Heavy Industries, the world’s largest shipbuilder and general heavy industry company, and Cummins of the U.S., which possesses the world’s best diesel engine technology, have joined forces to invest in Daegu.
Hyundai Heavy Industries, Cummins, and the Daegu-Gyeongbuk Free Economic Zone signed a memorandum of understanding on investment cooperation at Hyundai’s headquarters on September 7. The two companies agreed to construct a high-speed diesel engine plant, on a 78,000 sq. meter property in the Daegu Technopolis, by banking on the world’s best technology owned by the two firms and the superior industrial infrastructure Daegu has to offer.
Hyundai Heavy Industries and Cummins will invest a paid-in capital of US$ 33 million (a combined total of 74.6 billion won) each and establish a 50-50 joint venture firm with projected annual sales of US$ 500 million (565.1 billion won) in Daegu. More than 500 workers will be hired. The joint venture will produce, annually, 50,000 units of high-speed diesel engines for industrial use, with four different classes of displacements between 5900cc - 8900 cc. The firm will start construction of the plant in the second half of this year and will begin production in earnest in 2014.
Hyundai Heavy Industries, which controls 37 percent of the global large-sized engine market, has been producing large- and mid-size engines at its plant in Ulsan for a number of years. The company has seen an urgent need to expand its production faculties due to surging orders. Cummins of the U.S., which has been supplying assembled product models of its own and engine parts to various countries in Europe and Asia, has long been considering the establishment of a joint venture to secure a production base in Northeast Asia and decided to team up with Hyundai Heavy Industries to invest in Daegu.
The investment in Daegu has been made possible because Daegu promoted its excellent industrial infrastructure as a city of highly stable industrial relations with no labor disputes since 2006, as an education city producing more than 17,000 engineering and science majors per year, and as a winner of the national skills trade competition, and because it presented an investment proposal that differentiated itself from other regions.
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