[Asian Steel Watch] Vol.1(2016.1) Featured Articles Korea's Next Big Manufacturing Leap: Innovation Based on Culture, Creative Workforce, and Technology

1. Vol.01 January 2016 7372 Asian Steel Watch
Concerns are mounting over Korea’s manufactur-
ing sector. Growth continues to taper, and profits
keep falling. This is due largely to the sluggish
global economy, which is struggling to recover,
and to Korea being nudged out by its rivals, Chi-
na and Japan. Hence, Korea is described as being
sandwiched between its two neighbors. China is
rapidly catching up with Korea in major manu-
facturing sectors, including automobiles, steel,
and smartphones. Japan’s price competitiveness
has improved thanks to the weak yen—a corner-
stone of Abenomics. The Korean government and
companies agree that manufacturing is in crisis.
Manufacturing demands our keen attention
because it still accounts for the lion’s share of Ko-
rea’s economy.
After the share of manu-
facturing in Korea’s
GDP surpassed 20% in
the 1990s, it contin-
ued to rise to 29% in
2014. After the 2008
financial crisis, the share began to grow again,
and led a rapid economic recovery. Korea has the
largest share of manufacturing in GDP among
OECD member countries, and the second largest
share in the world after China. Meanwhile, the
manufacturing sector’s contribution to economic
growth, which was 29.8% in the 1980s, rose
steadily each year, reaching an average of 43.9%
Manufacturing is
still a pillar of Korea’s
economic growth
from 2010 to 2014. Given that its share of GDP is
29%, manufacturing’s contribution to economic
growth is relatively high. Generally, the more
advanced a country becomes, the larger the share
of the service sector grows. However, in Korea’s
case, the share of manufacturing is still huge and
its effect on economic growth is high. In terms of
operating profit margin by industry, manufactur-
ing is 1.5 times higher than the service sector.
It is fair to say that a
crisis in manufacturing
equals a crisis for the
entire Korean economy.
The all-important manu-
facturing sector is facing
three major challenges.
First, slow global economic growth is persist-
ing, and oversupply in major manufacturing
sectors is worsening. Korea highly depends on
the global economy, with an export-to-GDP ratio
of nearly 50%. Therefore, prolonged global eco-
nomic slowdown aggravates oversupply in major
manufacturing sectors. For example, the global
automobile industry is suffering from a supply
glut of 30%, with automobile production capacity
reaching 112.8 million units in 2014, but global
consumption standing at 83.8 million units. The
global steel industry is also suffering from 600
million tonnes of oversupply, with 2.24 billion
tonnes of global crude steel production capac-
ity and 1.66 billion tonnes of consumption. This
naturally leads to price decline. Oversupply is a
serious structural problem that cannot be solved
in the short term.
Second, Korea is sandwiched between China
and Japan. Bolstered by the weak yen, Japan’s ex-
port competitiveness has increased significantly,
and China is rapidly catching up with Korea. In
2014, China had 1,431 export items that were
global best-sellers, leading all countries, while Ko-
rea had only 63 such items. Korea’s manufactur-
ing competitiveness continues to decline. Accord-
ing to the U.S. Council on Competitiveness, Korea
slipped to fifth place in manufacturing competi-
tiveness in 2013, from third place in 2010, and is
Korea’s Next Big Manufacturing Leap:
Innovation Based on Culture,
Creative Workforce, and Technology
Dr. Park, Hyun-sung
Senior Principal Researcher
POSCO Research Institute
handsome@posri.re.kr
Major challenges
facing Korea’s
manufacturing
Featured Articles
Agriculture & Fishery
Manufacturing
Construction/Utility
Service
Other
1980 1990 2000 2010 2014
7.0 9.7 10.6 9.5 9.5
55.6 54.1 55.4 53.6 53.5
12.0 12.2 7.9
6.7 5.9
17.0 19.3 23.0 28.0 29.1
8.3 4.7
20.0
9.1
3.4 1.0 0.9 0.5
28.7
34.1
29.8 30.6
36.6
43.9
9.0
6.1
8.9 7.6
5.4
33.8
37.4
46.2 51.3 49.9 47.1
8.3 13.0 11.7 9.5 7.9 10.2
1960's 1970's 1980's 1990's 2000's 2010-2014
(%)
8.8 10.5 8.8 7.2 4.7 3.7 GDP Growth (%)
Other
Service
Construction/Utility
Manufacturing
Agriculture & Fishery
Source : Bank of Korea
Figure 2. Industrial Contribution to Korean Economic Growth
Figure 1. Changes in Korea's Industrial Structure (GDP Share)
Source : Bank of Korea
2.03.0 2.2
Korea’s Next Big Manufacturing Leap
(%)
-1.6

2. Vol.01 January 2016 7372 Asian Steel Watch
Concerns are mounting over Korea’s manufactur-
ing sector. Growth continues to taper, and profits
keep falling. This is due largely to the sluggish
global economy, which is struggling to recover,
and to Korea being nudged out by its rivals, Chi-
na and Japan. Hence, Korea is described as being
sandwiched between its two neighbors. China is
rapidly catching up with Korea in major manu-
facturing sectors, including automobiles, steel,
and smartphones. Japan’s price competitiveness
has improved thanks to the weak yen—a corner-
stone of Abenomics. The Korean government and
companies agree that manufacturing is in crisis.
Manufacturing demands our keen attention
because it still accounts for the lion’s share of Ko-
rea’s economy.
After the share of manu-
facturing in Korea’s
GDP surpassed 20% in
the 1990s, it contin-
ued to rise to 29% in
2014. After the 2008
financial crisis, the share began to grow again,
and led a rapid economic recovery. Korea has the
largest share of manufacturing in GDP among
OECD member countries, and the second largest
share in the world after China. Meanwhile, the
manufacturing sector’s contribution to economic
growth, which was 29.8% in the 1980s, rose
steadily each year, reaching an average of 43.9%
Manufacturing is
still a pillar of Korea’s
economic growth
from 2010 to 2014. Given that its share of GDP is
29%, manufacturing’s contribution to economic
growth is relatively high. Generally, the more
advanced a country becomes, the larger the share
of the service sector grows. However, in Korea’s
case, the share of manufacturing is still huge and
its effect on economic growth is high. In terms of
operating profit margin by industry, manufactur-
ing is 1.5 times higher than the service sector.
It is fair to say that a
crisis in manufacturing
equals a crisis for the
entire Korean economy.
The all-important manu-
facturing sector is facing
three major challenges.
First, slow global economic growth is persist-
ing, and oversupply in major manufacturing
sectors is worsening. Korea highly depends on
the global economy, with an export-to-GDP ratio
of nearly 50%. Therefore, prolonged global eco-
nomic slowdown aggravates oversupply in major
manufacturing sectors. For example, the global
automobile industry is suffering from a supply
glut of 30%, with automobile production capacity
reaching 112.8 million units in 2014, but global
consumption standing at 83.8 million units. The
global steel industry is also suffering from 600
million tonnes of oversupply, with 2.24 billion
tonnes of global crude steel production capac-
ity and 1.66 billion tonnes of consumption. This
naturally leads to price decline. Oversupply is a
serious structural problem that cannot be solved
in the short term.
Second, Korea is sandwiched between China
and Japan. Bolstered by the weak yen, Japan’s ex-
port competitiveness has increased significantly,
and China is rapidly catching up with Korea. In
2014, China had 1,431 export items that were
global best-sellers, leading all countries, while Ko-
rea had only 63 such items. Korea’s manufactur-
ing competitiveness continues to decline. Accord-
ing to the U.S. Council on Competitiveness, Korea
slipped to fifth place in manufacturing competi-
tiveness in 2013, from third place in 2010, and is
Korea’s Next Big Manufacturing Leap:
Innovation Based on Culture,
Creative Workforce, and Technology
Dr. Park, Hyun-sung
Senior Principal Researcher
POSCO Research Institute
handsome@posri.re.kr
Major challenges
facing Korea’s
manufacturing
Featured Articles
Agriculture & Fishery
Manufacturing
Construction/Utility
Service
Other
1980 1990 2000 2010 2014
7.0 9.7 10.6 9.5 9.5
55.6 54.1 55.4 53.6 53.5
12.0 12.2 7.9
6.7 5.9
17.0 19.3 23.0 28.0 29.1
8.3 4.7
20.0
9.1
3.4 1.0 0.9 0.5
28.7
34.1
29.8 30.6
36.6
43.9
9.0
6.1
8.9 7.6
5.4
33.8
37.4
46.2 51.3 49.9 47.1
8.3 13.0 11.7 9.5 7.9 10.2
1960's 1970's 1980's 1990's 2000's 2010-2014
(%)
8.8 10.5 8.8 7.2 4.7 3.7 GDP Growth (%)
Other
Service
Construction/Utility
Manufacturing
Agriculture & Fishery
Source : Bank of Korea
Figure 2. Industrial Contribution to Korean Economic Growth
Figure 1. Changes in Korea's Industrial Structure (GDP Share)
Source : Bank of Korea
2.03.0 2.2
Korea’s Next Big Manufacturing Leap
(%)
-1.6

3. Vol.01 January 2016 7574 Asian Steel Watch
expected to slide to sixth place in 2018.
Third, Korea’s manufacturing sector has lim-
ited differentiation strategies and no new growth
engines. In addition, in the competitive industrial
performance (CIP) index, released by the United
Nations Industrial Development Organization,
Korea was eleven places higher than China in
2000, but only three places higher in 2011. Korea
is only 1.9 years ahead of China in scientific and
technological competitiveness. Fuel cell and pho-
tovoltaic businesses, which had been chosen as
new growth engines by many big Korean compa-
nies, are now suffering from demand decline and
oversupply, and are thus limited to replace core
businesses.
If a manufacturing base collapses, it is hard
to achieve economic recovery, as seen in the
case of Greece. Manufacturing is a critical pillar
of the economy, especially in a crisis. After the
2008 global financial crisis, manufacturing pow-
erhouses, such as Germany, Austria, and Swit-
zerland, recovered faster than other countries.
Realizing the importance of manufacturing,
major advanced countries, including Germany,
the USA, and Japan, are implementing strategies
for a manufacturing renaissance. Korea should
address the three challenges mentioned above,
and follow in the footsteps of these countries in
order to herald in its own manufacturing renais-
sance.
In order to spur a renais-
sance in Korea’s manu-
facturing, a balance
should be struck among
three fundamental ele-
ments: a culture that
values manufacturing,
a creative workforce, and innovative technology
that will lead the future. These three elements are
the basis of a manufacturing powerhouse. The
most important thing is to restore a culture that
values manufacturing. An artisan spirit focused
on manufacturing, represented by Japan’s Mono-
zukuri principle and Germany’s Mittelstand mod-
el, has solidified the long-standing image of these
two countries as manufacturing powerhouses.
The strength of Monozukuri, which means manu-
facturing in Japanese, is in the artisan spirit of
pouring heart and soul into products, and genba-
ism, which focuses on on-site observation. The
strength of German manufacturing is the Mit-
telstand (small and mid-sized firms in German),
which accounts for nearly half of the world’s hid-
den champions. There is a German proverb that
says, “Technology is a gold mine that never runs
dry.” The enduring viability of the Mittelstand lies
in high reinvestment in R&D. Once dubbed the
“sick man of Europe,” Germany now elicits terms
such as “job miracle” and “phoenix,” thanks to its
high emphasis on manufacturing and surging ex-
ports.
The Korean government has announced the
“Five-year plan for Development of Companies
of Middle Standing (2015~2019)” with the aim
of nurturing 5,000 companies of middle standing
and 100 hidden champions by 2019. More im-
portant than the government’s goal is the private
sector’s will to act. Furthermore, Korea should
restore entrepreneurship, which is modest con-
sidering the size of its economy. It is also an ur-
gent task to achieve social integration and stable
labor-management relations based on a mature
sense of citizenship.
Second, Korea should nurture a creative work-
force and make the most of its talent. Korea’s
human resource capability is profoundly low
relative to the size of its economy. According to
a report released by Hyundai Research Institute
in 2013, Korea’s creative economy capability is
much lower than the OECD average, as shown
by five indicators: Korea ranks top in ICT capital
in the OECD and its level of innovation capital is
among the highest, but its levels of human, cul-
tural, and social capital are at or below average.
In particular, its human capital ranks 22nd out of
31 OECD member states, far below the average.
This is because Korea now faces quantitative and
qualitative shortages of human capital. Notably,
inflow of highly skilled workers who have earned
degrees in advanced countries continues to de-
cline. In the 1990s, about 30% of Korean recipi-
Culture,
creative workforce,
and technology:
the basis of
future manufacturing
Manufacturing
Construction
Service
1990
6.5
8.3
5.3 5.5
3.0
3.7
5.0
4.2
3.4
6.5
2.6
1.7
7.4
6.1
6.7
5.3
1995 2000 2005 2010 2013
1
2
3
4
5
6
7
8
9
0
(%)
Figure 3. Korea’s Operating Profit Margin by Industry
Source : Business Management Analysis, Bank of Korea
-4
-2
0
2
4
6
8
10
12
14
16
(%)
Manufacturing
Service
'01
2.4
4.7
'02
8.7
7.7
'03
5.4
1.7
'04
10
2.4
'05
5.2
3.5
'06
8.1
4.4
'07
7.2
5.1
'08
2.9
2.8
'09
-1.5
1.2
'10
14.7
3.9
'11
7.2
2.6
'12
2.4
2.2
'13
3.5
3.1
Figure 4. Annual Growth Rate of Manufacturing and Service Sectors
Source: Bank of Korea
Featured Articles Korea’s Next Big Manufacturing Leap

4. Vol.01 January 2016 7574 Asian Steel Watch
expected to slide to sixth place in 2018.
Third, Korea’s manufacturing sector has lim-
ited differentiation strategies and no new growth
engines. In addition, in the competitive industrial
performance (CIP) index, released by the United
Nations Industrial Development Organization,
Korea was eleven places higher than China in
2000, but only three places higher in 2011. Korea
is only 1.9 years ahead of China in scientific and
technological competitiveness. Fuel cell and pho-
tovoltaic businesses, which had been chosen as
new growth engines by many big Korean compa-
nies, are now suffering from demand decline and
oversupply, and are thus limited to replace core
businesses.
If a manufacturing base collapses, it is hard
to achieve economic recovery, as seen in the
case of Greece. Manufacturing is a critical pillar
of the economy, especially in a crisis. After the
2008 global financial crisis, manufacturing pow-
erhouses, such as Germany, Austria, and Swit-
zerland, recovered faster than other countries.
Realizing the importance of manufacturing,
major advanced countries, including Germany,
the USA, and Japan, are implementing strategies
for a manufacturing renaissance. Korea should
address the three challenges mentioned above,
and follow in the footsteps of these countries in
order to herald in its own manufacturing renais-
sance.
In order to spur a renais-
sance in Korea’s manu-
facturing, a balance
should be struck among
three fundamental ele-
ments: a culture that
values manufacturing,
a creative workforce, and innovative technology
that will lead the future. These three elements are
the basis of a manufacturing powerhouse. The
most important thing is to restore a culture that
values manufacturing. An artisan spirit focused
on manufacturing, represented by Japan’s Mono-
zukuri principle and Germany’s Mittelstand mod-
el, has solidified the long-standing image of these
two countries as manufacturing powerhouses.
The strength of Monozukuri, which means manu-
facturing in Japanese, is in the artisan spirit of
pouring heart and soul into products, and genba-
ism, which focuses on on-site observation. The
strength of German manufacturing is the Mit-
telstand (small and mid-sized firms in German),
which accounts for nearly half of the world’s hid-
den champions. There is a German proverb that
says, “Technology is a gold mine that never runs
dry.” The enduring viability of the Mittelstand lies
in high reinvestment in R&D. Once dubbed the
“sick man of Europe,” Germany now elicits terms
such as “job miracle” and “phoenix,” thanks to its
high emphasis on manufacturing and surging ex-
ports.
The Korean government has announced the
“Five-year plan for Development of Companies
of Middle Standing (2015~2019)” with the aim
of nurturing 5,000 companies of middle standing
and 100 hidden champions by 2019. More im-
portant than the government’s goal is the private
sector’s will to act. Furthermore, Korea should
restore entrepreneurship, which is modest con-
sidering the size of its economy. It is also an ur-
gent task to achieve social integration and stable
labor-management relations based on a mature
sense of citizenship.
Second, Korea should nurture a creative work-
force and make the most of its talent. Korea’s
human resource capability is profoundly low
relative to the size of its economy. According to
a report released by Hyundai Research Institute
in 2013, Korea’s creative economy capability is
much lower than the OECD average, as shown
by five indicators: Korea ranks top in ICT capital
in the OECD and its level of innovation capital is
among the highest, but its levels of human, cul-
tural, and social capital are at or below average.
In particular, its human capital ranks 22nd out of
31 OECD member states, far below the average.
This is because Korea now faces quantitative and
qualitative shortages of human capital. Notably,
inflow of highly skilled workers who have earned
degrees in advanced countries continues to de-
cline. In the 1990s, about 30% of Korean recipi-
Culture,
creative workforce,
and technology:
the basis of
future manufacturing
Manufacturing
Construction
Service
1990
6.5
8.3
5.3 5.5
3.0
3.7
5.0
4.2
3.4
6.5
2.6
1.7
7.4
6.1
6.7
5.3
1995 2000 2005 2010 2013
1
2
3
4
5
6
7
8
9
0
(%)
Figure 3. Korea’s Operating Profit Margin by Industry
Source : Business Management Analysis, Bank of Korea
-4
-2
0
2
4
6
8
10
12
14
16
(%)
Manufacturing
Service
'01
2.4
4.7
'02
8.7
7.7
'03
5.4
1.7
'04
10
2.4
'05
5.2
3.5
'06
8.1
4.4
'07
7.2
5.1
'08
2.9
2.8
'09
-1.5
1.2
'10
14.7
3.9
'11
7.2
2.6
'12
2.4
2.2
'13
3.5
3.1
Figure 4. Annual Growth Rate of Manufacturing and Service Sectors
Source: Bank of Korea
Featured Articles Korea’s Next Big Manufacturing Leap

5. Vol.01 January 2016 7776 Asian Steel Watch
112.8
Capacity
83.8
Consumption
Million units
2.24
Capacity
1.66
Consumption
Billion tonnes
ents of U.S. science and engineering doctorates
remained in the USA, but this rate rose to 45% on
average in the 2000s. Today we live in a society
where one person’s innovation is more important
than any product or service. For instance, start-
ups created by Stanford alumni generate annual
sales amounting to more than France’s GDP and
employ more than 5 million people. Korea must
develop a system to find, nurture, and utilize cre-
ative talents.
Third, based on its culture of valuing manufac-
turing and its creative workforce, Korea should
take the lead in creating innovative technology.
Korea’s R&D spending-to-GDP ratio is the world’s
second highest at 4%, and its R&D spending is
the sixth highest. The success rate of R&D devel-
opment is nearly 97%, but the commercialization
rate stays below 20%. Korea’s technological com-
petitiveness ranking continues to decline. Korea
must improve the relatively poor performance
of its R&D investment. Simply put, R&D should
focus on commercialization and market needs
rather than technology itself so as to create more
differentiated technologies for the world’s first
and world’s best products. More fundamentally,
Korea should put its utmost effort into making
innovative technologies that shift the competi-
tion paradigm.
Backed by a culture that
values manufacturing, a
creative workforce, and
innovative technology,
Korea should foment
a new manufacturing
revolution. Manufactur-
ing competitiveness is
national competitiveness. Now Korea is about to
enter the fourth industrial revolution, which will
open a new chapter in manufacturing. The fourth
industrial revolution will be led by intelligent fac-
tories that integrate traditional industries with
ICT. These factories will be operated by a two-way
communication system between production fa-
cilities and products built on a single platform to
optimize all production processes. Germany is at
the forefront of the fourth industrial revolution.
The German government has launched a major
drive called “Industrie 4.0” to increase competi-
tiveness, and has earmarked about EUR 200 mil-
lion for this initiative.
Korea’s manufacturing sector is surely facing
a crisis, but its fundamentals are fairly strong.
Korea ranked fourth in the CIP Index 2012-2013,
followed by Japan, Germany, and the USA. Ko-
rea’s manufacturing sector accounts for 29% of
its GDP, the second highest in the world. Korea
boasts strong manufacturing competitiveness,
prowess as an IT powerhouse, and world-class
ICT infrastructure. With such advantages, Korea
should actively embrace the future of manufactur-
ing and implement innovation strategies tailored
to its manufacturing. The direction of innovation
in manufacturing can be found in convergence
and integration of manufacturing and IT/service.
Utilizing rapidly developing IoT and 3D printing
technologies, Korea should begin a smart revolu-
tion and create new, convergent, and integrated
industries. The concept of smart technology is
deeply rooted in Korean society, as exemplified
by smart homes and smart cities. Smartification
is rapidly gaining ground, even at industrial sites.
There are many good examples: POSCO’s smart
plate factory at Gwangyang Steelworks, LS Indus-
trial Systems’ smart factory system, and Hyundai
Heavy Industries’ smart technologies for build-
ing “connected smart ships.” In order for Korea’s
manufacturing to survive global competition and
grow sustainably, it should strive for manufactur-
ing innovation through smart factories, and add
value to existing products and services.
It has been projected that more than 80%
of manufacturing innovation by leading global
companies will be realized by ICT. The Korean
government and Korean companies will spare no
effort in making investments, taking maximum
advantage of Korea’s advanced ICT and its manu-
facturing competitiveness. As a result, flexible,
independent, and customized production sys-
tems will be built, and help companies strive for
sustainable growth. This is the future of manu-
facturing in Korea.
Manufacturing
innovation,
integrating
manufacturing
and service
Backed by a culture that values manufacturing, a creative workforce,
and innovative technology, Korea should foment a new manufacturing
revolution. Manufacturing competitiveness is national competitiveness.
Figure 5. Global Oversupply in Automotive and Steel Sectors (2014)
Featured Articles Korea’s Next Big Manufacturing Leap
Source: POSCO Reserch Institute , Korea Automobile Manufacturers Association (KAMA)

6. Vol.01 January 2016 7776 Asian Steel Watch
112.8
Capacity
83.8
Consumption
Million units
2.24
Capacity
1.66
Consumption
Billion tonnes
ents of U.S. science and engineering doctorates
remained in the USA, but this rate rose to 45% on
average in the 2000s. Today we live in a society
where one person’s innovation is more important
than any product or service. For instance, start-
ups created by Stanford alumni generate annual
sales amounting to more than France’s GDP and
employ more than 5 million people. Korea must
develop a system to find, nurture, and utilize cre-
ative talents.
Third, based on its culture of valuing manufac-
turing and its creative workforce, Korea should
take the lead in creating innovative technology.
Korea’s R&D spending-to-GDP ratio is the world’s
second highest at 4%, and its R&D spending is
the sixth highest. The success rate of R&D devel-
opment is nearly 97%, but the commercialization
rate stays below 20%. Korea’s technological com-
petitiveness ranking continues to decline. Korea
must improve the relatively poor performance
of its R&D investment. Simply put, R&D should
focus on commercialization and market needs
rather than technology itself so as to create more
differentiated technologies for the world’s first
and world’s best products. More fundamentally,
Korea should put its utmost effort into making
innovative technologies that shift the competi-
tion paradigm.
Backed by a culture that
values manufacturing, a
creative workforce, and
innovative technology,
Korea should foment
a new manufacturing
revolution. Manufactur-
ing competitiveness is
national competitiveness. Now Korea is about to
enter the fourth industrial revolution, which will
open a new chapter in manufacturing. The fourth
industrial revolution will be led by intelligent fac-
tories that integrate traditional industries with
ICT. These factories will be operated by a two-way
communication system between production fa-
cilities and products built on a single platform to
optimize all production processes. Germany is at
the forefront of the fourth industrial revolution.
The German government has launched a major
drive called “Industrie 4.0” to increase competi-
tiveness, and has earmarked about EUR 200 mil-
lion for this initiative.
Korea’s manufacturing sector is surely facing
a crisis, but its fundamentals are fairly strong.
Korea ranked fourth in the CIP Index 2012-2013,
followed by Japan, Germany, and the USA. Ko-
rea’s manufacturing sector accounts for 29% of
its GDP, the second highest in the world. Korea
boasts strong manufacturing competitiveness,
prowess as an IT powerhouse, and world-class
ICT infrastructure. With such advantages, Korea
should actively embrace the future of manufactur-
ing and implement innovation strategies tailored
to its manufacturing. The direction of innovation
in manufacturing can be found in convergence
and integration of manufacturing and IT/service.
Utilizing rapidly developing IoT and 3D printing
technologies, Korea should begin a smart revolu-
tion and create new, convergent, and integrated
industries. The concept of smart technology is
deeply rooted in Korean society, as exemplified
by smart homes and smart cities. Smartification
is rapidly gaining ground, even at industrial sites.
There are many good examples: POSCO’s smart
plate factory at Gwangyang Steelworks, LS Indus-
trial Systems’ smart factory system, and Hyundai
Heavy Industries’ smart technologies for build-
ing “connected smart ships.” In order for Korea’s
manufacturing to survive global competition and
grow sustainably, it should strive for manufactur-
ing innovation through smart factories, and add
value to existing products and services.
It has been projected that more than 80%
of manufacturing innovation by leading global
companies will be realized by ICT. The Korean
government and Korean companies will spare no
effort in making investments, taking maximum
advantage of Korea’s advanced ICT and its manu-
facturing competitiveness. As a result, flexible,
independent, and customized production sys-
tems will be built, and help companies strive for
sustainable growth. This is the future of manu-
facturing in Korea.
Manufacturing
innovation,
integrating
manufacturing
and service
Backed by a culture that values manufacturing, a creative workforce,
and innovative technology, Korea should foment a new manufacturing
revolution. Manufacturing competitiveness is national competitiveness.
Figure 5. Global Oversupply in Automotive and Steel Sectors (2014)
Featured Articles Korea’s Next Big Manufacturing Leap
Source: POSCO Reserch Institute , Korea Automobile Manufacturers Association (KAMA)