KOMSCO Back in the Swing

Currency manufacturer finds new biz territories to turn around its bottom lines

President Lee Hae-seong of the Korea Minting and Security Printing Corp. found the company in difficult financial situation two years ago when he first arrived due to contraction of its business with reductions in its traditional business of manufacturing notes, coins and checks down sized. He thought the company needed new growth engines for its survival and he set out to discover a new area of growth by taking on such work as issuing electronic passports, electronic residential cards, stocks, electronic IDs and commodity coupons, in fact all the security related material, which are not handled by small and medium sized firms.
The company succeeded in taking on these works in its operation. As a result, the company put itself back on track of growth again in 2006 with the sales reaching 331.5 billion won and operating profit 40 billion won and it projects to improve the record of last year.
President Lee said he will continue to work on management reform and the six sigma program will also become part of the company's daily life as it has benefited greatly from the reform program in its effort to cut costs and boost productivity.
Following are excerpts from a written interview with President Lee:
Question: In the past two years, you managed to build a very good performance result for the company and a base for another take off. What are some of the most proud things in the process of creating such a feat?
Answer: When I first took over the job as president of the Korea Minting & Security Printing Corp. I had to worry about how I would have to address the company. Among government run organizations, where does KOMSCO stand and what kind of work it does and what direction it is headed to name some of the concerns I had.
In the case of a government owned firm, I decided that its most urgent priority mission was to continue to uphold public interest as people wanted. I also thought that the company had to find new growth engines while carrying out its public work that people want in the face of reductions in bank notes, coins, and checks,
getting away from the traditional business areas, a big reason being the creation of a base for employees to develop themselves without being hindered by job security.
It was why I changed the company's corporate ideals. I thought that KOMSCO should take charge of manufacturing all the security related products including currency, securities, resident cards and passports, among others, except those that can be done by small companies.
We undertook such projects as the electronic residential cards manufacturing, the nomination as the exclusive maker of the electronic passports, and the expansion of the commodity coupon sales, and expanded our market away from the traditional currency manufacturing as a manufacturing firm that produces diversified security products, building a base for ourselves to be a "The world class company for art & security solutions"This was one of the proudest moments I had as the CEO of KOMSCO. I dare say that it was the work that opened a new way for the future of KOMSCO.
Q: It seems that the company has secured a new growth engine. What kind of standards and efforts did you employ to find a new growth engine and build a base for new jump?
A: I set up a number of standards for the new growth engine. First, we should enter for business only in the areas that we can be competitive. Second, the new area should be able to strengthen our public service nature that will help the livelihood of the people. Third, we should not give damage to existing businesses in the area as we explore the market.
If an instrument that contains valuable information for the people turns out to be a bogus one, it would give a serious damage to the people. If it is money, KOMSCO is tops in the country for technologies to prevent bogus ones to be made. It is KOMSCO that can do the job.
Such technologies as a base, the company found a new growth engine in the manufacturing of securities certificates, commodity coupons, identification products, driver's license, electronic ID cards, and electronic passports.
The company won't stop here, but turn its eyes overseas to not only export products, but also systems to secure a win win technology cooperation.
Q: Last year, the company made 331.5 billion won in sales, the largest annual record in its history, and 40 billion won in operating profit and what kind of strategies did you employ to achieve such an outstanding result?
A: First, strategies were dissected to expand sales and profit in harmony with corporate and public nature. We took measures to strengthen our basic areas of businesses, meaning that we tried to raise the profit nature of our traditional areas such as manufacturing bank notes, coins, postal stamps, checks, passports, and cards by lowering costs. It was a quite a job to boost sales by 50 percent without additional manpower.
We also found new areas of profit models and let them grow. Brand businesses based on our public confidence, security related projects, and lottery tickets-digital printing work are some of our new businesses. We built a base for electronic passport and residential cards and explored overseas markets.
We expanded our overseas markets to South Asia from the traditional southeast Asia and increased export products not stopping with just papers for bank notes, coins and ink. We plan to export plants also in the future. Our exports totaled 12.7 billion won last year, up 61 percent from the previous year. We also strengthened the role of our internal capacity by promoting the Six Sigma program geared for management reform and raise the effectiveness. First, through the six sigma program, we tried to analyze problems with data and statistics and iron them out. We also were able to add some 16 billion won to our profit through cost savings and boosts in effectiveness.
What is more important has been the fact that our employees were able to change their minds and through the reform activities. The thought that customer is first has taken a root, jointly aware that we should change to do better in the future.
Q: As a government run company, the company showed its positive activities in social services and what can you show us detailed aspects of the activities?
A: On August 1, 2005, we launched the "KOMSCO Social Service"Group composed of autonomous service group and voluntary service groups to make our social services more voluntary in nature, rather than just providing support and present donations as society in general including our company have been doing in the area of social contribution activity.
The social service group continued to carry on with its social service activities in diversified areas including the help to sister villages, and services at social welfare facilities and as a result, the company won "One Company One Village Grand Award" and "social Responsibility Grand Award"in 2006.
In order to double our social service activities this year, we changed the name of "KOSCO Social Service Group"to "Gachi Bachi Social Service Group". We kicked off '1% Sharing"campaign rather than build up a voluntary giving corporate culture. Along with such voluntary donation culture "Share 113"campaign and 'Voluntary Day'designation, we have been doing our share of social service.
On July 24, we sold the notes issued early with numbers and donated the entire 1.1 billion won we secured from the sale to social welfare joint collection fund set up jointly with KOMSCO and the Bank of Korea. This was not the first time the donation was made. Last year, we donated 360 million won from the sale of the new 5,000 won bills with early numbers, providing for the money to buy two mobile bath cars for the senior citizens who cannot move around easily on their own.
At the time, we included the social service activities in the company's personnel policies and the new employees have to learn the subject during their training courses. We expect it to be an excellent course for the new employees to learn the importance of social service activities and its needs when they first become company employees.
In addition, we also will try to boost the company image in the country by undertaking various social service programs around the country such as holding events for residents of isolated regions and old people with no families and mobile currency museum displays connected with regional festivals for isolated neighbors and events for them to tour nearby famous places.
Q: The company can only manage to win the second place in the management result evaluation and what do you think is the significance for the event?
A: We tried to win the first place in the government invested firms management evaluation officers and staff working together. But we had to come away with winning the second spot this time with only 0,038 points separating us from the first place winner.
But we feel as good as we won the first place. The most important thing is that we were united in the belief that we can do and tried the best, with the proof that we can really do.
Last year, we had an incident that could have damaged the company's image but it was taken care of based on principles with very good results and the company won the second place despite the incident, which is very significant therefore.
All the staff worked very hard to produce new currency bank notes and the union's decision to introduce retirement pension system on a voluntary basis and earlier than any organizations also helped the company to win the second place award.
The company was able to boost the sales 50 percent from the previous year without the help of new staff and discharging efforts to change business structure, management reform, customer satisfaction activities, transparent and ethical management, all have contributed to the good results.
We did so well this year that the momentum will be carried over to next year. Once you win a good mark and you can do well again next time since you have the momentum. For next year, we will work hard on management reform and customer satisfaction, among others, to continue to become an excellent organization in the management evaluation. nw

President Lee Hae-seong of the Korea Minting and Security Printing Corp.