Defense News
11/16/09
By Wendell Minnick, Seoul
INTERVIEW: HYO-KOO LEE
President and COO, LIG Nex1
LIG Nex1 develops and produces a wide range of advanced precision electronic systems, including missile, underwater weapon, radar, electronic warfare, avionics, tactical communication, fire control, naval combat and electro-optic systems. As well as developing new weapons for South Korea’s military, the company is rapidly expanding into the export market.
Q. Tell us about your company.
A. LIG Nex1 works in close cooperation with not only the [South] Korean military but also the Defense Acquisition Program Administration [DAPA] and the Agency for Defense Development [ADD] to spearhead the development of indigenous state-of-the-art weapons in various fields, such as precision guided munitions, C4ISR, electronic warfare and avionics. LIG Nex1 has been a crucial component to [South] Korea’s efforts in ensuring an independent national defense capability, and has participated in the development of nine of the ADD’s top 10 defense products of 2008. LIG Nex1 has put great emphasis on ensuring the quality and reliability of all our products by investing in … environmental testing equipment and facilities, as well as establishing the Reliability Center.
Our efforts have resulted in LIG Nex1 winning the grand prize in the 2004 Department of Defense Quality Inspection, which is a testament to our commitment towards the quality and service of our weapon systems.
We also established the Modeling and Simulation [M&S] Research Center in February so that we may speedily react to the everchanging battlefield environment.
Through a system of thorough preliminary simulation/inspection and the organic cooperation of each of our research branches, LIG Nex1’s M&S Research Center has enabled us to stay ahead of the pack in the research arena.
Q. What is the company’s strategy in dealing with the worldwide economic downturn?
A. LIG Nex1 sees the downturn not just as a threat, but more as an opportunity. Through aggressive investments in R&D [research and development], we are continually researching new technologies to prepare for future businesses. LIG Nex1 is also working in close cooperation with numerous world-class defense companies in infrastructure investments, technology acquisition and weapon system production to expand our horizons.
Q. How do your projected 2009 numbers compare with 2008 revenue figures and sales? What percentage is defense versus commercial sales?
A. LIG Nex1 led the [South] Korean defense market in 2008 with revenue of approximately 850 billion Korean won ($728.7 million), and we expect an increase of over 100 billion Korean won this year in our revenue figures.
Due to the fact that LIG Nex1 is a dedicated defense company, our commercial sector accounts for about 1 percent of our total revenue. But in order to maintain our growth, LIG Nex1 will continue to focus on the export of our commercial solutions as well.
Q. What product lines are most in demand at home and abroad? Where do you see future growth?
A. LIG Nex1 is the only company in [South] Korea which offers total solutions for all three branches of the military. Our business scope covers C4I, ISR [intelligence, surveillance and reconnaissance], PGM [precision guided munitions], electronic warfare and avionics, and of the five areas, the PGM sector has seen the highest demand.
LIG Nex1 is continually investing in and developing other business areas, such as future warfare and autonomous unmanned systems, to ensure that we will continue to lead the [South] Korean defense industry.
Although it is well-recognized that in order to overcome the limitation of the domestic defense market, one must cultivate the export market, due to the unique dynamics of the defense industry, one cannot compete in the world market using a generalized export strategy. To maximize exports while avoiding competition with market-leading defense companies, LIG Nex1 has been actively promoting exports of communications equipment to Southeast Asian countries. Through continual development of new technologies as well as localization of the above-mentioned technologies, LIG Nex1 plans to increase not only our export volume, but also our market coverage.
As an example, LIG Nex1 is now developing the first domestically designed ship-to-air missiles, as well as the domestically designed radar for the KAI TA/FA-50 advanced fighter trainer. Through the acquisition of indigenous technologies, we hope to increase our competitiveness even more in the world market and thus increase our exports. We will continue to invest not just in the development of technologies, but in continued exchanges with domestic and global industrial/academic institutions.
Q. What is the company’s 10-year plan?
A. LIG Nex1 recently announced our goal to become a top-tier defense company by 2020 under the slogan of “true dream partner.” To achieve this goal, we plan to increase our stronghold in the field of precision electronic solutions as well as expand our overseas business. We will also invest in future warfare and autonomous unmanned systems to maintain an edge over our competitors.
Through strategic outsourcing, we intend to increase the efficiency of our business as well.
Q. What about R&D?
A. It would not be a stretch to say that LIG Nex1’s continual growth to this point has been due to our focus and investments in R&D. We will continue our dedication to the development not only of new technologies but also to the nurturing and developing of our human resources. Of the 2,500 or so employees currently under LIG Nex1’s umbrella, the R&D personnel account for about 35 percent.
We are also investing over 21 percent of our total revenue in R&D.
Q. How has the company changed under your leadership?
A. To ensure the continual growth of the business, a coaching leadership was utilized, which paved the way to LIG Nex1’s No. 1 position in the [South] Korean defense industry today.
But now we must look to the future and to the world, and to accomplish this feat, both the management and the employees must work under a common goal. I intend to be at the forefront of that change leading by example, utilizing a future-oriented leadership.
I guess I would like to be remembered as the person who brought growth to LIG Nex1. I would like to think that 10 years from now, LIG Nex1 will have be3come a global top-tier company. In order to reach such a goal, I believe that LIG Nex1 must find the answer in increasing exports.
I guess this sentiment is a common one for any CEO in the defense industry, but with the continual advancements and growth we have recently shown, I believe that this goal is not an unreachable one. No one can predict the future, but I feel that if all our employees continue down the path that we have been laying down, 10 years from now, my wishes of being remembered as the person who brought growth to LIG Nex1 will be realized.
Q. What are the South Korean defense industry’s strengths and weaknesses?
A. The industry has traditionally been concentrating on keeping pace with North Korea and other nearby countries through the relatively short-term procurement of foreign goods through such programs as the U.S. Foreign Military Sales program. Domestic R&D has also been led by government agencies, weakening the individual companies’ ability to independently develop technologies. This has widened the gap between [South] Korean defense companies and their foreign counterparts.
Although the defense market and the battlefields of the future continue to change, the growth of the defense industry here is almost at a saturation point.
The [South] Korean defense market has recently been changing so that it can grow to reach the next level. The establishment of the DAPA in 2006 has led to many policy changes in the government’s stand on defense exports, such as the opening of doors so that any defense company can participate in government programs, the promotion of company-led R&D, as well as the increase of R&D funding. These changes have acted as a motivation to the domestic defense industry, as well as increasing the industry’s R&D capability.
The governmental policies to promote and strengthen exports are also motivating companies to follow suit. I believe that these types of changes in government policies will act as a foundation on which the [South] Korean defense industry can grow.
Q. Can you tell me about the Rolling Airframe Missile (RAM) business?
A. The domestic development of the RAM is being carried out with technological support from U.S.based Raytheon. It is significant in that this type of weapon solution is a first for [South] Korea. We also believe that this will act as a springboard for the future indigenous development of a defense system against anti-ship missiles.
We recently held a rollout ceremony at our Gumi factory with guests from the [South] Korean Navy, DAPA, the Defense Agency for Technology and Quality and Raytheon attending.
As you well know, the RAM is a point-defense weapon against antiship cruise missiles. The Navy is planning to equip our destroyers and Landing Platform eXperimental ships with the RAM system, which will increase operational effectiveness in any combat condition. ■
