Tuesday, Feb 11, 2025
logo
Update At 10:00    USD/EUR 0,00  ↑+0        USD/JPY 0,00  ↑+0        USD/KRW 0,00  ↑+0        EUR/JPY 0,00  ↑+0        Crude Oil 0,00  ↑+0        Asia Dow 0,00  ↑+0        TSE 0,00  ↑+0        Japan: Nikkei 225 0,00  ↑+0        S. Korea: KOSPI 0,00  ↑+0        China: Shanghai Composite 0,00  ↑+0        Hong Kong: Hang Seng 0,00  ↑+0        Singapore: Straits Times 0,00  ↑+0        DJIA 0,00  ↑+0        Nasdaq Composite 0,00  ↑+0        S&P 500 0,00  ↑+0        Russell 2000 0,00  ↑+0        Stoxx Euro 50 0,00  ↑+0        Stoxx Europe 600 0,00  ↑+0        Germany: DAX 0,00  ↑+0        UK: FTSE 100 0,00  ↑+0        Spain: IBEX 35 0,00  ↑+0        France: CAC 40 0,00  ↑+0        

POWERMAX’s Strategy to Power the World

Interview - November 15, 2024

POWERMAX Co., Ltd. leverages its expertise in transformers, energy systems, and global partnerships to drive sustainable growth and meet the evolving demands of international markets.

DONGJIN CHANG, PRESIDENT OF POWERMAX CO., LTD.
DONGJIN CHANG | PRESIDENT OF POWERMAX CO., LTD.

In recent years, the Korean market has become overly saturated, with over 70 companies producing heavy equipment and transformers, according to 2020 figures. This situation has pushed Korean companies, in general, to go abroad as markets become increasingly saturated with competitors. Since your company has experience taking your business overseas, can you tell us about some of the challenges and opportunities that overseas expansion brings?

Firstly, that means head-on competition with local competitors, but then, to make things even more challenging, we have to secure price competitiveness and meet the quality or technical specifications of each market we enter. Additionally, depending on the region, geopolitical risks might be involved. As you mentioned, the domestic market became so saturated that we had no choice but to export, so since 2010, we’ve begun exporting to Japan, Southeast Asia, the Middle East, and the US. I think that has given us a window of opportunity because of the current preference for Korean products. This is because of the price competitiveness when compared to advanced economies, and when compared to countries like China and India, for example, the quality is much better with Korean products.

 

When Korean makers enter overseas markets, they are expected to have a similar quality to Japanese products but at a price that is as cost-effective as Chinese products. How do you balance innovative solutions and cost-effectiveness to maintain your competitiveness against foreign counterparts?

Korean companies are investing heavily into technological advancements. I think this will allow us to raise the technical quality while securing price competitiveness.


Substation Power Transformers for USA


In the US there is growing demand for transformers due to their aging grid system. On the other hand, Korean companies have a lot of collaborations with the Middle East and Southeast Asia. How do you adapt and tailor your products to meet the demands of different regions around the world?

In order to answer this question, I think it is pertinent to run you through our company’s history. We were established back in 2000 and our predecessor was called Leechun Electric which specialized in transformers, motors and pumps. Since we have been a key player in the domestic market, we have accumulated know-how and expertise that have been vital in establishing ourselves as a go-to company for customized solutions. Throughout the years we have been able to expand our capabilities, allowing us to tailor our solutions to each region.

 

Your company boasts a large portfolio of transformers, which you use for many different purposes. You’ve also shown an excellent track record of collaboration, working with industry stalwarts like Hitachi, Samsung, TSMC, and many others. Can you tell us some of the key milestones of your company’s history that have brought POWERMAX to the position it holds today? What makes your company unique when compared to some of your competitors?

It has now been about 24 years since the re-establishment of our company, so I don’t think there has been a critical inflection point. However, I would say that the biggest milestone for us was when we began exporting to the global market. Before that we mainly focused on partnering with construction companies here in Korea, but the moment we broke into the overseas market things changed.

Around two to three years ago, demand began growing in the US for outdated transformers. That was really the biggest growth point for our company.

 

A core decision you made in recent years was the expansion of your second factory, increasing POWERMAX’s production capabilities. How do you believe this expansion of your overall production capabilities will help you to respond to the challenging demands of modern day society?

Last year, we completed the expansion of our second factory and that was done in order to meet the persistent demands of the US market. In addition, we are now trying to ramp up our existing factory in order to meet the demands of our foreign customers.

 

POWERMAX has a particular focus on renewable energy. To illustrate this, you have a collaboration with GE for your Two-in-one Photovoltaic Inverter Station, which provides GE with ten megavolt-amperes transformers. Why did GE select you as the partner of choice, and how beneficial are your products for their applications?

While GE is performing well in terms of marketing in the US, they are rather slow in marketing here in Korea for renewable energy projects. I believe we were selected as an ideal strategic partner for marketing because of our long-term record and our extensive client network. With GE being more technologically advanced, our collaboration has mutual benefits for both parties. 

I’m not sure if this answers your question, but since we specialize in transformers, we engaged in the KEPCO’s ESS project when the government initially launched it. We have been able to ride the tide of the renewable energy boom by manufacturing specialized transformers that fit the energy storage system (ESS).


Special Transformers for Energy Storage System


In regards to photovoltaic energy, there is a requirement for long-lasting transformers. Could you tell us more about the advantages of your photovoltaic transformers when compared to your competitors?

All of these elements are very pertinent to renewable energy and we focus on providing consistent energy in order to enhance the efficiency of photovoltaic panels. We have been mainly focused on manufacturing high-efficiency transformers by utilizing high quality materials.

 

In addition to transformers, you are also producing switches and generators, and we saw from our research that you work with Mitsubishi and Volvo. Generators are very useful tools in monitoring energy, but they are often criticized for their use of diesel. What are your expectations for your generator business?

While generators are very important, they also raise a lot of environmental concerns due to their use of diesel fuel. This diesel can be replaced by other gasses or eco-friendly oils, but this depends entirely on the customers’ requirements. We try to provide tailored solutions, so if they want eco-friendly oil, we can replace diesel with that. Basically, we are able to supply based on the customer’s request.

 

Is it true that you also fully assemble the generator sets? Is this business only focused on Korea, or do you plan to export overseas?

Again, we provide tailored solutions, so that really depends on the customer’s request. Based on a request, we can provide either a single unit, a set, or even different components.

In regards to exporting, yes, we do export sometimes. We have exported mostly to Southeast Asian countries like Vietnam, the Philippines.

 

Why are you able to export your generator sets to the Middle East when companies like Volvo and Mitsubishi can work with local partners directly on-site?

The first core reason is because we are supplying Korean companies that are operating overseas. Another case might be in situations where we can directly supply local partners. An example might be in Southeast Asia, where they use price competitive Chinese products. For key sites however, they much prefer Korean products which presents us with an opportunity.

 

POWERMAX has signed a memorandum of understanding (MOU) with Schneider Electric SE, a well-known and respected company. This MOU is for cast resin transformers, which are a great fit for data centers, commercial buildings, and petrochemical facilities, providing them with the right fit and features. Here, we can see that the application of your products has extended from renewable energy devices to other devices such as data centers and facilities. How do you foresee the evolution of your business, and which sectors will drive the growth of your company in the future?

We first collaborated with Schneider Electric SE because they were trying to tap into our extensive distribution network here in Korea while they were trying to launch their cast resin transformers since we are not manufacturing them.

We believe that the biggest growth momentum we can gain is through oil immersed transformers. With these we will be targeting the US as well as the Japanese market.

 

Technology-wise, oil-immersed transformers are a mature market. Earlier, you mentioned using more environmentally friendly materials, and currently, there is a trend to incorporate IoT within transformers to improve efficiency. This will enable improved monitoring and maintenance of the devices. There are also a few other trends. Could you explain more about the uniqueness of your oil-immersed transformers? What is your flagship of megavolt-ampere? Where is your target?

Transformers have been around for 100 years now, so it isn’t a new technology, so it isn’t really easy to differentiate us from other specialized transformer companies. We’ve been able to accumulate technical know-how as a major play in this industry for the last seven decades. What sets us apart from our peers is our edge in optimization design. There is a greater focus on miniaturization and high efficiency.


Korean companies are known to be very nimble in customization, thus they are able to design, produce, and deliver in a very short cycle time. What strategies do you employ in order to ensure that you are nimble and quick to respond to customized needs of your clients?

A focus of ours is what we refer to as “workforce stream,” which explains the transfer of knowledge and expertise from experienced workers who have been in the industry for decades to new hires. We are trying to make this entire process more efficient.

 

COVID-19 was tough on the heavy electrical equipment market, but since 2020, you’ve grown 18%, surpassing your 2019 revenue figures and achieving revenue of USD 40 million. In addition, your company has around 13% operating margin, showing great performance over recent years. Looking at the next three to five years, how do you expect the finances of your company to evolve?

Export sales to the US have driven growth in our company for the last three to four years. We are planning to continue that focus on the US market for the foreseeable future. Fifteen years ago, we began exporting to mainland America. We initially focused on local municipality utilities such as the Los Angeles Department of Water and Power (LADWP). Still, now we have been able to grab the window of opportunity wrought by the COVID-19 pandemic, allowing us to break into investment-owned utilities (IOU), which used to exclude Asian companies. Moving forward, our biggest focus will be on retaining clients that we have secured.

 

Do you envision expanding your customer range, and if so, how do you plan to do so?

Although it provides an opportunity for Korean companies, this trend might be temporary. In order to make this growth trajectory more sustainable, you have to respond proactively. For example, we signed a long-term agreement with a utility company based in Michigan last month. Building upon our track record, we are trying to reach out to other IOUs as well.

 

Considering the trajectory in the US with AI implementation and the replacement of aging equipment, what megatrends do you think will impact the demand for transformers, generators, and switches over the next three to five years?

When talking with our clients, we have discovered that they have their own projections for the future. Their outlook is that until 2040, there will be big investment plans in place, which will increase the demand for transformers. Since electricity consumption from data centers and EVs is continuously growing, we foresee continual increases in the demand for transformers.

 

Do you see the discussed idea of connecting EVs to the power grid as something that could possibly happen in the near future? If so, does this represent an opportunity for your firm?

The concept you mentioned has been the talk of the town for a few years and KEPCO is also pursuing these kinds of projects, so my belief is that this will provide us with opportunities.

 

You mentioned earlier that in your field, it is difficult to differentiate yourselves from your competition. What kind of innovations are you looking at besides IoT as a way to remain competitive in your industry?

You asked about the future of transformers, but as I mentioned earlier, transformers themselves have been around for over a century now. There haven’t been any big or groundbreaking technologies or breakthroughs in a long time, so all of the innovations come from small technological adjustments and modifications. By building expertise around transformers, we can make ourselves more appealing to relevant industrial partners.

 

Imagine that we come back in five years and have this interview all over again. What goals or dreams do you hope to achieve by the time we come back for that new interview?

By then I hope we have moved from the domestic transformer market to the global one which includes the US. This is in order to grab even more market share and earn better brand recognition globally.

 


For more details, explore their website at: http://www.powermax.kr/en/

 

  0 COMMENTS