If the U.S.-educated second generation now running the company gets its way, that will change. This month, Hankuk announced ambitions to manufacture and sell globally "smart windows" that, at the turn of a knob, can be adjusted to change the amount of light passing through them. Hankuk is betting some of its future on the new technology, which it projects will bring in more than 10% of revenues by 2005.
A new strategy is overdue. Hankuk badly needs to move up the value chain as competitors in Korea and China begin to eat into its market share. It also must replace business lost in the wake of a slowdown in Korea's construction and auto industries. As it is, Hankuk expects 2001 sales to drop to $426 million, down from $447 million last year.
In smart-window technology, the company seems to have an edge. Hankuk holds patents on a thin film version of the technology that can be affixed to a variety of products--from office windows to automobile sunroofs to oven windows. The film is to be made at a new, $6.2 million plant in Inchon, 40 kilometers west of Seoul. Says company President Kim Seong Man, 53: "It will give a new dimension to windows in the 21st century."
Hankuk originally licensed its glass-dimming technology in 1990 from New York-based Research Frontiers Inc. The company's suspended particle devices (SPD) use electrical current to control the light passing through glass. When the power is off, the windows go dark; gradually boosting the juice increases transparency. Under the original deal, Hankuk could make and market smart windows only in Korea. By the mid-1990s, the company had devised the film format, which it can sell abroad.FAR CHEAPER. SPD is a breakthrough because the user can determine exactly how much light gets through. By contrast, the photochromic technology used to cut glare in sunglasses is activated only when exposed to ultraviolet rays--and is not adjustable. What's more, SPD is far cheaper than rival technologies that control light and shade. A pair of battery-power electrochromic sunglasses costs $1,200. By contrast, a square meter of Hankuk's smart glass costs about $400.
The demand for smart window technology is expected to soar. A recent survey by U.S.-based Townsend Research expects dimming technology to grab 3.6% of the North American residential window market by 2005. Research Frontiers figures just a 2% share of the residential and commercial markets will amount to $9 billion annually in four years. The U.S. company will get 5% to 10% of net sales.
Hankuk is also hoping to get major auto makers interested. Already, a leading European carmaker is testing its SPD film. Hankuk also plans to sell to ship and aircraft makers, as well as manufacturers of refrigerators and ovens.
Hankuk has spent years preparing for its global push. As part of a mid-1990s restructuring, the company formed a strategic partnership with France's Saint-Gobain Group, selling the European glass giant a 35.2% stake in Hankuk Glass. Hankuk also raised $85 million by selling off noncore businesses and used the money to buy out two-thirds of its 6,000 staff. While Hankuk is expecting a high return on its investment in smart glass, it is keeping its projections conservative, at just $60 million in annual sales in five years. If smart windows take off, Hankuk may shed its dowdy image--and teach its critics that it knows how to be bold without being reckless. By Moon Ihlwan in Seoul