Invest KOREA

An Angel of an Investor, Literally

Engel Korea manufactures plastic and rubber injection moulding machines for Korea and the world

The motto below Engel’s corporate logo is “Be the first.” While this refers to being the first to provide solutions and lead market trends, the motto takes on historic significance in Korea.

In 1997, the Austrian manufacturer of injection moulding and plastics processing machines became the first foreign company to invest in Korea through the Korea Trade-Investment Promotion Agency (KOTRA). The owners of Engel had been considering establishing a branch in Korea, China or Thailand.

“They found that Korea had good infrastructure at the time to produce high-end injection moulding machines compared to other countries, as well as potential customers,” said Lee Seung-Kyu, vice president of Engel Machinery Korea Ltd.

In the last 15 years, Engel Machinery Korea Ltd. has established a factory in Pyeongtaek and four sales/service offices nationwide, increased its product range and experienced growth in sales volume almost every year. It is one of Engel’s five production plants worldwide.

Engel Korea produces plastic and rubber injection moulding machines for the automotive, teletronics, medical, packaging and technical moulding industries, with most of its revenue coming from the first two. The company has grown from producing 64 machines in 2002 to 580 machines in 2011 and a projected 610 this year. Having manufactured five models of products in its early years, today it manufactures more than 13 sizes and types, with machines in the 28-400 ton clamping force range.

Lee attributes this growth to high demand from China in recent years. Exports account for more than 80 percent of Engel Korea’s business while local sales make up the remainder. For the company’s first five to six years, the export-to-sales-volume ratio was 30/70.

Engel Korea’s machines make the plastic and rubber for everything from toothbrushes and mobile phone keypads to TV frames and car dashboards. Main Korean customers include Samsung, Hyundai Mobis, SL Corp. and local high-end suppliers, said Lee. Engel Korea’s factory includes a research and development department that handles how machines can be adjusted according to customer specifications.

Looking back, Lee cites tax benefits, good infrastructure and business potential as the key factors for Engel Korea’s success. For its first capital injection, Engel Korea received a 100 percent corporate tax exemption for seven years and a 50 percent exemption for three years. By good infrastructure, Lee is referring to Korea’s skilled human resources, especially in the manufacturing business. Finally, Engel Korea benefited from the growth potential of major Korean companies, like Samsung and Hyundai, that end up using its machines.

Of course, the journey wasn’t always smooth. In 2010, Engel Korea closed its factory for a total of seven weeks due to sluggish global investments that led to a drastic decline in demand. Sales and profits dropped and employees took a 10 percent pay cut. But no one was laid off and Engel’s head office remained committed to Korea. Fortunately, sales in 2011 reached 54 billion won ($47.3 million), exceeding 2009’s record volume of 42 billion won. Today Engel Korea produces machines to be exported not only to China, but also to Southeast Asian countries including Thailand, Singapore and Indonesia.

“From a geographical point of view, we are a very important country,” said Lee.

Last month, the company began a 20-percent factory expansion that will double its current capacity of 610 machines a year and add machining centers. The expansion is scheduled for completion by December.

With a local workforce, Engel Korea is poised to increase its impact on Pyeongtaek.

“In [terms of] Pyeongtaek’s economy, we are contributing quite significantly,” Lee said.