3. The Currency crisis and capital increase of POONGSUNG Precision’s DENSO equity

(2) Period of overcoming the currency crisis for the POONGSUNG Group

The wave of the currency crisis that hit the country in the blink of an eye placed employees of POONGSUNG Electric and POONGSUNG Precision in the worst situation, with their salaries being paid late. All Directors and employees had to share the suffering in order for the company to overcome the crisis, including the return of bonuses and a two-year moratorium on promotions of job title. In addition, the use of expenses was thoroughly analyzed, and the approval procedure to ensure that even small amounts were approved for use was reinforced. The company worked hard to reduce expenses so that every single won could be used efficiently.

In particular, the POONGSUNG Group responded to the currency crisis with aggressive management strategies. One of them was securing product competitiveness through quality innovation at production sites.

The POONGSUNG Group, which independently developed inspection machines for the quality innovation of 100 PPM (The Seongsu-dong Plant was certified 100 PPM in 1996, and the Changwon Plant in 1998), set automatic inspection machines at every position of the production line in order to grasp the place of defects. Inspections were implemented in the middle of the production line in order to find the cause of the defect in the manufacturing process in advance, not after completion of the finished product.

In addition, defects by process that were predicted because they had occurred previously were listed to prevent mass production of defective parts in advance. At the same time, many efforts were devoted to computerization work. If a defect occurred at the production site, it was immediately displayed on the manager’s computer so that it could be dealt with promptly, and the Seoul Headquarters would also be able to keep track of the defective ratio at the Changwon Plant online.

Quality innovation using in-house technology to complete inspection machines to lower costs and improve product competitiveness were a major force in overcoming the currency crisis.
Having gone through the currency crisis and gained valuable experience and know-how in dealing with an emergency, the POONGSUNG Group was able to demonstrate its ability to improve the profitability of the company in the face of various difficult situations such as the collapse of Lehman Brothers and the deterioration of its business.

Meanwhile, the POONGSUNG Group sold its equity to DENSO in 1998 as part of an effort to turn the crisis into an opportunity to overcome financial difficulties and stabilize its business. The DENSO equity of POONGSUNG Precision and POONGSUNG Electric was changed to 51:49.