LG Innotek (CEOYoung Ho, Hur) is accelerating its campaign to assure co-growth with subcontractors and suppliers.
LG Innotek signed “co-grow and fair transaction treaties” with more than 100 companies during a ceremony attended by members of its cooperative partnership, including Changwon Optech, at the Special KTX Hall in Seoul Station on October 6.
During the signing ceremony, LG Innotek’s executives, including Vice President Lee Ung-beom (chief of the parts and materials business headquarters) and representatives of the partnership, including President Han Gi-su of Changwon Optech (chairman of the cooperative partnership) signed the treaty, which is designed to assure fair trade and co-growth.
Through the ceremony, LG Innotek announced action plans for co-growth, comprisingpractical execution measures in line with the “LG co-growth and fair trade treaty” announced by LG Group in early September, and shared exemplary cases of co-growth with its partners.
The action plans for co-growth, which LG Innotek will seek to implement jointly with its partner firms, entail ▲ R&D assistance, ▲ financial assistance, ▲ managerial assistance, ▲ educational assistance, ▲ and reinforced communication.
In the R&D assistance field, the Company has decided to expand joint participation with subcontractors in projects to develop technology contingent upon its purchase, and proactively pursue the domestic development of equipment through technology exchange.
The project on technology development, contingent upon conglomerates’ purchase, is an assistance program that is highly sought after by many small- and medium-sized enterprises, because it results in practical sales when the partners develop new technology on condition that they receive state subsidies contingent upon demand for purchase. LG Innotek plans to conduct at least four such projects this year, and will continue to expand such initiatives.
To seek the domestic development of parts, materials and core equipment, LG Innotek is collaborating with two SMEs to pursue joint development. Such equipment is highly costly, at 3 billion won per unit, and Korea depends on imports for its entire demand.
Additionally, the Company will continue to expand its assistance to subcontractors to allow them to use highly expensive R&D and measuring equipment, and production facilities.
In the field of financial assistance, the Company plans to significantly enhance the financial soundness of its partner companies by improving the conditions for its financial assistance and financial settlements.
The Company plans to extend a combined total of 30 billion won, including 4.5 billion won in direct assistance, 15 billion won in integrated assistance, including co-growth funds, and 10 billion won in indirect assistance, including network loans.
With these measures, the Company plans to proactively support efforts to enhance quality and productivity, programs for the domestic development of core parts and materials, facilities investment, and the development of cutting-edge technology.
Also, by improving the terms of its financial settlements, the Company plans to raise the portion of settlements through cash and cash-like payments to 100 percent, and reduce the period of settlement to within 14 days.
In the managerial assistance field, the Company plans to step up activities to allow partner firms to boost their capacities in personnel management, labor management, and marketing and sales so as to ensure that they can secure global competitiveness in the long term.
Notably, by mobilizing LG Innotek’s technology and sales know-how, the Company has decided to provide support to partner firms to allow them to become parts suppliers of global enterprises.
The Company will also expand its “Management Doctor Program,” a managerial consulting assistance program designed to help partner firms increase their competitiveness. Under the program, LG Innotek provides consulting assistance to partner firms for a six-month period to help them boost their labor productivity and improve their personnel management systems, and set mid- to long-term managerial strategies.
In the educational assistance field, the Company will expand educational programs specialized by region and business area, including cost management, validation by certifiers, and Six Sigma, to enable its partner firms to further consolidate the foundation for co-growth. It plans to provide training programs to support 150 executives and staff members from partner firms this year alone.
To assure prompt and accurate communication with its partner firms, LG Innotek will also operate a team dedicated exclusively to co-growth within the purchasing team, and revamp the purchasing portal site for co-growth.
LG Innotek plans to inspect co-growth activities on a regular basis, while proactively implementing execution plans on co-growth. By building and operating a database on co-growth activities by business division, the Company will seek to proactively share exemplary cases, including domestic development, equipment production, standardization, productivity enhancement, and quality improvement.
An LG Innotek official said, “We will focus on the practical implementation of co-growth, and will continue to construct a sustainable co-growth system over the long term.”
