Daechang Solution Co., Ltd

Ha Neul Ahn

Parallel Session 1.1 : Performance of Outstanding Enterprise Participating in the Cluster Program

Contents

1 Overview of Daechang Solution

2 Overview of Cluster Project

3 Milestones of Cluster Project

4 Outcomes

Overview of

Daechang Solution

Overview of Daechang Solution > Company at a glance

Establish

-ment

May 1 1953

Annual Revenue

KRW62.8bil (2014) Headcount

Production Capacity

Carbon steel casting

and alloy steel Key

Products

Weight

Overview of Daechang Solution > Company at a glance

History 2013 Changed company name to Daechang Solution Co., Ltd.

2012 Acquired stakes of Cryos Co., Ltd.

2012 Received Silver Tower Industry Medal in recognition of

‘outstanding capital asset development’ (CEO Park Jeong Ho)

2011 Designated as advanced technology center (ATC) by

Ministry of Knowledge Economy

2009 Newly built and started operation of Ulju Plant

2008 Received Presidential Medal in recognition of outstanding

capital asset development

2007 Listed in KOSDAQ

2007 Changed company name to Daechang Metal Co., Ltd.

2006 Designated as world-class product producer (MOTIE)

1953 Founded Daechang Cast Iron Industry Company

(Youngdo Busan)

Overview of Daechang Solution > Company at a glance

Busan

Plant

Busan Plant(HQ)

: Located in Daedaepo

Address : Daedae-dong Saha-gu Busan

Korea

Size : 16,665m2 (5,050 pyung)

Headcount : 75

Production Capacity : 18,000 tons/ year

Ulsan Plant

: Located in Ulju-gun

Address : Samdong-myun Ulju-gun

Ulsan Korea

Size : 132,398m2 (40,050 pyung)

Headcount : 90

Production Capacity : 27,000 tons/year

Ulsan

Plant

Overview of Daechang Solution > Area of Business _Steel casting for ship engine

Korea world class

product (2012)

Korea world class

product(2006)

Overview of Daechang Solution > Area of Business _ Steel casting for offshore plant

Chain Jack

and Winch System

Overview of

Cluster Project

Overview of Cluster Project

Project name

Domestic production cluster for drilling equipment and materials based on drilling system integration

Project period Dec 1 2012 ～ Nov 30 2014 (24 months)

Project cost KRW1.99 billion

No. of companies in the project 39 (28(year 1) → 39(year 2))

① Project leader : DSME

② Sub leader : DSME, NK, Daechang Solution, KOMERI

③ Participating members :

Sun-Il Gyejeon, Daewon Industry, Sambo Construction Machinery, Sunbo Industry, Hoseung Ent, KTE, Kangrim, Kumgang, Sukjin E&T, Jungmin Metal,

Sungilencare, YNV, Ilseung, S&W, Daedong Metal Industry, Korval, Seyon Machine Ind, Woomin Tech, Estec, Gwangsung, Eungwang Industry, Sung-Il

SIM, Mt.H Control,Valve, Jeonjin Entech, Byuksong, Jung-A Marine, DKlok, Daom Metal, Daeho Hydralic, SLTE, Flutek, Yujincometal, Pan Korea Heavy

Industries, Cytroniq

④ Secretary : KICOX (Busan Branch)

Overview of Cluster Project

Derrick with

Components

Drill String &

Down-Hole

Equipment

Bulk & Mud

System

NK

Sunil Gaejeon

Sambo Construcion

Machinery

Sukjin E&T

YNV

S&W

Kangrim

Kumgang

Daechang

Solution

Daewon

Industry

Sunbo

Industry

Hoseung Ent

KTE

JM Tech

Shinho

Valcan

Drill Floor

Equipment

& System

Sungil encare

Ilseung

Well Control

Equipment

& System

Project Leader : DSME

Sponsor : KOMERI

KICOX(Busan Branch)

*Total 39 company and institutions

Overview of Cluster Project

Process on development of offshore drilling system industry

and win-win cooperation of small, medium and large enterprises

Project leader: DSME

Network

DSME

Form domestic production

industry cluster network of

drilling system integration

technology-based drilling

equipment and materials

Cluster general assembly

Managing committee

Drilling localization technology

exchange workshop

Advanced technology seminar

R&D 1

Develop modularization

technology of riser tensioning

APV(air pressure vessels) for

offshore drilling system

Leader(SME) + Demand

(DSME)

Participation of Sunil Gyejeon

Development of equipment and

material technology

that can be domestically

produced in a short timeframe

R&D 2

Develop Korean

drawworks drum

For arctic drillship

Leader(SME) +Demand

(DSME)

Participation of Daewon Heavy

Industries

Development of equipment and

material technology that can be

domestically produced in a

short timeframe

Non R&D

Establish a technology support

mechanism for development of

drilling system integration

Participation of 21 companies and

institutions

Field customized education and

training

Mentoring on market-entry

knowledge

Support for test analysis and

compliance with international code

NK Daechang

Solution KOMERI

Domestic and overseas

benchmarking and demand

survey Support for prototype production

Overview of Cluster Project > Objective

NOV, AKMH Oil Major

N/W

(DSME) R&D

(NK, Daechang)

NOV, AKMH Oil Major

N/W(DSME)

R&D

(NK,Daechang)

BEFORE

AFTER

Overview of Cluster Project > Technology Development Structure 1

DSME

Daechang

Solution

KOMERI

Review spec

Negotiation skills

with supplier

Technical support, PQ

support, customized training

Domestic development

of drawworks drum

Overview of Cluster Project > Technology Development Structure 2

Develop key drilling

system materials

and equipment

Theme-based

Cluster Project

Platform for

Joint R&D

Daechang Solution

Material DB

Company A

Company B

Company C

Share

material

DB

Milestones of

Cluster Project

Milestones of Cluster Project

Cluster General Assembly (2 times a year/total 4 times)

Managing Committee (4 times a year/total 8 times)

Progress Meeting (12 times a year/total 24 times)

• Presented on annual results

and plan by members

• Held interim briefing

• Progress briefing by members

• Reported on the progress of

given theme

• Introduced managing committee

• Managing rules

• Discussed directions, reported on

progress

• Plan, and reviewed other agenda

• Checked monthly progress

• Result by members and discussed

matters to be decided

Milestones of Cluster Project

Drilling System Technology

Exchange Workshop (2 times a year/ total 4 times)

Seminar on

Advanced Technology (2 times a year/ total 4 times)

1. Introduction of 6th generation deep sea drilling

system (Prof. Lee Myung Ho/ KMOU)

2. Drilling & Mud System (Prof. Choi Jung

Geun/SNU)

3. Introduction of development of LP Mud

Treatment Equipment (President Hwang

Joong Deuk/ Woomin Tech)

4. Introduction of Doosungho, semi-submersible

rig drilling equipment (Director Park Jae Mun/

KNOC)

1. Modern Drilling Technology & DNV-Offshore Standard (Kang Seung Young/

DNV-GL)

2. Latest and New Technology of Drilling System (Dr. Jang Se Hoon/ Technip)

3. Latest technology trend of drilling operation (Prof. Lim Jong Se/ KMOU)

4. Major foreign patents on drilling system (Lee Sung Gyu/patent lawyer/ AIIP)

5. Advanced technology trend of drilling system (Prof Lee Myung Ho/ KMOU)

6. Introduction of DNV-GL test and certification on offshore plant equipment

(Kang Seung Young/ senior inspector/ DNV-GL)

7. Introduction of the Progress on Subsea test base for Equipment and Materials

of Offshore drilling system (Jujak) (Lim Dong Ju/ KOMERI)

8. Introduction of new drilling system (Kim Jung Min/ DSME)

Benchmarking

in Korea and overseas OTC and Benchmarking of

advanced technology(May 5~11 2014)

DSME tour and Drilling

ship sailing ceremony (Sep 23 2014) • OTC : Visited drilling equipment company

booths and carried out benchmarking.

Discussed individual interests of companies

visiting OTC and cluster companies

• Offshore plant industry exchange &

cooperation symposium (Increased networking

activities with the presence of 80 personnel

from MOTIE, related companies, institutions

and academia)

• Houston DSME Reception : Held networking

activities among owners, registry, large

companies and SMEs with the attendance of

NK and other cluster members

• Visited Houston OCEAN STAR Offshore

Energy Center to decide the direction of

domestic production of drilling equipment and

materials

• Understood the trend of offshore drilling

industry and identified items to be

localized during a ride on the drill ship

fabricated by DSME

• Visited DSME PR Hall, watched PR

video, toured shipyard etc.

Milestones of Cluster Project

Milestones of Cluster Project > Outcomes of Project

Established a framework for

localization-themed cluster of

drilling equipment and

materials, leading to a win-

win partnership among small,

medium and large enterprises

Cluster General

Assembly

Technology Exchange Workshop

Advanced Technology

Seminar

Domestic

/Overseas Benchmarking

Survey

Planned the

operation of

cluster

Feedback by

members

Facilitated

exchange among

members

Improved

understanding on

project

Acquired

technology

knowledge of

researchers

Management

sought direction

for development

Learned global

market trend

Identified

mid-to-long

term roadmap

Incorporated

next year plan

Collected

various opinions

Able to find a breakthrough for

localization through

continuous market

development

Found a need for continued

networking with foreign leading

companies and institutions to gain

required capabilities

OUTCOMES

Outcomes

Generated appr. 4.1 billion in revenue from

application of APV module, after its

development, to actual ships (H.3031/2/3/4/5,

H.3618)

1. Results of Project-related Domestic Production

Built a project-related track record of

delivering to major foreign drilling system

vendor (Appr. KRW3.2 bil)

- Laid the platform for the domestic

production of drawworks drum and material

technologies required for localization of

drilling system integration in the future

Completed PQ listing at foreign major drilling system vendor

- Laid the platform for the domestic production of derrick and

top driver required for localization of drilling system integration

in the future

Leader : NK, Sponsor : DSME and 3 Korean shipbuilders,

MOTIE, Busan Metropolitan Government, KICOX. Participated

by 40 valve-related equipment and material suppliers

OVC helped Korean companies’ discussion on the

establishment of domestic JVs with foreign valve suppliers

: NSV(discussing with OMB and 7 other companies),

DK-LOK(discussing with Viar Valvole ),

KMC(discussing with Mir V/V)

NK

Daechang Solution

Eungwang Industry

OVC linked activities : total 40 companies(institutions)

Outcomes

Planned the identification and chosen large state-sponsored national project (Bulk & mud H. system

development) related to domestic production of drilling system equipment and materials

- National project : Industry convergence core technology development project, - Total project cost : KRW10.9bil,

- Project period: Jun 1 2013~May 31 2015

2. Identification and Planning of Project-related Large National Projects

Performing activities to plan the establishment

of ‘Offshore plant topside engineering

technological independence TFT’

(MOTIE, 3 Korean shipbuilders, academia etc.)

Under discussion over building large drilling

equipment for onshore

and offshore testing as government project

(testing/certification of equipment and materials and

development of innovative equipment and materials)

Conducted East Sea Jujak project /

Deep sea drilling test platform project

(MOTIE, MOLIT, 3 Korean shipbuilders, KOMERI, KHAN etc.)

Carried out localization activities and

localization planning for

No.2 Doosungho

(semi-submersible rig) project

Outcomes

Expect localization of equipment and materials required for

fabricating the next Doosungho (semi-submersible rig)

Generated synergy by linking with Jujak-1, project on the use of

waste borehole

Overcame limitations in a development structure made up of

individual company

Achieved joint technology development and created new value

through advanced technology and technology exchanges

Established drilling localization-themed cluster conducive to win-

win partnership for small, medium and large enterprises

Expect a breakthrough in localization from continuous market

development

Established win-win network

Strengthen SME competitiveness

Link with large national project Aggressive

localization

Successful

market entry

Value

creation for

companies

Localization

of offshore

module

Cooperation

for win-win

partnership Cross

industry

synergy

Drilling

Theme

Cluster

Thank you