Bonds of steel: Three generations make KISWIRE an industry leader

KISWIRE Hong
Photo (left to right): Young-Chul Hong (chairman), Suk-Cheon Hong (founder and honorary chairman), Scott Hong (MBA 2008 and production manager).

There is a certain industrial artistry in both process and product.

Calliope strains of a Beethoven arpeggio flutter among the clamor of hard-working machinery that reverberates across an immaculate KISWIRE factory floor. Raw carbon steel from colossal spools laces through a gauntlet of precision devices. It is scoured of rust and bathed in acid, lubricated, galvanized, super-heated and drawn through dies of narrowing diameter. And at the end of this elaborate metallic pasta maker emerges a pristine strand of gleaming steel wire.

Elegant, yes. But also essential.

High-carbon steel wire is an indispensible ingredient of civilization. And the kind produced by Korea-based KISWIRE is the best in the business. From filaments finer than a human hair to braided wire rope as thick as an elephant’s trunk, KISWIRE—quietly, reliably—supports bridges, buildings and stadiums, hoists elevators, cranes and oil rigs, reinforces radial tires and high-pressure hoses, transports electricity and telecommunications, fabricates semiconductors, facilitates renewable energy, even gives a piano its dulcet voice.

It also inhabits Scott Hong’s (MBA 2008) past, present and future.

After earning his MBA at the University of Washington Foster School of Business, Scott joined the company founded by his grandfather, and currently led by his father. As production manager of KISWIRE’s Korean operations, Scott is learning the ropes from both elders in preparation to someday take the helm. For the first time, three generations of the Hong family are in business together, a succession of wisdom that has long guided this astonishingly successful company and endowed it with such economic, social and historic significance to the nation it calls home.

“Tradition,” says Scott, “means everything to us.”

Into an Asian tiger

KISWIRE FounderIn 1945, a young man named Suk-Cheon Hong was working as a chandler for a Japanese import company, selling supplies to ships docked in the southeast Korean port city of Busan, when his world turned upside down. As World War II came to an end, the Japanese were evicted from Korea, their colony for decades. And Korea, an agrarian society with little industry of its own, was cast into economic chaos.

Suk-Cheon saw opportunity. He started his own maritime supply business, importing goods from Japan. His trade miraculously eluded the advancing communists during the Korean War. But this period of national upheaval made him consider what his company could do for his country. “After the war I decided that I could make money either importing or exporting,” Hong recalls. “But if I exported, it would lift the Korean economy.”

He identified one of his best-selling products—steel wire—and painstakingly learned how to make it. Taking advantage of post-war foreign aid and scraping together modest financing, Suk-Cheon launched the Korea Iron and Steel Wire Company in 1961. Its initial product was aptly named “Elephant Wire” for its strength and dependability.

From the ground floor of his nation’s late-arriving industrial revolution, Suk-Cheon’s gaze was always upward. By 1971, the newly named KISWIRE hit its production goal of 1,000 metric tons a month.

That same year, Suk-Cheon Hong welcomed his son, Young-Chul Hong, to the company. Young-Chul started out creating standards in the production facility. But he rose quickly, right alongside KISWIRE’s soaring fortunes. Through the next decades, the company steadily opened new factories and diversified its product line as the market warranted. Its sales expanded globally, from Korea to Vietnam, Europe, the United States, Japan and China.

Young-Chul ascended to CEO in 1988 and chairman in 2001, as his father gradually eased out of day-to-day operations and into his eternal role as honorary chairman. Now in his 90s, Suk-Cheon Hong still works every day, keeping a close eye on his legacy.

Today, as Scott Hong is groomed to take the family business into a third generation, KISWIRE has achieved a level of success that the honorary chairman says was inconceivable at its humble founding. Today, KISWIRE produces nearly one million metric tons of steel wire, cord and rope each year, carving a 10 percent market share of the fragmented $20 billion global industry. Its 4,600 employees operate 19 production facilities—each dedicated to a specific product line—in Korea, China, Malaysia and the US. Nearly three-quarters of its sales are overseas.

KISWIRE is everywhere.

A different kind of company

Such dramatic growth doesn’t happen by accident. From the beginning, the Hong family has led KISWIRE by the kind of unwritten code that holds enormous power when it genuinely permeates the culture of a family business on a global scale: hard work, honesty, integrity.

KISWIRE differentThese simple traits have resulted in the highest quality product, continually improving efficiency and innovation, and sterling relationships with employees and customers alike. They have sustained KISWIRE through decades pockmarked by war, dictatorial rule, financial crisis and political turmoil.

According to Scott, his grandfather set a lasting growth strategy of financing expansion with profit rather than debt. KISWIRE has relied on its own research and development to drive product improvements, cut costs and open new product lines. It has innovated opportunity, recently opening a factory catering to homemakers’ schedules, and another run by retirees not ready to hang up their hats.

Along the way, KISWIRE leadership has inspired in its work force a rarity in modern times: loyalty. During several severe economic shocks, the now honorary chairman and current chairman sacrificed corporate profits to protect every last employee’s job.

That loyalty was repaid. In the early 1990s, when a newly democratized Korea roiled with labor unrest after decades of military rule, KISWIRE workers organized, then pledged that they would never strike. That’s a level of camaraderie between administration and rank-and-file that a library of management books could not achieve.

It’s the KISWIRE gift, embedded deep inside the Hong family DNA. And Scott Hong gets it.

The education of Scott Hong

Scott may have KISWIRE steel in his bones, but he also had options. His father was obliged to join the company at the behest of his grandfather, originally working, eating, even sleeping at the company’s Sooyoung plant (in a small attached apartment he fondly recalls as “the bunker”).

But times have changed in Korea. Young-Chul Hong did his best to encourage his son and expose him to the business. But the decision to join KISWIRE was Scott’s alone. He attended a science and technology high school, studied mechanical engineering in college and considered pursuing an academic career.

In the end, he chose tradition. “This business is my foundation,” Scott says. “I planned everything to prepare me to one day lead this company skillfully.”

It started with two years interning at the world’s foremost steel manufacturers, including KISWIRE’s largest provider, POSCO. And, to complete his business education, Scott traveled around the world to study management at the UW Foster School of Business. It was a choice strongly recommended by Dr. Chan-Jin Kim, a prominent attorney and family friend who earned a PhD in law from the UW in 1972, and resoundingly endorsed by both grandfather and father.

“There were gaps in my knowledge,” Scott says. “My Foster MBA gave me skill at strategy, leadership, marketing and finance that I can connect with my prior knowledge of engineering and computer science, and my familiarity with the steel wire industry. Plus, my experience in Seattle helped me to see business from many different perspectives.”

His father believes it did even more: “The difference in Scott since before his Foster MBA is that he knows the world better, he understands better how people are linked with business.”

The Shingo pear doesn’t fall far from the tree.

Innovating tradition

“Steel is steel,” says Young-Chul Hong. “It was invented 3,500 years ago and the demand has grown ever since.”

That doesn’t mean, he adds, that KISWIRE rests on past success in an industry that has been historically stable. Since introducing a dedicated research and development facility—and through less formal means in earlier years—the company has perpetually worked to carve time and cost from the process, and produced cables of ever increasing tensile strength to meet the voracious demand of a rapidly developing world.

“Most of our research has been in efficiency,” says Young-Chul. “Now the existing steel wire and rope market is nearing saturation. So we will need to develop into new areas that will be important in the future.”

KISWIRE Piano WiresAmong the most promising is KISWIRE’s work developing state-of-the-art superconductive wire. It’s a key part of Korea’s contribution to the International Thermal Energy Reactor (ITER). This much-anticipated nuclear fusion device, under construction in France, is attempting to atomically convert materials in sea water into plasma of 100 million degrees Celsius—an “artificial sun” that could finally solve the planet’s renewable energy conundrum. That sun won’t shine if it can’t be contained and harnessed, requiring superconducting coils that can convey a magnetic field of unimaginable strength. KISWIRE is on it, developing steel that isn’t really just steel.

At this chapter in his family’s history, Scott stands prepared for his future. “If I’m going to follow in the footsteps of my grandfather,” he says, laughing, “I’ll have to work another 60 years at least.”

A family affair

Suk-Cheon, Young-Chul and Scott Hong gather at KISWIRE’s Busan office on a sweltering late summer day. Outside, on the site of the relocated Sooyoung factory, construction has begun on the company’s new headquarters, residential education center, and wire museum, all to be powered by three forms of renewable energy. Always looking forward, even in celebrating the past.

As the three men recount stories, consider accomplishments and ponder the future, the family pride is obvious—albeit suppressed by humility. It’s well-earned. Three generations, connected by steel wire and the honest hard work that makes it, have built a company that is the envy of its industry, and an emblem of Korea’s resilient economic growth.

“We don’t necessarily have to be the biggest,” says Chairman Young-Chul Hong. “We want to be the best—most efficient, highest quality product, most satisfied customers, happiest employees. That’s what we’re aiming for.”

“And look to new product lines,” Scott adds, “diversify within our core line of expertise.”

“If we can reach these goals,” says Honorary Chairman Suk-Cheon Hong, “I think we will also become the biggest.”

Like grandfather, like father, like son.

“I’m fully satisfied with the company today, and its growth under my son’s leadership,” concludes the Honorary Chairman. “And I have full faith in this promising young grandson of mine.”

That grandson puts his faith in tradition. “I’m really happy that we’re all in this business together.” Scott says. “It’s tradition. I don’t see it as pressure, but rather a sharing of wisdom that is essential to advancing this company and this family. In a way, I’ve been preparing my whole life for this.”

The art of entrepreneurial decision-making

Emer Dooley“Do I take the job or start my own company?” It’s a tough decision but just the first of many decisions an entrepreneur will make during his or her career. And that’s the point of Emer Dooley‘s Entrepreneurial Decision-Making class: get used to it now because you’re going to spend your career making decisions—often with incomplete information and few data points.

Each week, graduate students hear first-hand from an entrepreneur who is grappling with or has just gone through the decision-making process on an issue from the start-up lifecycle, from generating an idea and writing a business plan to financing, growth, and a successful exit. Small teams of students are responsible for engaging the guest in discussion and digging into the hows and whys of the entrepreneur’s final decision.

Dooley, a lecturer in entrepreneurship at the UW Foster School of Business, has no problem getting leaders from Seattle’s entrepreneurial ecosystem to share their experiences with her class. “We recently had Rich Barton, the founder of Expedia, come in and talk about his latest idea and he asked the students how they would generate viral traffic. Now one of the MBAs is working with him on the project,” she said. “I wanted to make this class interactive and more of a conversation where there’s real feedback about what’s happening. The ownership is on the students to make this a useful part of the class.”

Students also look at a variety of entrepreneurial models during the quarter, everything from franchising, to buying a company, to high-tech start-ups. Dooley tries to balance the types of companies that come into the class. “Right now Web 2.0 is huge in Seattle so we’re spending a little more time on those companies this quarter,” she said.

While helping students develop the tools and network they’ll find most valuable after they leave the university, Dooley also promotes the idea that there is no one set track or right answer for an entrepreneur. “It’s all about figuring out who you are and what makes you tick,” she said. “Some people start their companies right out of school but others may be better off joining a big company for a couple of years. Every entrepreneur is different.”

Figuring out who you are. Put that in the tough decision category.

Bacon…in a glass?

Stefan Schachtell, Sven Liden, and Chris Marshall, founders of Black Rock Spirits.
Stefan Schachtell, Sven Liden, and Chris Marshall, founders of Black Rock Spirits.

In the food industry, bacon is the “it” food of the moment. And if industry awards and late night talk shows are any indication, Bakon Vodka may just be the “it” beverage of the year. Sven Liden (MBA 2004), co-founder of the parent company, Black Rock Spirits, says it all began on a camping trip in 2007 when a friend brought along 20 pounds of bacon. As the campfire conversation turned to infused liquors, they began to wonder if all that bacon could make a good drink. “The next weekend we bought 12 types of bacon and a bunch of different types of vodka and did all of these infusions in Mason jars in my kitchen,” he said.

The best infusion came from a mix of peppered bacon and potato vodka. After getting a positive response from friends who sampled the winning concoction, Liden and his business partners decided to test the product to the commercial market. In May 2009, after a year and a half of working through all of the liquor industry’s requirements and regulations, they produced 1,500 bottles of Bakon Vodka—enough, they figured, to last three or four months.

Posts about Bakon Vodka on Facebook and Twitter soon had the blogosphere buzzing. Within two weeks of its initial release, Conan O’Brien was sampling Bakon Vodka on his late night talk show. And those first 1,500 bottles were gone in no time. While many other small liquor companies struggle to get their products distributed in one or two states, distribution of Bakon Vodka has expanded from two states to 20 in just one year. Black Rock Spirits expects sales of the beverage to top $1 million in 2010 and was recently awarded a Gold Medal in the Beverage Testing Institute’s 2010 International Review of Spirits—a very prestigious award in the liquor industry.

Before entering the full-time MBA program at the University of Washington, Liden already had one start-up under his belt. “My background was in engineering and software development, but I felt that something was missing from my tool box. I wanted that knowledge of business,” he said. While at the UW, Liden participated in the 2004 Business Plan Competition with TeachTown, a company that provides educational software for children with autism. “I’ve been part of three start-ups now and that’s been really interesting because they are all so different,” he said. “I don’t necessarily think all entrepreneurs should try that, but the broad foundation I developed at the UW has allowed me to do that and succeed.”

One million tweeps

Arianna O'DellThe Twitter phenomenon will soon be immortalized in that most retro form of publishing: a book. Remember those? Arianna O’Dell, a UW entrepreneurship undergraduate, is hoping to capture the faces of one million Twitter users in a coffee table book called One Million Tweeps.

O’Dell and software developer Ludo Antonov launched the “One Million Tweeps” website in early October and have received close to 1,500 submissions to date. Twitter users, or “Tweeps” as they’re called, can upload their Twitter photo for free to a tile on the site that will be included in the book. Businesses and public figures are also encouraged to upload photos or advertisements at a cost of $5 per tile. Several marketing and social media firms have already signed on and staked out their spots in the book.

Inspiration for the project came from the “$1 Million Home Page,” a wildly successful website created by a student in the UK to fund his university education by selling ad space for $1/pixel. Similarly, O’Dell and Antonov will use any proceeds remaining after publishing their book to bootstrap their next start-up, “a business focused on making the web a more transparent and informed place.” But this unique project is as much social experiment as it is business venture. “Our goal with this book is also to create a time capsule of the state of social media today,” O’Dell said.

O’Dell is now talking with potential publishers to determine final pricing of the book as well as the layout and design. The pair hopes to reach the one million–tweep point by the end of the year. “We’re really excited about how well it’s all going. The Whidbey News Times and TechFlash.com just ran articles about the project, which was great,” said O’Dell. “Now we’re just focused on getting the word out.”

To contribute to One Million Tweeps, go to: www.onemilliontweeps.com.

Taking aim at energy solutions

AIMER SystemIn 2008 Brian Pepin and Anthony Simon were running Energizing Solutions, a small industrial efficiency consulting company, while studying electrical engineering at the UW.  The two undergraduates discovered that while efficiency monitoring systems were available in the marketplace, they were often cost-prohibitive for their manufacturing clients who were already operating on the thinnest of margins and feeling pressure from lower-cost competitors abroad. Passionate about helping their customers save energy and money, Pepin and Simon invented a new type of monitoring system that detects inefficient and abnormal operation in electric motors at a fraction of the competition’s price.

Called the Attachable Indicator for Maintaining Efficiency and Reliability, or AIMER, the system monitors energy efficiency in electric motors and tells the operator what kind of maintenance is needed and when. This, in turn, allows plant operators to move from preventive to predictive maintenance on their electric motors, cutting maintenance costs by more than 70 percent.

More efficient motors equate to reduced electricity costs and consumption. And when you’re talking about the billions of dollars spent each year on electricity costs by the US industrial and manufacturing sector, that’s some serious cost savings.

After recruiting Mark Ramme (MBA 2009) to join the company as chief operating officer, Energizing Solutions entered the UW Business Plan Competition in 2009. They won second place and $10,000. “The BPC was an invaluable experience for us,” said Pepin. “Coming from an engineering background, we were unaware of the start-up environment, from financing to organizational structure. It was great for us to learn what VCs and angels want to see from a company coming to ask for money.”

Since graduating from the UW, Pepin was accepted to the electrical engineering doctoral program at UC Berkeley. Energizing Solutions also applied for and won a spot at the Berkeley Venture Lab, which provided the company with free lab space and mentoring as well as a $5,000 prize. Energizing Solutions then partnered with Far Sciences to produce the first generation prototype, and with Siemens Technology-To-Business Center to conduct a one-year pilot of the AIMER system.

If all goes well with the pilot, the next step will be to enter into either a joint venture or licensing agreement with Siemens. After that, who knows? Perhaps another entrepreneurial adventure. “The entrepreneurial community has a lot of energy and excitement,” Pepin said. “And the appetite for clean-tech solutions in manufacturing is only going to grow. I don’t think we’ll be sitting around for long.”

Update June 2011: Energizing Solutions recevied a $150,000 grant from the National Science Foundation (NSF) Small Business Innovation Research program (SBIR).

Generosity of women leaders in India

Guest blog post by Cate Goethals, UW Foster School of Business lecturer

Women Leadership Trip - India 2010I first noticed it on the plane before I even reached Mumbai when I sat next to a woman who owned a handicraft business. I told her I was bringing a group of 22 students to India. “Come to my home,” she said. “Let me cook for you.” Her sister-in-law, who ran a different business, came to sit in our row. “Please let me host your group,” she said.

University of Washington students and I (their faculty trip organizer) had set out to study women’s leadership in India. I expected the accomplished women we met to be powerful, visionary, confident, charismatic, any number of traits. What I had not anticipated was generosity.  Extreme generosity. The more responsibility someone had, the more time and attention and respect they gave us.  Some more examples:

  • Rohini Nilekani, who runs a multimillion-dollar foundation in Bangalore and is known as “the Melinda Gates of India,” spoke to us and then had to go to a meeting.  After the meeting, she returned and gave us another hour of her time.  Half of that was spent asking us for our ideas.
  • Poorvi Chothani, well-known attorney often seen on Mumbai TV, not only agreed to brief my group on women and the law in India – but went on to spend many more hours organizing a special session of the Ladies Wing (!) of the Mumbai Merchants Chamber to gather dozens of women in our honor. She turned what could have been a personal platform into an exchange of ideas.
  • Veena Mankar, leading banker and co-founder of microfinance institution Swadhaar, had to cancel our visit to go to a funeral. She then rearranged her schedule and spent more than an hour driving across Mumbai to meet with us at our hotel early one morning. “Young people have the best ideas,” she told me. “I talk to them whenever I can.”
  • Amma, “the hugging saint” and most well-known female spiritual guru in the world, heard that we were rushed through our first session with her. Although she hugged thousands of other people that day, she invited us for a second session, asked that we sit at her feet and personally answered our questions about women’s leadership. Then she asked her swami to give us back the money we paid to stay at her ashram. “Students should have pocket money,” she said.
  • Women of the world-famous Self Employed Women’s Association greeted each of us several times with a personal flower, a special bindi (red dot pressed with rice on our foreheads to nourish our spirits) and a bit of sugar to eat.

I was struck by this generosity on nearly every visit.  It may be part of Indian culture, it may be related to gender, it may be a function of the exceptional people we saw.  In any case, it is an overlooked and undervalued leadership trait – and one that is infectious, making the students and I want to give back…and give elsewhere…and do it again, creating new cycles of generosity even now that we’re home.  The ripples are still being felt.

Cate Goethals, University of Washington Foster School of Business lecturer and Seattle consultant, leads global business seminars and study trips focused on women and international business. She has taught at the UW Foster School for more than 20 years—including a class called “Women at the Top” that was named one of the 10 most innovative MBA classes in the country by Forbes in 2010.

The India exploration seminar abroad, called Half the Sky: Women Leaders and Entrepreneurs, included 22 graduate and undergraduate students.

Interning in rural Kenya

Guest post by Nathan Whitson (UW business major graduating in 2012)

SAM_0286As part of my international studies at the UW, I desired to volunteer abroad during my college career. The summer of my sophomore year (2010) I traveled to Kenya as part of an informal internship at a small orphanage called Watoto Wa Baraka.

My time in Kenya lasted 6 weeks, but it was jam-packed with new experiences and encounters. Kenyans are wonderful. They help before you ask and smile before you can react. This attitude puzzled me, because in deep poverty, they persist and love the life that they were dealt. I quickly began drawing differences between Kenya and America, a natural process that creates unique global views.

Global conversations
Kenya was not the only thing new to me. So was everyone around me. While in Kenya, there were few Americans and many of my peers were European. I did not know what to expect, but my understanding grew as we discussed everything from politics to education. In addition to learning about Kenyan culture and society, I gained a unique understanding of different communities from around Europe. I now have a mini network of people from around the world that I can connect with in the future.

Preparing food at a Kenyan orphanage
Preparing food at a Kenyan orphanage

Making an impact
As volunteers, we spent time looking after the children, helping in the local school and hospital, aiding with laundry, harvesting and cooking food and traveling around to different communities in the area. This internship taught me what simple living really is. I am deeply humbled that I was able participate in an international internship this summer because the experience truly cannot be replicated. Kenyans are the most resilient people I have ever met, leaving me with the hope that a bit of this attitude rubbed off on me. I feel that this is true of all internships; they are gateways into the real world. Not every internship defines what your career will be, but it shines a light into what exists at that next level.

Resources
If you are thinking of interning abroad, my recommendation is to fully commit yourself to a program and go with it. A variety of great resources exist for those looking to make a difference abroad or gain experience locally. Here are a few I would recommend: Volunteer Match (opportunities abroad/locally), Intern Match (local internships) or UW Husky jobs.

Nathan Whitson is a junior at the Foster School of Business focusing on finance. He used his “summer break for something more heartfelt than simply a check every two weeks and it definitely paid off.” His Kenyan internship was organized by himself via Volunteer Match.

Entrepreneur Rich Barton on consumer-driven start-ups

Expedia founder and serial entrepreneur Rich Barton spoke candidly to University of Washington Foster School of Business entrepreneurial alumni about his philosophy, lessons learned, venture capitalist experience, owning consumer-driven dot coms and social networking.

Rich Barton is executive chairman of Zillow, chairman of Glassdoor, chairman of new venture Travelpost, board member of Realself (started by CEO Tom Seery, Foster MBA 2000) and involved with numerous other start-ups.

Watch a condensed 12-minute version of his guest lecture:

 Click on image above to play video