Investor That Can See The Future

Chapter 202

PAS was originally a small company focusing on plastic parts such as dashboards and interior materials for automobiles. In the process of rapid growth, it has grown in size by merging domestic and foreign parts makers, among them TKT Precision, which developed its own airbags.

TKT Precision, named after its founder Tak Kwon-taek, was ranked as a small but strong company among domestic auto parts makers.

At that time, the company size, sales, and operating profit were not even comparable to PAS, but unfortunately, it was acquired by PAS.

To use an analogy, it is like a shrimp swallowing a whale. There were not one or two things that were not clear in this process.

“How did you take over?”

“It’s an obvious pattern.”

TKT Precision, a seat belt manufacturer, developed a new airbag after years of investment and passed the safety inspection of the Ministry of Land, Infrastructure and Transport.

However, since airbags are important safety equipment, automakers did not easily change partners. When I was frustrated that I could not get a delivery contract, Eunseong Cha reached out. It was proposed to supply airbags to TKT Precision.

President Tak Kwon-taek did not make any mistakes as he had been in business for a long time. He carefully proceeded with the supply contract, and after receiving an advance payment from Eunsung Motors, he expanded facilities and hired staff to start full-scale production. And delivered on the specified date.

The problem occurred at this time.

It did not pass the safety inspection conducted inside the Eunseong car.

In this case, of course, the fault lies with TKT Precision. It’s easy to blame a problem, but it’s not easy to prove that there isn’t a problem. At this rate, instead of receiving the delivery fee, they would have to pay the advance payment they had already received and bear compensation for damages resulting from non-performance of the contract.

When I inquired about the Ministry of Land, Infrastructure and Transport, only answers came back that solved problems between companies.

I looked for delivery to other automakers, but there was no company that offered to receive airbags that did not pass the safety inspection of Eunsung Motors.

Debt and facility expansion came back as a boomerang. Eunsung Motors also did not receive airbags on time, and new car shipments were delayed for more than a week.

Eunsung Motor wanted another company and threatened to file a claim for damages against TKT Precision, and TKT Precision, a solid mid-sized company, was on the verge of bankruptcy.

At this time, PAS offered to take over. The condition was to succeed in all debt and employment. President Tak Kwon-taek had no choice but to hand over TKT Precision to PAS at a low price. Even at a low price, the sale price reached 30 billion won.

At the time, PAS could not afford to pay that much money. However, this problem was solved very easily.

Eunsung Motor lent money directly to PAS and provided a guarantee for payment to the bank. The bank loaned the acquisition funds at a low interest rate, and in the end, PAS succeeded in acquiring TKT Precision.

“What happened next?”

“It’s obvious.”

Instead of claiming damages, Eun Sung-cha gave him one more chance. PAS delivered an improved airbag (I don’t know what improved it), and this time it passed the safety inspection easily.

Since then, PAS has become the most important supplier by supplying airbags and seat belts exclusively to Eunsung Motors. Even today, airbags account for the largest portion of PAS sales.

Taek-gyu crossed his arms and said.

“If you look at the series of processes, you can reasonably suspect that Eunsung Motors and PAS were scheming and fraudulent to acquire TKT Precision.”

“So President Tak Kwon-taek, who lost his company, reported it to the media and sued the prosecution.”

“How are you?”

“As usual, the media remained silent, and the prosecution closed the case with an acquittal.”

For reference, TKT Precision was not the only company PAS acquired in this way. There are also companies that have taken over for free by putting them in a corner by blocking delivery.

Anyway, the important thing now is that it will be recalled due to airbag issues.

What the hell is wrong with it?

If you are not sure, would it be better to ask someone you know?

“where?”

“On Karos.”

I called Daryl. He welcomed my call.

[It’s been a while, CEO.]

“How are you?”

[of course.]

“How about the lab?”

[no problem. Vehicle sales are also recovering, inventory is almost exhausted, and factory utilization is rising.]

Originally, Karos was headquartered in Silicon Valley. After merging with Chrysler, the headquarters moved to Detroit and the research center remained, but the research center was moved to Detroit due to Big One.

In the process, some of the key personnel who did not want to leave Silicon Valley left, but now almost all of them have returned.

Because Silicon Valley is completely gone.

The research was temporarily suspended due to the relocation of the research center, confusion in the United States, and the departure of key personnel, but now it is back to normal. It is unavoidable that the release date of the new car is delayed by several months.

[When are you coming to Detroit? All the staff are looking forward to seeing you.]

“I want to see everyone too. please say hi.”

After the greeting was over, I brought out the main topic.

“Send me some data about the Eunsung car airbags.”

[What is it for?]

“I’ve read a few articles, and I have some things to check.”

[Okay. We will arrange it immediately and send it to you.]

* * *

next day.

While Taek-gyu was gone, I looked through the data sent by Carlos. Among them, one paper stood out.

A paper published in a British academic journal pointed out the possibility of a defect in the silver car airbag. The author is Professor Pil-Hyun Park of the Department of Automotive at Hankuk University.

He is a renowned automobile expert at home and abroad, and has even received the title of “Automobile Master No. 1” from the government.

The reason the past tense is because the master system was abolished after Park Si-hyung became president.

As the domestic automobile market is a monopoly system of Eunsung Motors, related experts are generally favorable to Eunsung Motors. However, Professor Pil-Hyeon Park actively raised the issue of defects regardless of the company.

On one occasion, he pointed out a leaky defect in the engine room of a new car released by Eunseong. Then, instead of recalling, Eun Seong-cha sued Professor Park Pil-hyun for ‘obstruction of business’ and ‘defamation by dissemination of false information’.

Everyone was at a loss for words in the ridiculous situation that a large company sued experts for pointing out a problem with the product.

Although the prosecution ended the charges, domestic experts have been silent on the flaws of the Eunsung car since then.

I leaned back on my chair and carefully read the structure and principle of the airbag.

A substance called tetrazole is generally used in airbag propellants. However, the airbags made by PAS use Ammonium Nitrate.

“Tetrazole and ammonium nitrate… … .”

Before that, what is propellant?

Of course, we don’t learn these things in the liberal arts department.

Because of the battery, it was not enough to study NCM and LFP, now I have to study airbag propellant. After that, the terminology continued one after another. I read it a few times, but I didn’t quite understand it.

Is this the limit with the door?

In this case, it is best to ask the person who wrote the thesis directly. I don’t even have a face-to-face meeting with Professor Pil-Hyun Park, but I can introduce myself.

I called the head of the department of business administration after a long time.

“Hello, Professor Myung-Jun Kim.”

A friendly voice came from over the phone.

[Who is this? Isn’t that my disciple and American hero Kang Jin-hoo?]

Is the shame my part?

“No. What is a hero?”

[Thanks to you, the business school kids are working hard on their necks these days. All the kids who stand up with stiff necks on campus can be regarded as business administration majors. What did you call for?]

I quietly spoke out.

“I have a question for Professor Pil-Hyun Park of the Department of Automobile. Could you please connect me?”

[what? I thought it was a safety call, was that because of that? This is a bit sad.]

“Oh, sorry.”

I feel sorry for always contacting you only when you need it.

Professor Myung-Jun Kim said with a smile.

[I’m kidding. Aren’t you asking me to introduce you for free? This time, I need to get an introduction fee.]

“… … .”

I’m not sure if this is a joke or a serious one.

“How much… … ?”

[Let’s do one lecture at school later. Business school kids want to see you a lot.]

“Yes?”

[If you don’t like it. I just cut it off.]

“Oh, no. I will.”

[Haha, well thought out. I’m not a professor I know well, so I’ll talk about it first and let you know.]

“Yes. Thank you.”

After the call ended, I waited for a while.

Has it been 15 minutes?

I got a text message from Professor Myung-Jun Kim.

[I told you, you can call me now. Don’t forget the introduction fee.]

I sent a thank you reply and immediately called the number I received. As if waiting, the call was immediately connected.

[Hello.]

I said politely.

“Hello, Professor Pilhyun Park. My name is Jinhoo Kang, Department of Business Administration. I contacted Professor Myung-Jun Kim with an introduction, is it okay to call?”

Professor Pil-Hyeon Park burst into laughter.

[Five! Are you really Kang Jin-hoo? This is an honor. Can I go home and brag to the kids?]

“I am honored. I’ve always heard the professor’s name a lot.”

[Haha, but what’s going on?]

“Nothing else, I was reading your thesis, and I have a question for you.”

[Which paper?]

“A paper on silver-star airbags that was published in a British academic journal three years ago.”

[Ah, that. What are you curious about?]

“The professor pointed out a problem, and I want to know more about it.”

[As written in the thesis. You would know if you read it.]

“Ah… … Since I’m a business major, I don’t know much about this kind of thing.”

[Haha, it could be. In fact, I didn’t know what to say when I read the papers of professors from other departments. To put it briefly, this is it. An airbag is a device that protects the life and safety of the driver in the event of an accident and must be deployed immediately in the event of a collision. In this case, propellant is used. The propellant is compressed and contained in a metal case called an inflator, which explodes within 15/1000 of a second the moment an electric signal is transmitted. The gas generated at this time inflates the airbag.]

“i See.”

I had no idea that such a scientific principle was hidden in airbags.

[The core of the airbag is the propellant. I used to use sodium azide, but now I usually use tetrazole. But only PAS uses ammonium nitrate.]

“Why?”

[Because we can reduce the cost. The proportion of propellants in the cost is quite large, but the price of ammonium nitrate is only one-tenth that of tetrazole. It’s even more effective because you can reduce the size here.]

Was the cost reduction the goal?

It was TKT Precision, not PAS, that developed this airbag. As a latecomer, it would have been impossible not to focus on price competitiveness.

“Why don’t other companies switch to ammonium nitrate?”(Read more @ wuxiax.com)

[Because safety is low. The airbag propellant should only detonate exactly enough to inflate the airbag. However, ammonium nitrate is very unstable compared to tetrazole. Mainly used in commercial explosives. In addition, there is a risk that the explosion will rapidly accelerate in case of contact with water or high humidity.]

“Then what will happen?”

[There is a risk of injuring the occupants by blowing up fragments if an explosion more than necessary is caused. In fact, there have been several similar incidents.]

His eyes lit up at those words.

“Then shouldn’t we call it back?”

[I think so, but you passed the safety inspection anyway. In fact, if the humidity is low, there is no problem at all. You have to prove the risk to get them to recall.]

“How do you prove that?”

Professor Pil-Hyun Park said simply.

[You can do a collision test yourself. Actually, I wanted to try it while writing a thesis, but it didn’t cost me a penny or two. Unfortunately, I just had to be satisfied with an alternative experiment.]

The car crash test is carried out by loading a dummy in a car and then crashing under various accident situations. Tea and piles used in the experiment should be discarded as they are.

However, the price of a car is also the price of a car, but the price of the dummy is not cheap. The basic price is 100 million each, and the expensive one is over 1 billion.

To run the experiment properly, you need at least billions of dollars.

I suggested to Professor Pil-Hyun Park.

“Then why don’t you try this once? I will pay for it.”

* * *

Karos employees bought dozens of cars around Eunseong tea stores.

Due to Big One, retail sales decreased and inventory was overflowing, so shipments were made immediately. Also, in the used car market, silver cars were purchased by model year and model.

To their surprise, the cars headed to the Carlos Labs in Detroit. There, the researchers began conducting silver-star car crash tests.

This fact soon became known to the industry.

Park Si-hyeong, who was reported to the PAS management, was bewildered.

“What else is this guy trying to do?”

I’ve been through so much bad things in the meantime, so now, if Jinhoo Kang does something, he gets stressed out.

Why are you buying an alternative competitor’s car and doing a crash test? This is also against morals.

Park Si-hyeong immediately contacted Chairman Eun Seong-cha and Han Min-koo.

“Did you hear the news?”

To Park Si-hyung’s question, Han Min-goo answered with a heavy voice.

[I heard, President.]

“What the hell is Jinhoo Kang up to? Do you know?”

[When I checked, she said she was checking for an airbag problem. Professor Pil-hyun Park of Korea University has moved to Detroit and is conducting the experiment.]

Park Si-hyung was startled and almost dropped his cell phone.

“Hey, is that really true?”