Driving hard to become number one! Having taken
Hyundai Motors from nowhere to the world's sixth-largest automaker,
hard-charging B.J. Park is putting the pedal to the metal as new Young
Chang CEO in a bid for market leadership. To employees, his message is
simple: "We must change everything!" To the piano market, he
says: "We will set the standard for quality and
value.".
Manufacturing heavy, cast iron piano plates is an inherently dirty
process. Smelting iron ingots fills the air with a choking combination
of smoke and dust. The fine sand that's used to form the casting
molds has a way of mixing with metal filings and machinist's oil to
create a sticky, gritty film that coats everything in sight, workers
included. A visit to most of the world's plate producers calls to
mind images of an early-industrial age sweatshop, complete with glowing
flows of hot molten iron, sparks filling the air, and smoke everywhere.
The Young Chang plate foundry, on the outskirts of Tianjin, China, is a
striking exception. Floors at the recently upgraded plant gleam with a
fresh coat of paint, the heavy-duty casting and metal working machinery
is remarkably free of grime, and the 75 employees go about their jobs in
clean, cream-colored uniforms. The sparkling plate foundry is only one
of the more obvious indications of new CEO Byung Jae Park's
professed goal of making Young Chang pianos and Kurzweil keyboards the
worldwide standard of quality and value. In a characteristically direct
manner, he explains, "You need good working conditions to build a
quality product."
Park knows more than a little about working conditions and quality.
In 1967 he was one of the first ten employees hired at Korea's
newly formed Hyundai Motor Company. Drawing on technical assistance and
designs from the Ford Motor Company, the fledgling automaker produced a
few hundred cars in its first year of operation. Four years ago, when
Park retired as vice-chairman, Hyundai Motors produced over 3.5 million
vehicles in plants around the world and ranked as the world's
sixth-largest automaker. As measured by the J.D. Power Survey, in 2006,
Hyundai cars trailed only Toyota in initial quality ratings. At Young
Chang, Park is pledging to orchestrate a similar transformation.
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Economists and academics can trot out a host of statistics and data
to explain the stunning rise of the South Korean economy in the years
following the devastation of what Westerners refer to as the
"Korean War" and local residents call the "Civil
War." In 1953 the country was one of the poorest in the world, with
a per-capita income lower than Kenya's. By 2006 South Korea ranked
as the third largest economy in Asia and received "Prosperous
Nation" status from the U.N. High productivity, low wages, a
well-managed currency, and a light regulatory hand all contributed to
the dramatic transformation. However, what the data fails to capture is
the critical role played by the energy and drive of executives like B.J.
Park.
Park is unquestionably a product of his environment. Growing up in
abject poverty--he recalls Christian missionaries being a vital source
of food for his family--infused him with an intense drive to succeed.
Living under the specter of an armed and openly hostile neighbor to the
north, he gained an appreciation of the fragility of life in a way few
Americans could begin to grasp. At Hyundai Motors he transformed this
outlook into a guiding mantra: "Improve everything continuously or
perish."
A series of fortunate coincidences placed him at the helm of Young
Chang. In May of 2006 Hyundai Development Co. paid $74 million to
acquire Young Chang/Kurzweil from the keyboard maker's relationship
banks. Earlier, Park had retired as vice-chairman of Hyundai Motors.
Although Hyundai Motors and Hyundai Development are independent
enterprises, they have shared origins and a significant amount of
interrelated business dealings. Chung Mong Gyu, chairman of Hyundai
Development, was friendly with Park and approached him to head the newly
acquired piano business.
Chung reasoned that Park was the ideal man for the job: He had
personal dynamism and vast manufacturing experience as well as a highly
developed appreciation for music, gained through years of singing in a
church choir. In June of 2006, after a lengthy review of Young
Chang's history, assets, and prospects, Park agreed to take on the
challenge. "Music is such a culturally important thing, I wanted to
be part of this," he says. "This is the perfect final project
for my career."
While Park may view his stint at Young Chang as the last act in an
illustrious career, there has been nothing relaxed about his approach to
the business. The day after taking the reins he delivered a simple but
urgent directive to the assembled workforce at the factories in Seoul,
Korea, and Tianjin, China. "From today forward, we must change
everything we do," he declared. "The only future is for a
company that builds high-quality products. If we don't upgrade the
quality of every facet of our business, and constantly strive to do
better, we will go out of business."
Park's ultimatum to the workforce was followed by a whirlwind
of activities at the factory. His first directive was to refurbish the
employee cafeterias and restrooms at both plants. His reasoning:
"It shows our respect for our employees and the importance of their
efforts." Drawing on experience gained at laying out Hyundai's
Ulsan plant in Korea, the world's largest integrated auto plant,
Park revamped the production line at Young Chang operations in both
Seoul and Tianjin. With the new configuration, the wasted energy of
transferring assemblies from one work station to the next was kept to a
minimum. In addition, the new layout gave managers clear sight lines to
every workstation, making it easier to monitor production. Finally, he
subjected all of Young Chang's suppliers to a withering quality
review, and reduced the list to a select group of companies willing to
meet exacting standards.
A telling indicator of Young Chang's new emphasis on quality
can be found at the ten-acre open-air lumber yard adjoining the
company's Tianjin plant. Up until a year ago, less than half of the
area was filled with wood, because management was hesitant to tie up too
much capital in raw materials. Under Park's management, the lumber
yard is now filled, and wood is allowed to cure for over six months
before moving into the manufacturing process. Additional curing time
makes the wood more stable, eliminating a host of potential quality
problems, and ultimately resulting in a better piano.
The realignment of Young Chang's manufacturing operations was
also accompanied by a modest reduction in employment levels in both
Korea and China. Despite the cuts, Park has received unstinting support
from the company's rank and file. Although he is an admittedly
tough task master, they have apparently concluded that after close to a
decade of rudderless management, the company was in desperate need of
decisive leadership.
And he has more than provided that, immersing himself in all the
minutiae of the business. One morning late last October he was obviously
nursing a cold as he addressed the staff in Tianjin. The reason: The
previous night he had been outside the plant in chilly fall weather
until well after midnight cajoling state utility workers to finish a
crucial upgrade to the plant's electrical service on time. He says
simply, "The CEO has to be everywhere."
Six thousand miles away, in the U.S. market, Park's leadership
has also been felt. Improved product quality has bolstered the
confidence of the entire U.S. sales organization, from the head office
in southern California down to retail selling floors across the country.
Furthermore, after a decade of uncertainty surrounding the future of
Young Chang, the decisive new leadership has begun to win back the
support of key retailers. Todd Brown, national sales manager for Young
Chang and Kurzweil Digital Pianos, explains, "Noticeable
improvements in product quality, a more responsive sales team, and the
support of a strong corporate parent have all helped to enhance the
standing of the Young Chang and Kurzweil brands. When we say we are
committed to being an industry leader, people take us seriously."
Dealers have also responded to some new and tangible marketing
efforts, unveiled over the past year. Young Chang Direct, a
comprehensive dealer training program, has been particularly well
received. "It's like a coaching program," explains Brown.
"We don't go in and try to tell a dealer how to run his
business. Rather, we watch how they operate, and offer suggestions. Just
like a golf coach who sees things that you're missing or doing
wrong, we go in and help dealers refine their operations."
Service Direct is the code name for Young Chang and Kurzweil's
all-encompassing service effort. Without much in the way of formal
language, the program represents a pledge to fix any and all service
problems immediately with a minimum of paperwork and hassle. To support
the effort, the company has expanded its spare parts inventory and
service staff. "If there is a problem, it will be fixed, and fixed
fast," emphasizes Brown.
Young Chang's formal U.S. marketing programs are the outgrowth
of a simple but compelling business approach: mutual partnership. Brown
says that the company is looking to do business with a relatively
limited number of dealers who are committed to actively supporting the
Young Chang, Kurzweil, and Weber brands. "It's pretty
straightforward," he explains. "We will bend over backward to
assist those dealers who really support our line, whether it's with
marketing support or floorplanning. We are looking to build strong
partnerships."
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