Differences of opinion over "company governance" and the
equity value of Korea Aerospace Industries scuttled talks for a
Boeing-BAE consortium to take a 35% percent share of the Asian manufacturer
last year. Now KAI is working to improve its perceived value via
a combination of military and civilian program initiatives, with
an eye to future international deals.
Military and civilian efforts are often intertwined at KAI. The
company, born of an October 1999 merger of the aerospace businesses
of Daewoo, Hyundai and Samsung, is working with the Korean government
to link future Korean fighter acquisitions to an increased KAI role
on Airbus and Boeing jetliners. In another example, KAI's experience
with fuselage and tail boom manufacturing for the Bell 427 helicopter
is seen boosting its chances to manufacture a new rotorcraft for
the Korean army and for export markets.
KAI is also working hard to convince European governments that the
T-50 trainer now being manufactured under Lockheed Martin license
in the former Samsung factory at Sachon can satisfy needs for a
proposed new "Eurotrainer."
"It is important for us to present the T-50 in Paris,"
says KAI president and CEO In-Taik Lim. He names Spain, Turkey and
Israel as "very important elements to the Eurotrainer concept."
The Korean government's commitment to buy 94 T-50s is thus far the
only sale of the aircraft, though KAI and partner Lockheed are projecting
a 500- to 800-aircraft world market.
The Korean government's recent order for 20 more KF-16 fighters
effectively extends KAI's license from Lockheed Martin for F-16
production at Sachon through 2004, and a total of 140 aircraft.
Beyond that is the Republic of Korea Air Force's requirement for
a next-generation fighter, the F-X, which could be satisfied by
the Boeing F-15, Dassault Rafale, Eurofighter, or Sukhoi Su-35.
"Our hope," says Lim, "is that the program will be
in the form of a license so that we can continue to use the facilities
we developed for the F-16." He expects his government's decision
to be linked to the chance of increased component work for Boeing
if the F-15 is chosen, or for Airbus if RoKAF's F-X turns out to
be of European origin.
KAI does about $100 million per year worth of aerostructures work
for Airbus and Boeing, Lim told Show News. It recently notched
a contract for Airbus A319 and A320 wing panels expected to be worth
about $110 million over the next four years.
KAI is parlaying Samsung's experience with the composite fuselage
and tail boom of the Bell 427 helicopter into production, underway
just this year, of the new SB427 for the Asian market. That could
lead to development, again with U.S. or European partners, to a
new helicopter to satisfy the Korean army's need to replace about
400 aging machines.
"There is a large potential for the export market as well,"
says Lim. Partnership arrangements will be made next year, he says,
and deliveries of a new KAI helicopter are expected to begin in
2008.
Also possible is resuscitation of an Asian regional aircraft program.
A much ballyhooed deal with China never came to fruition, but KAI
is hoping for a new infusion of government money to support "a
potential collaboration of companies around the region" in
pursuit of the "very exciting marketplace in northeast Asia."
Some $400 million was allocated for the China deal but never used.
KAI has four manufacturing facilities, some 3,400 employees and
an annual turnover of approximately $600 million. KAI is by Korean
law the prime contractor for government programs involving companies
there. Its long-term goal is be among the world's ten top aerospace
companies by 2010.
By Rich Piellisch
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