Daelim Industrial Co. Aims at Expanding its Business Horizons Abroad

Company maintains the No. 1 position in the domestic railways project turn-key/alternative tender segment it has held since 2008

The following are excerpts of an interview between NewsWorld and Kim Jong-oh, vice president in charge of civil engineering and planning at Daelim Industrial Co., who touched on his company’s strategies to tap into the foreign railway market.
Question: Will you tell us about the current status and growth chronology of Daelim Industrial Co.’s railway business division?
Answer: Daelim Industrial Co. entered the local railway construction market by participating in a project to build the Yeongam Line connecting Yeongju, Gyeongsangbuk-do, and Cheoram, Gangwon-do, following the 1949 establishment of the first Republic of Korea government, and it carried out the Hwangjibonseon (Tongni-Shimpori) Line Project in 1963 and the Bukpyeong (Donghae-Samwha) Line Project in 1967 in succession.
In particular, Daelim Industrial Co. had been credited with successfully completing a 1 km-long curving tunnel section on the Yeongam Line. The work on digging a curving tunnel in a mountainous area 450 meters above sea level was considered to be tricky work in consideration of the nation’s civil engineering technology levels. The project had to be halted for three years due the outbreak of the Korean War, but Daelim Industrial Co. managed to get the state project done in 1955, overcoming all challenges.
In the 1970s, Daelim Industrial Co. was involved in the construction of Seoul’s first subway, which was launched with the establishment of the Seoul Subway Headquarters. The contractor was charged with building a 1.66 km long section of the subway line and two stations. It was praised for contributing to the nation’s solid foundation for the development of subway construction technology by developing diverse technologies to lower costs and shorten the construction period compared to rival companies, and for keeping neighborhood structures intact while executing the project. Based on its successful performance on the first subway project, Daelim Industrial Co. kept it going in the domestic railway industry by participating in Seoul’s subway lines 2, 3, 4, 5, 6 and 7, Busan’s subways, the Gyeongbu (Seoul-Busan) high-speed railway and the Incheon International Airport backwater railway.

Q: Will you specify the ongoing railway projects Daelim Industrial Co. is carrying out?
A: Among Daelim Industrial Co.’s projects that are under way are those related to the construction of high-speed railways, emerging as an innovative transportation means of the 21st century. We’re now engaged in 17 projects including subways. They include the 3-2 and 3-3 sections of the Honam High-speed Line. Daelim Industrial Co. is also set to break ground in two construction sections, including the Poseung-Pyeongtaek railway section.
Attracting public attention is the soon-to-be-opened Yongin light electric railway being built by Daelim Industrial Co. A trial operation shows that the upcoming unmanned 18.1 km-long light electric railway has had a good reception. The contractor is soon to launch a project to build a Honam high-speed line depot, to be designed with a KTX-II motif to visualize a high-tech image. The project also employs a combination of IT and energy efficiency in its designs in order to reduce annual energy consumption by 17 percent and emit 13 percent less greenhouse gases. A planned 1.07 km-long double-tied arch railway bridge, part of the Poseung-Pyeongtaek railway line, will be the world’s first such one.
Q: Will you tell us about the current status and prospects of the local and international railway industries?
A: Korea plans to focus on railways in SOC investments so as to proactively cope with changes in the domestic transportation market in the wake of climate change. The government plans to expand the portion of the railway sector out of aggregate transportation-related SOC investments from the current 25 percent to 50 percent by 2020. The local railway industry is striving to shift into an efficiency-oriented paradigm in keeping with the direction of green transportation policies, and it is forecast to see growth by expanding connections with railways overland and by sea.
The global railway market is likely to see a renaissance with a focus on investments for green growth. Along with Brazil’s much-publicized high-speed railway project, under study in the global railway market are 11 projected high-speed railway projects in the United States, a high-speed project in Mongolia, a railway project to connect the six member states of the Gulf Cooperation Council (GCC) ― Saudi Arabia, Bahrain, Qatar, the United Arab Emirates, Kuwait and Oman ― as well as a few projects in the countries of Southeast Asia, the Commonwealth of Independent States and Africa. In particular, Saudi Arabia was the only GCC member country with railways, but the Metro that made its debut in 2009 now stretches to 2,200 km in total length. Together with the GCC Railway PJT, each GCC country seeks to implement its own railway projects. The UAE wants to extend its aggregate railway system to 1,500 km; Saudi Arabia seeks to stretch it to 2,399 km; Qatar aims for its railway system, including the Metro, to extend to 699 km; Oman wants 1,500 km of tracks; and Bahrain aims to have 184 km, thus the railway market in the Middle East, estimated at $80 billion, is expected to blossom.
States are competing to take an upper hand in the global railway market as high-speed projects are huge in size and have an immense impact on each nation’s infrastructure. Russian and Chinese firms have landed Libyan railway projects, while Korea, China and Japan are competing in an international bidding to build a high-speed railway in Brazil. Large amounts of capital and resources are expected to be put into the global railway market, and nations with insufficient infrastructure are forecast to see steady growth. The winning of foreign high-speed railway projects will likely not only accompany economic benefits but also contribute to furthering the presence of Daelim in the other construction segments.
Q: What’s the current status of overseas railways projects your company is carrying out?
A: Daelim Industrial Co. has established strategies to get a jumpstart in the foreign railways market and it is making flat-out efforts to translate them into action with a focus on strengthening the capability to win large-sized overseas railways projects. Daelim Industrial Co. is seeking to join in government-initiated bodies established to tap the foreign railway market. In reality, although Daelim Industrial Co. has no experiences in conducting railway projects abroad, we have a competitive edge in the overseas railway market due to experiences and expertise we have so far accumulated while carrying out railway projects in Korea.
In the case of the UAE, Daelim Industrial Co. in July became the first company to submit a Letter of Intent (LOI) for bidding on the $1 billion Shah Habshan Railway Project including part of the GCC Railway and it is waiting for the approval of pre-qualification. Daelim Industrial Co. is also seeking to join in a consortium headed by Hyundai E&C. We are conducting a feasibility study into a railways project in Mongolia after submitting a request to participate in the Korean government-initiated body for winning the project.
Q: Will you tell us about your company’s mid- and long-term strategies to further its presence in the railway business?
A: Daelim Industrial Co. has maintained the No. 1 position in the domestic railway project turn-key/alternative tender segment since 2008. This is owed to Daelim Industrial Co.’s profound technological power, design capability and price competitiveness. Daelim Industrial Co. plans to strengthen its capability to evolve into a railway industry leader capable of overall project management by cultivating its caliber in the construction management sector, emerging as a potential growth segment of the construction industry based on its accumulated experiences and expertise.
The most important thing for jump-starting in the overseas railways market is to establish business strategies tailored to meet the characteristics of each country’s and customer’s needs. Daelim Industrial Co. is striving to expand its railway business horizon abroad by joining forces with the Korean government. We also plan to strengthen our overseas presence by forging strategic alliances with local firms and conducting other localization strategies so as to maximize profitability and reduce risks. nw

Daelim Industrial Co. has participated in the construction of high-speed railways, including the Gyeongbu High-speed Line.

Attracting public attention is the soon-to-be-opened Yongin light electric railway being built by Daelim Industrial Co.