98 Kwon Oh-gap and Lee Sung-geun, HHI/DSME
When taking over DSME, HHI Holdings' Kwon Oh-gap pledged employment security for the yard's workers. Meanwhile, DSME's previous vice-president Lee Sung-geun, who was appointed to lead the yard in March 2019, has to deal with former colleagues who are unhappy with the merger
The chief executive and chairman of the parent group will need to join forces with the president and chief executive of the yard it is taking over
DAEWOO Shipbuilding & Marine Engineering, which is being taken over by compatriot South Korean shipbuilder Hyundai Heavy Industries, appointed previous vice-president Lee Sung-geun as its new president and chief executive in March 2019, taking over from former top executive Jung Sung-leep.
DSME had earlier nominated head of shipyard Mr Lee as the chief executive designate, while Mr Jung had offered to step down, when the merger deal of the two shipyard giants was signed. Mr Lee was also appointed chairman of the board.
The two firms claim the merger will create the world’s biggest shipbuilding group and the deal is expected to be completed in 2020.
While chief executive and newly appointed chairman of parent group HHI Holdings Kwon Oh-gap and Korea Development Bank chairman Lee Dong-gull pledged in a joint statement employment security for DSME workers and continued relationships with DSME’s current business partners, the move continues to stir up emotional responses.
It may prove to be one of Mr Lee’s bigger challenges in the years ahead, as workers immediately protested as soon as the deal was signed.
Mr Lee started his career at DSME in 1979, just six years after ground was broken to build DSME’s Okpo shipyard, and has been a lifelong company man.
He has served the company as head of the research and development institute, chief technology officer, head of the ship business unit, and shipyard general manager before rising to the top post.
Mr Kwon, on the other hand, while also a veteran of the group he has now risen to head, comes from a position of greater strength as the dominant partner in the marriage. He has also had extensive experience at senior management level in the group.
Having joined in 1978, Mr Kwon was chief executive of HHI in 2014, as well as head of group planning at the parent. In doing so, he laid the foundations for bringing the company back to health, reorganising non-core businesses and pushing reforms such as asset sales.
He has also previously served as director of HHI's London and Seoul branches, giving him an international outlook, and has been vice-chairman at the parent group since 2018, before being appointed chairman in November this year.
Likewise, however, HHI is under no illusions that the merger will be an easy process. Commenting on Mr Kwon's appointment, the group said: “The appointment reflects the growing uncertainty in the global economy and the demand for leadership in addressing various issues, such as the acquisition of Daewoo Shipbuilding & Marine Engineering.”
Mr Lee has a bachelor’s degree in shipbuilding and marine engineering from Seoul National University, a master’s degree in metallurgical engineering from the Graduate School of New York University, and a doctorate in welding engineering from the Graduate School of Ohio State University in the US.
Having been mainly involved in operations may hold Mr Lee in good stead as he balances the demands of his former colleagues in the yard with new higher, corporate responsibilities.
His passion for the company and the industry clearly shines through.
“We are not willing to settle for our position at this moment and are committed to making our company lead the market and constantly develop based on unrivaled technology and leadership,” Mr Lee said in his first message as chief executive.
Further clues about his vision for the company can be gleaned from his particular mention of DSME’s lead in certain technologies.
These include natural gas reliquefaction, Arctic technologies, as well as its reputation as a top liquefied natural gas carrier shipbuilder, based on its track record in securing many of the contracts for the Yamal LNG project.
Yet Mr Lee is not oblivious to the challenges that lie ahead.
“Uncertainty in the ship marine industry has been intensifying recently,” he said, noting that “the fierce competition has begun and only the winners will survive to dominate the market”.
Mr Kwon is also cautious but optimistic. Noting the group's shift to a holding company structure, he said HHI has made constant efforts to maximise its business capabilities and value.
He also acknowledged the efforts made in undertaking the shift to create growth engines and overcome current challenges.
However, Mr Kwon concluded: "We believe this initiative will lay a solid foundation for a better future of the group."