Shipping group aims for top 7 conglomerate ranking by 2020

He worked as a normal office worker for 27 years. When his company went bankrupt, he decided to take it over.

People around him blasted his decision as an “unwise move.” Still, he pushed ahead with his plan, saying he knew the company better than anyone else.

Defying critics around him who widely believed that he would fail, he now stands tall on the world stage after 10 years.

Kang Deok-soo is chairman of STX Group, Korea`s lone conglomerate built by an entrepreneur from scratch rather than inheriting the business from parents among the country`s top 20 enterprises. He held the 10th anniversary ceremony of his group, which he inaugurated in 2001, in China instead of Korea.

○ 12 subsidiaries, 58,000 employees

Kang joined Ssangyong Heavy Industries (now STX Engine) in 1973. He bought the company by using his stock options and own money. Afterwards, he renamed the company STX and launched the business group.

Thereafter, STX took over Daedong Shipbuilding (now STX Offshore & Shipbuilding), Pan Ocean Shipping (now STX Pan Ocean) and others and continued to grow.

The conglomerate’s merger and acquisition drive went beyond Korea. In 2007, it took over Aker Yards (now STX Shipbuilding and Marine Engineering), the world’s second-largest cruise ship builder, in the largest M&A deal in the history of Korean shipbuilding.

STX continued with its M&A spree under a method in which it bought companies at low prices and listed them through initial public offering to recoup investment capital. Through these efforts, the group established a portfolio of four major business areas: shipbuilding and machinery, shipping and trade, plant engineering and construction, and energy.

The mergers and streamlining also improved STX`s financial health. The group had 260.5 billion won (244 million U.S. dollars) in assets and 439.1 billion won (411 million dollars) in sales in 2001 but the two figures surged to 26 trillion won (24.3 billion dollars) and 32 trillion won (30 billion dollars), respectively, last year.

STX Group ranked 12th last year among Korean conglomerates excluding state-run corporations. It also had 12 subsidiaries and 58,000 employees.

○ Higher competitiveness via three pillars in shipbuilding and maritime biz

Friday’s ceremony was held at the STX Dalian Shipbuilding and Marine Engineering General Industrial Complex because the complex is a symbolic place where STX opened a new chapter in its history as a business group.

In 2006, STX started building a mega-size dockyard over 5.5 square kilometers. With the newly inaugurated Dalian production complex with an investment of 1.7 trillion won (1.59 billion dollars), STX has completed its three global production bases along with Jinhae and Busan (STX Shipbuilding and Marine Engineering) in Korea, Dalian in China (STX Dalian), and Norway and Finland (STX Europe).

STX said, “We are the lone global shipbuilder to have the capacity to produce all types of ships in the four categories of shipbuilding, including general merchant ships, cruise ships, marine plants and battleships.”

A shipbuilding industry source said, “The factor behind STX`s success is vertical integration of related industries, including engine production, shipbuilding and shipping.”

Along with its anniversary celebration, STX also held a ceremony to declare “Vision 2020,” a plan for attaining 120 trillion won (112 billion dollars) in sales and joining the list of the top seven Korean conglomerates.

Kang said, “The road ahead is more important than the path we have come through,” adding, “Let all group members unite and attain our vision through creativity and challenges to become a truly global and ultra-sound enterprise.”

alwaysj@donga.com