DETROIT—Hwaseung R&A Co. Ltd. has come a long way since it first established operations in North America.
The firm said it's doubled its automotive revenue since 2013, thanks largely to securing additional business with key original equipment manufacturing customers like Fiat-Chrysler, General Motors and Hyundai/Kia among others. The new opportunities have caused the firm to establish additional facilities in Enterprise, Ala., and Ramos Arizpe, Mexico, in addition to expanding its existing ones.
The firm produces both weatherstrips and fluid handling products such as hoses for high pressure, air controlling and brake applications. The Detroit 3 accounts for about 15 percent of its global business with Asia-based OEMs operating in the U.S. accounting for about 8 percent of the South Korean-based firm's global revenues.
The firm established itself in North America in 2003 with its 219,000-sq.-ft. weatherstrip plant in Enterprise. It has since added a second 162,000-sq.-ft. facility on the same site. Guest said the two sites employ 588 and represent a combined $47 million investment.
"It's very important to our global OEM customers that we have a global footprint, especially as OEMs try to have platforms that have a global reach," said Matt Guest, director of HS R&A's sales and its North America research and development center in Detroit. "As long as there is a viable market around the world, they want us to be able to supply that. Opening these facilities here has given us one more tool that we can use to serve our customers."
The firm has since both expanded its presence in weatherstrips and added additional capabilities for its fluid handling products. It entered Mexico in November 2014 with the establishment of a 66,000-sq.-ft. weatherstrips plant to support Kia's investment in the region. That plant has since expanded to 137,500 square feet, and a second site for weatherstrips and fluid handling was recently established at the end of 2017. In total, Guest said the firm has invested $26 million with 928 employees between the two Mexico sites.
"Previously we were focused pretty much exclusively on the South Korean market, with Hyundai and Kia being our biggest customers globally," Guest said. "As we've come into the American market, we've found some receptive customers and, based on some early successes we've had with them, we have expanded our business with them."
But at the same time, Hwaseung was building out its fluid handling business. Guest said the firm had developed some derivative products—air conditioning, brake and high-pressure hose/fluid transfer lines—which was growing. This led to the establishment of a second facility in Enterprise.
"Our primary focus is serving our current customers," Guest said. "We need to meet their needs with high quality and advanced technology. We also work with them so we can anticipate their future needs and position ourselves to meet those requirements."
Hwaseung's automotive unit is just one part of the overall South Korean-based group, which generated $4.2 billion in sales for 2017, with about $2.7 billion of that coming from its rubber products business. The firm primarily utilizes EPDM and thermoplastic vulcanizates with automotive being its largest industry and Hyundai/Kia its largest customer. However, the company also has a large presence in the apparel industry, especially footwear.
The company was founded in 1953 right after the Korean War producing rubber shoes for those working in the rice paddies industry. Eventually, it expanded into athletic shoes for all of the major global sportswear companies. Guest said it entered the automotive industry in 1978, when Hwaseung started producing low-pressure rubber hoses for the automotive industry and then expanded into its current product portfolio.
Hwaseung and Adidas have had a long-term partnership, sharing core technology for new products. Guest said the firm serves as an original design manufacturer for Adidas, taking charge of the whole process from product planning to development, making both Adidas- and Reebok-branded footwear with a large manufacturing footprint in Vietnam, China and Indonesia.
The firm has developed more than 1,500 types of compounds, including thermoplastic elastomers, silicones and chemical materials. Guest said its thermoplastic materials have contributed to lightweighting automotive parts.
HS R&A recently introduced a turbo charger intercooler hose using plastic material instead of steel. And of late it has developed low-gravity materials to reduce the weight of its rubber sealing products.
Guest said the North American market continues to transition away from cars to trucks, sport-utility vehicles and crossovers. However, the global industry is pushing toward electrification and autonomous driving. Hwaseung's engineering teams are exploring adaptations of its current products while coordinating with OEMs that are based in electric and automated technologies to discover where it can help address their needs.
Guest doesn't anticipate the need for rubber weatherstrips and hoses disappearing anytime soon, adding that the company is well-positioned to capitalize on opportunities emerging from the development of these new vehicle technologies.
"As long as they have doors, they will need weatherstrips," he said. "As long as the sun shines, they will need air conditioning. And all vehicles, even autonomous, will need brake lines. Some features, such as gull-wing doors or electrical architecture, pose interesting sealing and routing challenges, but nothing insurmountable."