"100% Imported... Misconceptions About Localization Lead to Headstrong Efforts" Bold Aviation Entrepreneur

Interview with Jinseop Kim, CEO of Sub, the First Domestic Company for Materials and Components in the Aviation Sector
Success in Domestic Production of Aluminum Pallets... "We Will Challenge the 1.3 Trillion Won Market with Our Technology"

After 7 years of development, CEO Kim Jin-seop of Serve, who succeeded in domestic production of aluminum pallets for air cargo, is posing in front of the pallet he personally developed. Photo by Kim Hee-yoon

[Asia Economy Reporter Kim Heeyoon] Amid the heatwave and the aftermath of the novel coronavirus infection (COVID-19), the factory is so busy with steel processing machines running nonstop and employees moving busily that the heat seems forgotten. The factory of Sub Co., Ltd. located in Mado Industrial Complex, Mado-myeon, Hwaseong-si, Gyeonggi Province, was filled with cargo pallets made of aluminum and steel pipes. Among them, a silver panel occupying one side of the factory wall catches the eye. It is the country’s first domestically produced ‘aluminum pallet’ for aircraft baggage.

The aircraft manufacturing industry, which combines more than 200,000 parts?ten times that of automobiles?has a complicated certification process and requires long-term initial investment, making it a market with high entry barriers for small and medium-sized enterprises. Overcoming these difficulties, Kim Jinseop, CEO of Sub, who succeeded in domestic production of aircraft cargo pallets previously fully dependent on imports, said, “The number of domestic aircraft is increasing every year, but I learned that cargo pallets are entirely imported items, and I really wanted to take on the challenge with our technology.”

Sub, a company specializing in manufacturing aluminum and steel pallets, is a 10-year-old company, but before founding it, CEO Kim gained experience in the related industry by working as a site manager at a pallet company. When the business stabilized by securing large clients such as Hyundai and Hanwha, visiting an aircraft cargo site became the start of a new challenge. CEO Kim said, “In 2012, I happened to see Asiana Airlines’ loaded cargo at an air cargo terminal. I asked where they sourced the aluminum containers and pallets, and I was told they were 100% imported. I thought it was definitely possible to challenge with our technology, so I jumped in without hesitation.”

Cargo pallet for aircraft developed and certified by Sub Co., Ltd. Graphic by Jinkyung Lee, Designer

Aircraft cabin cargo is stacked on pallets made of aluminum, then secured with vinyl and straps, transported by forklift, and loaded into the cabin. Typically, aluminum pallets are mainly used for cargo planes because they are lighter and more convenient to move than containers, which are used less frequently.

Product development was a continuous struggle. CEO Kim spent seven full years on development, purchasing professional books from foreign pallet and container companies and seeking help from the Korea Aviation Safety Technology Institute and the Ministry of Land, Infrastructure and Transport, all while standards were unclear and regulations unknown. The annual research and development cost of about 100 million KRW was covered by sales from the steel pallet business. CEO Kim explained that beyond money, the lack of standards was more daunting. “Since there were no domestic development cases, related institutions had to establish standards, and all basic data had to be imported from abroad and created ourselves. It truly felt like walking in a fog.”

Unit Load Devices (ULD), including cargo pallets, number about 900,000 worldwide. The domestic aviation industry requires about 20,000 units, with annual replacement and repair costs each around 3 billion KRW. Since all were imported, this led directly to foreign currency outflow.

Company Information of Sub Co., Ltd. Graphic by Designer Jin-Kyung Lee

After seven years of research, Sub’s aircraft cargo pallet was finally completed and received the Ministry of Land, Infrastructure and Transport’s ‘Aircraft Equipment Technical Standard Type Approval (KTSO)’ last year, and in April this year, it obtained certification from the U.S. Federal Aviation Administration (FAA). All international aircraft equipment must be certified by the FAA and the European Union Aviation Safety Agency (EASA) before being loaded into aircraft. In this process, support from the Ministry of Land, Infrastructure and Transport, the Korea Aviation Safety Technology Institute, and Gyeonggi Province was greatly helpful. CEO Kim said, “In the final stages of development, we were selected as a Gyeonggi Province materials and components domestic production company and received 400 million KRW in operating funds, which allowed us to complete the technology. Following pallets, aircraft cargo containers are currently under certification review by the Ministry of Land, Infrastructure and Transport.”

The joy of being the first in domestic production of materials and components in the aviation sector was brief. Just as Sub received FAA certification and was about to start full-scale business, the global aviation industry rapidly froze due to the COVID-19 impact. Korean Air, considered a major domestic client, had signed an option contract last year to outsource pallet and container transport operations to foreign companies for five years. Asiana Airlines was also struggling with acquisition issues, making proposals difficult. However, CEO Kim’s expression was bright. He said, “We are receiving many inquiries mainly from Canadian and Russian airlines. We have clear advantages in price competitiveness, so we want to gain experience first by dealing with foreign airlines, then proceed with full-scale domestic production, and eventually challenge repair and sales businesses as well.”

This content was produced with the assistance of AI translation services.