Seohan ENP Prepare Next-Gen Forging Technology

In Korea’s domestic market, increasing saturation has made it difficult to gain new market share. Experts now suggest that this could be the ideal time for Korean companies to consider exporting, especially with regulations promoting onshoring and supply chain restructuring—factors that could benefit Korean companies. Do you agree that this is a favorable time for small and medium-sized enterprises to diversify and internationalize? What do you see as the primary challenges and opportunities for these SMEs when operating abroad?

I agree with this perspective. As you mentioned, recent legislation like the Inflation Reduction Act and the CHIPS Act has spurred Korean multinationals—SK, Samsung, LG, and Hyundai—to expand globally, and Korean SMEs are also seizing opportunities to enter the global market and build new ecosystems. With the domestic market reaching saturation, it has become essential for SMEs to pursue growth overseas. However, at Seohan ENP, we approach this expansion somewhat differently. Our clients, including industry leaders like Hyundai Heavy Industries, Samsung Heavy Industries, and Hanwha Ocean, are globally recognized in shipbuilding, and we are a trusted supplier for them. As they expand internationally, often driven by onshoring policies, we aim to follow their lead and support their growth in new markets.

The wind power sector, however, presents unique challenges. Europe and the U.S. lead in wind power, with many projects centered in those regions, while suppliers in Mexico and Spain serve these areas efficiently, thanks to lower logistics costs. Some of our competitors are also based there. To compete, we see potential in expanding to Mexico or Europe, where wind projects are proliferating. Our specialized production technologies and capabilities position us to meet our clients' cost requirements, so in near future, we anticipate exploring this expansion into Europe or Mexico.

Currently, over 50% of global shipbuilding occurs in China, creating a strong dependency for Europe and the U.S. on Chinese ship production. Some investments and agreements are underway in the U.S. to bolster and possibly revitalize its own shipbuilding sector. With China, Korea, and Japan as the main powerhouses in shipbuilding, do you foresee diversification in the future? Do you believe this shift would be a short- or long-term plan? How do you view overseas opportunities in the shipbuilding industry?

We consistently monitor trends and developments in the shipbuilding sector, particularly the growth of Chinese companies. Our R&D team has studied Chinese components and parts suppliers closely, assessing whether we can remain competitive against them. We found that Chinese companies benefit from lower labor costs, cost-efficient materials, and expansive land for large-scale, efficient operations. These factors present significant challenges for us, and we are continuously evaluating ways to address them. I don’t think onshoring or diversifying alone will resolve these challenges.

On the other hand, Korea’s top three heavy industries—Hyundai, Hanwha, and Samsung—are actively developing green engine technologies in response to global eco-friendly policies, and they have secured demand for the next three to five years. We’re aligned with this approach, working closely with our clients and advancing our own proprietary technology to stay competitive.

Seohan ENP was founded in 2008, with all founding members bringing expertise from Korea Movenex, our parent company, which has 35 years of forging technology experience. Together with Seohan ENP’s 15 years of expertise, this gives us a robust 50-year foundation in forging technology, enabling us to deliver high-quality, reliable products that stand out against Chinese competition. So, while there are considerable opportunities to diversify, particularly due to recent onshoring policies, we believe our priority right now is to reinforce customer trust through quality.

One of the strengths of Korean companies is their ability to tailor products and respond quickly to customer demands. On top of this, Korean companies excel in integrating automation, AI, and other digital technologies, which enhances this agility. Do you believe advancements in these technologies present an opportunity for you to compete with Chinese companies and more established firms from Germany and Japan?

I fully agree. Before joining Seohan ENP, I served as CEO of another large manufacturing company, where I successfully led a project to digitalize manufacturing and production processes, significantly improving both efficiency and quality. Today, leveraging digital systems to enhance production capabilities is a necessity across industries. At Seohan ENP, our equipment handles massive loads of raw materials, such as 20 to 50 tons of ingots, which we heat and move with heavy cranes. This entire process requires robust machinery. We are currently exploring how AI can be incorporated to optimize this workflow, and I believe that AI integration will be essential to remain competitive. To support this, we are analyzing data from each piece of equipment, investigating digital solutions to advance our production capabilities.

Additionally, in the shipbuilding industry, companies like MAN ES in Germany and WinGD in Switzerland specialize in engine design, holding key technologies for ship engines. Engine builders, such as Hyundai Heavy Industries in Korea and Mitsui in Japan, use these designs to manufacture engines. In the production of low-speed engine parts, for example, processes are largely standardized. Typically, raw material is forged, processed, and manufactured in stages. The steelmaking process alone can take 30 to 40 days. However, at Seohan ENP, we keep slabs, ingots, and other raw materials on hand, reducing lead times and accelerating production—a significant competitive advantage for us.

We also maintain partnerships in countries like Korea, the U.S., Japan, and China, and we closely monitor how our products are used by clients. Regarding AI, our goal is to implement technology that can scan specific machinery and predict required parts, enabling more proactive maintenance and enhanced operational efficiency.

Most companies implementing AI today focus on quality checks. From your explanation, it seems you aim to extend AI integration beyond quality control to include processing operations and the machinery itself, connecting the entire system. How long do you expect this development to take for your shipbuilding or wind turbine segments?

Currently, data processing is managed in separate stages, and we haven’t yet fully integrated the entire process. Integrating all data across operations is a complex challenge, and at this stage, it’s difficult to predict how many years this will take to achieve.

The U.S. excel in military shipbuilding and are strong in smaller commercial or specialty vessels, while Europe is known for its cruise ships. Meanwhile, Asia is recognized for large commercial vessels. Looking at the U.S. and EU markets, which segments of shipbuilding do you think will drive growth for your sector? And do you believe green engines will also contribute to growth as shipyards adapt to more stringent regulations?

We are focused primarily on large-scale engines. Korean shipbuilders typically concentrate on large vessels, while Europe emphasizes cruise ships and the U.S. focuses on specialty vessels. Our specialization is in engines for large vessels, specifically in the 50 to 100 bore range, with a focus on 60 to 95 bore. We have developed unique technology in this area, and rather than diversifying our portfolio, our strategic goal is to become the best in this segment.

You mentioned that, combining Seohan ENP and its parent company, you have 50 years of expertise, but you yourself assumed leadership more recently. What is your vision for the company moving forward?

Our business goal for 2024 is to strengthen our capabilities and ensure sustainable growth. As a forging company, we primarily work with free forging, but we also use die molding and open die technology, leveraging both methods. Our overarching vision is to become the most trusted forging company in Korea.

In 2014, we achieved supplier certifications from companies like Vestas, GE, SGRE (Formerly Siemens and Gamesa), which has been instrumental in establishing us as a competitive player. To secure a strong position in the wind power sector, we invested in developing a large ring with a diameter of up to nine meters in 2020. By 2030, we aim to rival other industry leaders. In summary, our goal is to become both the most trusted name in forging technology and a top global supplier for the wind power industry.

Seohan ENP is part of the Seohan Group, a prominent domestic group in the automotive and forging components industry, with subsidiaries like Korea Movenex and Seohan Innobility. How does Seohan ENP fit within the group, and what synergies do you create with other subsidiaries?

Seohan Group includes several sectors, such as automotive parts, with affiliates like Korea Movenex, Seohan Innobility, Kamtec, and Emtes, which work in alignment to leverage shared technologies. For example, as technology shifted from internal combustion engines to EVs, these companies evolved together, creating significant synergies.

Seohan ENP, however, has a unique origin. Established in 2008, we were primarily responding to the rapidly growing demand for shipbuilding. Hyundai Heavy Industries approached us to provide forging technology for their heavy machinery due to the expertise developed within the Seohan Group. This is why Seohan ENP operates somewhat independently. We maintain our own client base, markets, and a distinctive technology focus. I believe we will continue to operate autonomously, with our own strategies, well into the future.

Currently, you’re developing tower rings for wind turbines. How do you plan to differentiate from your competitors? Could you outline your product development and supply chain strategies to achieve the competitiveness you envision?

The wind power industry is increasingly focusing on greener energy, with projected growth at 19%. However, due to rising raw material costs and inflation, many wind power projects are currently delayed, and this trend may continue into 2025-2026. Despite this, global green policies are pushing the development of larger and more efficient wind turbines. The largest turbines now generate 15 MW, and one company has announced plans for a 17 MW turbine by 2027, with a 10-meter ring diameter and a tower height of 250 meters. As ring sizes increase, so do capacity and efficiency, but this also requires substantial changes across the wind power ecosystem, from manufacturing to transportation and installation. A breakthrough in just one component isn’t enough; an entire integrated system is necessary. We expect our 9-meter ring capacity to meet market demand through 2030. For true competitiveness, simply producing a tower ring isn’t sufficient; we aim to provide end-to-end production from forging to processing, ensuring consistent quality and reliability for our clients.

Furthermore, there are two primary segments in wind power: onshore and offshore. For offshore wind power, the foundation is underwater, and traditional European companies are major leaders in this market. However, we have a proven track record and our investment strategy is aligned with the development directions of leading turbine makers like Vestas and SGRE. We monitor the major turbine makers and developers closely, and if they shift towards larger turbines, we will follow suit. For now, the current turbine size is competitive.

A key strength is our close collaboration with clients in part development. We maintain frequent consultations, working hand in hand to develop products tailored to their needs. This partnership-driven approach is one of our strongest competitive edges.

You mentioned that the wind turbine industry is currently somewhat sluggish, but there’s still considerable growth potential for both offshore and onshore segments. New wind turbine projects are planned well in advance based on available technology, and major wind turbine manufacturers are already working on the next generation of turbines. How crucial is it for you to collaborate with major players now to prepare for future demand?

In the industry, power generation companies, developers, turbine manufacturers, and tower suppliers form a tightly interconnected ecosystem. Since our tower rings are integrated into the towers, we must maintain close collaboration with tower suppliers to ensure seamless integration. Each component we supply to our major turbine clients like Vestas is critical, and trust is essential. Over time, we’ve built a solid reputation as a long-term supplier, which is reinforced through our diverse range of supply contracts with Vestas, GE, and SGRE.

For instance, we’re supplying parts for an offshore wind power project in Virginia in the United States, which has laid the groundwork for future long-term agreements. This project demonstrates our ability to support large-scale wind power projects abroad, solidifying our presence in the industry and positioning us for continued collaboration with leading turbine manufacturers.

The international market represents a significant opportunity for you, especially as you build partnerships with major players. Where do you see the primary growth coming from for Seohan ENP? Are there specific regions or projects that align well with your portfolio, business model, and current capabilities?

Both offshore and onshore wind power rely on towers to generate energy, and key customers such as Vestas, GE, and SGRE are integral to this space. Our approach centers on co-development and sustainable growth with these companies. By supplying high-quality products and maintaining long-term relationships, we can foster mutual growth. But to achieve this, we must continually strengthen our capabilities and technology. This is why these major players have visited our facilities to assess our quality control systems, technological expertise, and production capacity. We take our relationships with those major turbine companies very seriously and see them as critical to our future growth.

Over the last three years, Seohan ENP's revenue has grown significantly, reaching 246 billion KRW, reflecting a strong recovery from the pandemic and achieving a healthy operating margin of 12.5%. With the shipbuilding and wind power industries each representing 40% of your business, how do you envision the future growth of the company? Which division do you see driving growth over the next three to five years?

Our recent revenue growth can be attributed to several key factors. First, we had the technological foundations in place to meet evolving market demands. Second, while quality is a baseline requirement in industries like wind power and shipbuilding, cost competitiveness is crucial. This means that we continually strive to reduce costs, which is challenging but essential. In 2007, we pioneered a co-developed material with POSCO using slabs, patented it, and used it to significantly expand our market share in shipbuilding. Lastly, global demand is increasingly driven by eco-friendly requirements. The International Maritime Organization’s goal of achieving net zero emissions by 2050 means new vessels will need to be more energy efficient, while older vessels may require retrofitting with green engines to meet port entry standards. This shift creates a growing demand for green engines, aligning well with our technological expertise and paving the way for substantial revenue growth.

Looking ahead, our plan is to develop and manufacture vessel engines that align with shipbuilders’ long-term orders over the next three to five years, fostering mutual growth. In wind power, our established production capacity and proven track record support sustainable growth with our clients, and this will also be a primary driver of our growth.

As for building trust with our clients, quality is our strongest competitive advantage. We hold a range of certifications from global institutions, including those in Germany, France, Italy, China, Russia, Japan, and Korea. A particularly noteworthy certification is KOLAS, an international quality standard that allows us to conduct our own quality inspections. This certification reduces costs substantially, further strengthening our competitive edge.

If there was one takeaway you’d like readers to have after reading this report, what would it be?

I've worked with various large companies, and when I first joined Seohan ENP, the revenue was about one-tenth of my previous company’s. Naturally, I was concerned. However, once I was here, I noticed several things that truly set Seohan ENP apart. First, we have a secure and reliable system in place. Second, our engineers demonstrate a level of professionalism that is exceptional. And third, every individual here is deeply passionate about their work. Seohan ENP is built on a solid foundation.

While we operate in the parts sector, which is at the base of the shipbuilding, wind power, and other industries, we are the essential stepping stones that enable these industries to function. Without quality parts, engines won’t run, and towers won’t stand. I remind all our employees to take pride in our work and to always deliver the highest quality to our customers.

To industry leaders and partners, Seohan ENP exemplifies how a company can succeed by specializing in a single area—our expertise in forging. And finally, a belief I hold close is, “God helps those who help themselves.”

For more details, explore their website at: http://www.seohan.com/_ENG/