Interview New machines from Doosan place focus on European markets
Doosan has unveiled a radical new design, introduced large machines and aims to double European sales within five years. Jaeyoon Lee, the head of the Doosan Infracore Machine Tool Group, outlined the strategy to ETMM Publisher Ken Fouhy.
ETMM: What are the most important new products for Doosan at EMO?
Jaeyoon Lee: At the Doosan Infracore Machine Tools Fair held in May, we unveiled the Puma SMX, which are being launched in the European markets at the EMO. Featuring a new design, the Puma SMX is a next-generation multitasking machine tool, comprising a turning centre and a machining centre that boasts enhanced productivity and work convenience. Also, with the new exteriors, the Puma SMX delivers a stronger image and enhanced user-convenience. It is an important model because it represents Doosan’s product development direction based on customer and market needs. Furthermore, we have developed the DNM200/5AX and the NHP8000 to target the aerospace industry and the DBC130 II to target the oil and gas markets. We will also develop our compact Y-axis machine, the Lynx 220LSY, and expand our share of the ‘multitasking equipment’ market.
ETMM: Why did you decide to change your machine design with this introduction?
Lee: Since renewing our designs in 2007, we have continued our pursuit of technology, quality and service innovations, thereby enhancing our profile. This effort has required us to reestablish our design philosophy and direction. Our new designs pursue a stable, solid overall appearance and user-friendly ergonomic design features. Our high-end series designs will reflect customer needs and be further advanced. Our general base series designs will pursue practicality and satisfy customer needs while offering differentiated value. For our rollout plans, we will apply the new design to new models beginning in the second half of 2013, and gradually expand the new design. In 2015, we will apply the new design to all our models.
ETMM: How many machines does Doosan plan to sell in Germany this year?
Lee: We posted sales of over €30 million in the German market in 2008, and expect to renew our 2008 German sales peak this year, too. Our products have been highly acclaimed for their quality, reliability, and competitive prices by our German customers, so we intend to further focus on the supply of products equipped with such features. We will bolster our sales capabilities in southern Germany, the area with the largest demand, explore major customers in the automobile industry, and continue to expand our product diversity and boost our Doosan brand publicity campaigns. We aim to more than double our sales within the next five years.
ETMM: What are your targets for the European markets?
Lee: Europe accounts for a 25% share of the total global market and includes such advanced markets as Germany and Italy, and emerging markets such as Eastern Europe and Russia. As such, Europe is a highly attractive market. We have experienced some difficulties in Europe due to the ongoing financial crisis. But we have continued to supply new products, and have bolstered our marketing and sales networks, thus maintaining our growth. As such, we expect to post over €300 million in sales this year, surpassing our 2008 sales peak. Important markets include Italy and the UK, which have the top market shares, Germany and France, both of which have big sales potential, and emerging markets with great growth potential such as Eastern Europe, Russia and Turkey.
ETMM: You have begun to introduce large machines to the European market. What is your approach here?
Lee: Our large machines are developed to suit the needs of European customers, and offer diverse applications appropriate for a wide range of customer needs. We also offer consulting and services through our expert engineers, and we deliver fast. All of this differentiates us from our competitors. From the product development stage, we use the NPD (New Product Development) process and begin by analysing market needs. As such, we have established an environment in which we can develop products tailored to the voices of diverse markets. For example, in line with the needs of the European market, we have developed and upgraded large vertical turning centres (VTS), tailoring them for the aerospace, oil and gas, and large machining job shop markets, and have unveiled VTS in the European markets. Based on the needs of our European customers, we will unveil machines equipped with Siemens’s controllers at EMO. In addition, in order to respond to the demands of Europe’s diverse industries, we have constructed multitasking double-column machining centers. We have also beefed up the large-machine application engineers, and offer counsulting and services tailored to customer needs. To enable fast production, we have constructed short-time delivery systems based on unit modular designs, enabling us to respond quickly to customers’ orders. Our new large-machine plant, which will be constructed in October 2013, will chiefly produce our large machines such as the Ram-type Vertical Turning Center (VTS), the Double Column Machining Center (DCM), and the Horizontal Boring Mill. .
ETMM: In the Machine Tool Scoreboard from Gardner Business Media, Doosan is listed with in 15th place with $1.1 billion in machine tool revenue. Yet you claim that in cutting machines you are already under the top 10 producers. How do you explain this apparent discrepancy?
Lee: The Gardner Scoreboard targets all machine tool manufacturers including metal cutting and metal forming companies, and the data may not be updated according to companies’ situations, which is why we were only ranked 15th in terms of revenue. To derive a clearer and more meaningful ranking, we consider directly related firms, namely, firms which mainly produce our products, such as ‘turning centres and machining centres.’ If possible, we fully reflect the updated data of related firms and compare them on the basis of the same fiscal year. Thus, our 2012 revenue was about $1.28 billion, which ranks 12th among all machine tool manufacturers, and 6th among major TC/MC manufacturers.
ETMM: In your four plants in Korea and China, you claim to have produced 15,000 machines last year. How accurate is this figure? Your business plan foresees production growth up to 23,000 machines in 2016 – where will this production growth take place and more importantly, where will you sell these machines?
Lee: We had already prepared our production capacity, but since the 2008 financial crisis, major markets have been slow to recover, leaving us with surfeit production capacity at present. Our projected production capacity of 23,000 machines in 2016 includes three Korean plants and one Chinese plant. In the emerging markets, we will bolster our product competitiveness in terms of performance, quality and price, and grow accordingly. In Europe and Korea, we will unveil high-value-added products, and provide support solutions, including system solutions, training, and engineering support, thus securing global-top competitiveness and selling products in line with our production capacity.
ETMM: How important is the Chinese market to Doosan and how will this change in the future?
Lee: China comprises a wide range of markets from large, multi-axis, high-priced high-end markets to simple, low-end markets. All world-class suppliers are operating in China – 1,500 metal cutting firms, and 1,500 machine tool firms of various sizes. In addition, due to the ever-rising demand, China accounted for 44% of the global markets as of 2012. As such, we achieved combined sales of $200 million with products produced in both Korea and China. We see China as our second home market after Korea, and hence concentrate our capabilities on that market. In the future, too, China will remain the largest single market in the world, and will accelerate the large, multi-axis, high-priced, high-end markets. Thus, we will expand our production capacity in China, strengthen our system engineering capabilities, secure differentiated customer support capabilities, boost our Chinese lineups, and enhance our quality. In this way we hope to increase our share of the Chinese market two-fold or more within the next five years.
ETMM: A number of years ago you considered establishing production capacity in Europe. What has happened to those plans?
Lee: We have no plans as yet to construct any European plants, but we will review the possibility according to the market situation.