As a specialist in color-coated steel sheets, BN Steela has served the South Korean market by delivering high-quality surfaces, contributing to South Korea’s dominance in the premium consumer market.
Many Korean SMEs are prompt to expand internationally. However, they often found themselves positions between two competitive forces: established economies and emerging economies. What are some of the key advantages that allow Korean companies to maintain a strong global market share despite these challenges?
The strength of Korean SMEs lies in their agility and adaptability. Unlike larger corporations, Korean SMEs benefit from streamlined internal processes that enable them to make quick, strategic decisions, whether related to investments, R&D, or other critical areas. This nimbleness allows them to respond swiftly to market demands and changing conditions. Their ability to innovate and adapt in real-time is a significant factor in maintaining their competitiveness on the global stage.
The steel industry is affected by stringent trade policies and measures that reshaped the global dynamics. While the market continues to grow, the landscape has undeniably shifted. What is your perspective on the opportunities for Korean companies in the next three to five years?
The primary aim of tariffs and quotas is to protect domestic industries, but they also create significant hurdles for exporters like us. With President Trump now reelected, it’s likely we’ll see an increase in such measures, especially in the steel sector. In this context, the only viable solution is to leverage cutting-edge technology and demonstrate to consumers that our products are superior in quality.
Tariffs and quotas are government-imposed challenges, and as a company, we have limited influence over them. Addressing these issues requires coordinated government action. Our role is to focus on delivering exceptional products by listening to customer needs, integrating their feedback, and continuously improving our offerings. While we can’t devise specific countermeasures to eliminate the barriers of tariffs and quotas, we can ensure our products remain the best in the market, solidifying our reputation and competitiveness globally.
In your first response, you emphasized the agility of Korean suppliers as a key competitive advantage. Do you believe that this adaptability will be the critical factor enabling BN Steela to overcome regulatory challenges and capture greater market share?
Absolutely. The agility and adaptability of Korean SMEs like BN Steela are essential for navigating complex and ever-changing markets. Even with tariffs imposed by the U.S. to protect its domestic industries, there are always ways to find opportunities. One strategy is to focus on producing specialized components and parts that are not easily manufactured in local markets.
For instance, BN Steela produces essential parts and components that are critical for the production of finished goods. Many manufacturers in the U.S. depend on our products because they cannot make their finished goods without them. This dependency could lead to calls for tariff exemptions, as our components are indispensable to the supply chain. To maintain this edge, we are committed to advancing our R&D capabilities and developing innovative solutions tailored to market needs.
You mentioned a range of products that cater to niche markets, particularly those where local producers in Europe or the U.S. lack capabilities. Could you elaborate on the specific products you are referring to?
Many of our steel sheets are highly specialized products, such as VCM (Vinyl Coated Metal) and PCM (Pre-Coated Metal). These materials are integral to certain industries. For example, domestic home appliance companies which have invested heavily in the U.S. home appliance market, cannot source the parts and components within the U.S. As a result, they must import these specialized products from Korea.
Similarly, in Europe, there is no local production capability for certain types of color steel sheets, making imports from Korea essential. While the steel industry as a whole is vast, the markets for niche products like VCM and PCM are relatively small. This limited scale often discourages large corporations from entering these segments, which creates an opportunity for SMEs like BN Steela to thrive.
In 2022, during the post-COVID era, the home appliance market experienced a significant downturn, with home appliance companies seeing a notable drop in operating profits. However, the market rebounded last year and has shown further improvement this year, particularly driven by millennials' preference for premium, high-quality products. How do you see the home appliance market evolving, and which region do you believe holds the most potential to capitalize on this new wave?
I believe India is currently the most promising market in the world. While some regions in the Americas also show potential, challenges like currency settlement issues make it difficult for us to fully enter those markets. India, on the other hand, offers vast opportunities due to its growing consumer base and increasing demand for premium products.
When you mention India, are you referring to entering the market through partnerships with Indian corporations operating factories in India, or through international corporations with factories there? Which approach do you find more challenging?
We’ve been working in India for nearly 20 years through our agency network. Supplying our products to the Indian market requires more than just steel sheets; it also involves PVC films and other relevant components. Investing directly in India is not straightforward because the local quality standards for steel and related materials often don’t align with our requirements.
Our strategy involves manufacturing our products and shipping them to our Indian manufacturing and distribution centers. Unlike large corporations, we’re not in a position to make significant investments in building factories in India. Instead, we rely on our agents and a differentiated approach to penetrate the market.
To succeed, we focus on producing higher-quality products than local competitors. However, this isn’t an industry where success can be achieved solely through investment. It requires collaboration with various related industries and stakeholders. Establishing a foothold in India is a complex process, but our strategy is built on delivering superior quality and leveraging partnerships to overcome these challenges.
Established in 1989, BN Steela specializes in high-quality color steel sheets for home appliances, shipbuilding, and industrial equipment. The company has collaborated with major home appliance manufacturers. Could you describe the company’s current position and its ambitions for the future?
Since COVID-19, we’ve faced both ups and downs in the industry. The past two years, in particular, have been challenging, not only for our company but also for our competitors across the sector. Looking ahead, I don’t foresee significant growth in demand next year or even in the years to come. Uncertainty continues to cloud the industry’s outlook, which has put us in a difficult position with sluggish revenues.
As a result, we’ve shifted our focus toward improving operating profits rather than prioritizing revenue growth. This approach has been our key strategy for this year and will likely remain so next year. The market is highly competitive, with limited growth opportunities. Given these circumstances, we are concentrating on R&D and introducing innovative products to enhance profitability and maintain our competitiveness.
Recently, you invested in your Noksan factory, focusing on your PCM lineup, and implemented automation systems for better process control and data collection. Does this investment align with your current focus on maximizing operating profits and accelerating the launch of new products?
Absolutely. Automating our processes serves two key purposes: boosting operating profits and enabling faster market launches for new products. Another important factor behind this decision was the significant changes to Korea’s labor laws on workplace safety introduced last year. These changes impose strict penalties on companies in the event of industrial incidents or accidents. To address this, we’ve prioritized automation to minimize risks and ensure compliance.
Moreover, small businesses like ours face challenges in hiring new employees compared to larger corporations. Automation helps us overcome this by improving efficiency, enabling preemptive maintenance, and enhancing data collection for smarter operations.
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We’ve also benefited from government support for automation and AI-driven projects, which has made this initiative more sustainable. Our investment in automation is not a one-off effort but part of a broader, multi-year plan. Our current three-year project is ongoing, and we have outlined additional follow-up projects to qualify for future government funding. This continuous investment in automation and AI will allow us to adapt to changing industry dynamics while maintaining a competitive edge.
How do you envision automation and the implementation of AI benefiting your production capabilities, management efficiency, and overall competitiveness? If BN Steela is selected for further investment, would this initiative extend for three to five years or longer?
There are two primary benefits of investing in automation and AI. The first is an improvement in cost competitiveness, and the second is enhanced worker safety. These advantages make automation and AI pivotal to our strategy, and that’s why I am prioritizing investments in this area.
To elaborate on worker safety, certain tasks that were once performed entirely manually can now be automated, reducing worker fatigue and the physical demands of their roles. This not only improves safety conditions but also enhances productivity. By introducing automation and AI, we can create a more efficient production process while ensuring employees work in a healthier and safer environment. In the long run, these advancements are interconnected, leading to cost savings, increased productivity, and a better overall working environment.
BN Steela is part of Korea’s BN Group, which comprises 13 subsidiaries with a strong focus on the shipbuilding industry. In addition to your role as CEO of BN Steela, you also oversee BN Steel Chemical, an industrial paint specialist, and BN Bipex. What synergies does BN Steela create within the group? Additionally, how does the group’s strong emphasis on shipbuilding influence your efforts to expand?
Shipbuilding has been the cornerstone of our group since its inception. BN Group began as a shipbuilding manufacturer in 1978, with BN Steela established in 1989, BN Bipex in 2006, and BN Steel Chemical in 2011. BN Steela specializes in color steel sheets and related components for the shipbuilding industry.
Initially, the group relied on external suppliers for these components, which impacted our overall competitiveness and operating margins. To address this, we decided to bring these operations in-house. This led to the creation of BN Bipex for transportation services and BN Steel Chemical for specialized paints tailored to the needs of shipbuilders. BN Steel Chemical’s anti-fouling paint, in particular was developed in collaboration with Busan University, reflecting our commitment to innovation and partnerships.
These companies were not established in isolation but rather in response to specific business needs within the shipbuilding sector. This interconnectedness allows us to maintain streamlined internal processes for technology development and cost optimization, strengthening the group’s overall competitiveness.
For example, BN Steel Chemical was established to produce PCM and BN Steela for VCM sheets, which are integral to our operations. This synergy enables the group to produce high-quality, cost-effective components internally, reinforcing our leadership in the shipbuilding industry while paving the way for expansion into other markets.
Today, many of your customers in Korea include major players. Internationally, you work with companies such as Haier, Electrolux, and Hitachi. You’ve diversified significantly away from shipbuilding. How is the business landscape today? What prompted this diversification, and what percentage of your total revenue comes from home appliances?
We have focused on markets where large corporations face challenges entering due to their scale or operational structure. Currently, shipbuilding accounts for approximately 5% of our revenues, while home appliances contribute the remaining 95%, with LG representing about 40% and Samsung around 10% of our business.
Over the years, we’ve supplied many global companies. However, we’ve lost some market share to Chinese competitors. Our production capacity is relatively smaller compared to larger corporations, which have achieved economies of scale through their significant production capabilities.
To remain competitive, we concentrate on advancing our technology to stay at the cutting edge of the industry. Our strategy revolves around maintaining nimbleness, adaptability, and the trust we’ve built with our customers over the years. These factors are key to increasing our market share despite the competitive landscape.
Your current objective appears to be focusing on operational profitability by reducing costs and increasing product value. What is your strategy for achieving this? Will you focus on growing market share within your existing client base, or do you aim to diversify by winning back former customers and building new partnerships?
The second strategy—diversifying and gaining new customers—is far more important for our long-term growth. While we’ve maintained strong, enduring partnerships with our existing clients, which we are confident will continue, our primary goal is to expand into new markets and build relationships with new customers.
We plan to put significant effort into establishing these new connections by visiting potential clients in person to introduce our products and explore opportunities. Developing a new client relationship is a gradual process—it can take anywhere from six months to a year, moving from prototype development to actual production.
A single meeting rarely guarantees a successful partnership. It requires consistent follow-up and a series of discussions to align on needs and expectations. We are committed to investing time and effort into these interactions to open new markets, foster trust, and ultimately grow our business.
If there are specific regions where you believe the greatest opportunities lie, where would they be? Would it be Europe, or are you focused more on Asia?
As I mentioned earlier, India and Central and South America present the greatest opportunities for us. While I can’t disclose specific company names at the moment, our team is currently in discussions with potential partners in these regions.
In Europe, we don’t work directly with many local companies, but we do export our parts and components to Poland, where subsidiaries of domestic home appliance companies operate. Previously, we also exported to Russia. However, following the withdrawal of those domestic home appliance companies due to the conflict in Ukraine, that market has been closed to us. We are hopeful that after the war ends, new opportunities will arise in the region.
Meanwhile, we are actively seeking to expand in Central America, where we see a lot of untapped potential. We believe these markets will play an essential role in our growth strategy moving forward.
Let’s imagine we return in a few years for the 40th anniversary of BN Steela. What would you like to reflect on as CEO at that time?
This company holds a very special place in my heart, as it was my first workplace when I started my career in 1993. I joined as an entry-level employee, stayed until 2007, moved to another company for a period, and then returned to BN Steela in 2022. Returning here feels like coming full circle, and it’s deeply meaningful for me.
My initial vision upon returning was to introduce new equipment, expand into global markets, and achieve 300 billion KRW in annual revenue. However, the challenges brought by COVID-19 and a sluggish market made that goal extremely difficult to achieve.
Looking ahead, it’s hard to predict what the next 10 years will hold, but one thing I am certain about is my commitment to the well-being of our employees. Although our company is relatively small, it has a strong market presence and reputation. However, I’m aware that our salaries and benefits don’t match those of larger corporations.
My priority is to grow the company in a way that allows us to improve these conditions. Our employees work incredibly hard, often going above and beyond, and they deserve better. By driving growth and profitability, I hope to enhance their salaries and provide more meaningful perks and benefits.
At the 40th anniversary, I’d like to look back and say that we not only achieved greater market success but also became a company where employees feel truly valued and rewarded for their dedication.
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