment.
In fact, according to Off-Highway Research, a UK research institute specializing in global construction equipment, the sales volume of global construction equipment is forecast to reach 1.08 million units per year by 2025, showing a continuous economic boom. Notably, as the US recently made official its launch of the ‘Build Back Better World (B3W)’ initiative for developing countries, HCE is looking forward to expanding the new market.

HCE confirmed its decision after six months of close examinations related with the favorable conditions of the global construction equipment market and its plan to develop a construction equipment business within the group.

Last May, Hyundai Heavy Industries Group appointed Vice-President Choi Cheol-gon, a production expert in the area of construction equipment, as the head of the Global Production Innovation Center, and entrusted him with the task of reviewing the measures for maximizing the production efficiency of the Ulsan factory. Last month, Vice-President Choi, currently the CEO of HCE, declared the urgent necessity of improving the efficiency of Ulsan factory and set out to execute the plan to create synergy by competing in good faith with Hyundai Doosan Infracore.

CEO Choi Cheol-gon said, “Strengthening the competitiveness of the Ulsan factory is the first challenge that needs to be addressed to reach the global top 5, the goal of the construction equipment division of the Hyundai Heavy Industries group. With this investment, we will further raise our brand competitiveness by producing and delivering construction equipment with increased efficiency.”

Meanwhile, last November, HCE completed the construction of a technology innovation center for a total investment of KRW 77 billion. The new center, which consists of sixteen laboratories employing around 100 researchers, will execute research & development projects focused on eco-friendly technologies, high efficiency & noise reduction technologies, and a virtual verification system, while comprehensively performing quality research and verification ranging from parts to completed equipment. HCE will not spare any investments to make sure the company takes a leap to become a global top tier company with efforts like completing the quality assurance center for verifying the reliability of parts (June 2021), and remodeling the global training center for developing excellent human resources (June 2021).