Policy Consultation on Promotion of Mechanical Parts Industry, And
Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Policy Consultation on Promotion of Mechanical Parts Indus- try, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico
Project Title Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico
Prepared by Center for Korean Prosperity Korea Research Institute for Vocational Education & Training Moravian Fratrum Consulting KR Consulting
Supported by Ministry of Strategy and Finance (MOSF), Republic of Korea Korea Development Institute (KDI)
Prepared for The Government of the United Mexican States
In cooperation with Mexican Agency for International Development Cooperation, United Mexican States Ministry of Education, United Mexican States Secretariat of Economic Development of the State of Hidalgo, United Mexican States Secretariat of Education of the State of Hidalgo
Program Directors Hong Tack Chun, Executive Director, Center for International Development (CID), KDI MoonJoong Tcha, Senior Advisor to Deputy Prime Minister and Minister of Strategy and Finance, Former Executive Director, CID, KDI Taihee Lee, Director, Division of KSP Consultation, CID, KDI
Program Officer Jeong Seok Kim, Associate Research Fellow, Center for Korean Prosperity JongPil Moon, Research Associate, Division of KSP Consultation, CID, KDI
Senior Advisor Young Kyo Oh, Former Minister of Public Administration and Home Affairs
Project Manager Joseph Im, Director, Center for Korean Prosperity
Authors Chapter 1. Man Soo Joun, Professor, Gyeongsang National University; Kang-Rak Lee, CEO, KR Consulting Chapter 2. Eun Sang Cho, Research Fellow, Korea Research Institute for Vocational Education & Training; Young Soo Kim, CEO, Moravian Fratrum Consulting
Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry- Academy Cooperation in Hidalgo of Mexico
2013
K R I V E T Preface
In the 21st century, knowledge is one of the key determinants of a country’s level of socio-economic de- velopment. Based on this recognition, Korea’s Knowledge Sharing Program (KSP) was launched in 2004 by the Ministry of Strategy and Finance (MOSF) and the Korea Development Institute (KDI). KSP aims to share Korea’s development experience and knowledge accumulated over the past decades to assist socio- economic development of the partner countries. Former high-ranking government officials are directly involved in policy consultations to share their intimate knowledge of development challenges, and they complement the analytical work of policy experts and specialists who have extensive experience in their fields. The government officials and practitioners effectively pair up with their counterparts in develop- ment partner countries to work jointly on pressing policy challenges and share development knowledge in the process. The Program includes policy research, consultation and capacity-building activities, all in all to provide comprehensive, tailor-made assistance to the partner country in building a stable foundation and fostering capabilities to pursue self-sustainable growth.
2012 is the first year to conduct KSP with Mexico. Based on the written demand survey form as well as the discussion with the Mexican government, the program was launched in May, 2012, focusing on the following two topics: Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico.
I would like to take this opportunity to express my sincere gratitude to Senior Advisor Mr. Young Kyo Oh and Project Manager Mr. Joseph Im, as well as all the project consultants including Dr. Man Soo Joun, Dr. Eun Sang Cho, Mr. Kang-rak Lee, and Mr. Young Soo Kim for their immense efforts in successfully completing the 2012 KSP with Mexico. I extend my warmest thanks to Dr. Octavio Tripp, Director General for Technical and Scientific Cooperation of the Mexican Agency for International Development Cooperation (AMEXCID), as this bilateral project would have not been productive as desired without his sincere leadership and com- mitment of his team. I appreciate from my deepest heart, contributions of Mr. Eduardo Calderón, Advisor to the Vice Minister of Upper Middle Education, Ministry of Public Education (SEP), Mr. José Pablo Maauad, Secretary of Economic Development of Hidalgo, and Mr. Joel Guerrero, Secretary of Public Education of Hidalgo. I cannot fail to thank Mr. Eduardo Cuevas, CIATEQ and Mrs. Rocío Serrano, Prof. José Ibarra Oliva- res for their indispensable roles as local consultants. I feel honored to receive active support from other government agencies and individuals. At last but least, I offer special gratitude to Ms. Lorena García for her devoted efforts in coordination.
In your hands is the publication of the results of the 2012 KSP with Mexico. I sincerely hope the final research results including policy recommendations on the selected areas could be fully utilized to help Mexico in achieving economic development in priority areas in the near future.
Young-Bong Kim President Center for Korean Prosperity Contents
2012 KSP with Mexico… ………………………………………………………………………………………………………………………………………………………………………………………… 12
1. Current State of Hidalgo’s Technical Manpower Development… ……………………………………………………………………… 104
1.1. Employment in Hidalgo… …………………………………………………………………………………………………………………………………………………… 104 Contents
1.2. Current State of Education System in Hidalgo … ………………………………………………………………………………………………… 106
1.2.1. Mexican vocational education and training system: technical high schools…………………… 106
1.2.2. Current state of vocational education in Hidalgo… …………………………………………………………………………… 108
1.2.3. Current state and problems of CONALEP and CBTis… ……………………………………………………………………… 109
2. Korea’s Similar Experiences and Implications… ……………………………………………………………………………………………………………… 113
2.1. Cases of technical manpower development in high school… …………………………………………………………………… 113
2.2. Industries and vocational education and training in the 1960s to 2000s… ……………………………………… 113
2.3. Comparison of different types of Korean VET high Schools… …………………………………………………………………… 116
2.4. Activities, problems, and results of Specialized High Schools…………………………………………………………………… 117
2.5. Current state, results, and future development of Meister High Schools… ……………………………………… 123
2.5.1. Introduction of Meister High Schools and their organization…………………………………………………… 123
2.5.2. Industry-academy cooperation model for fostering Meister High Schools… …………………… 125
2.5.3. Overview of policy of fostering Meister High Schools and their results… …………………………… 126
2.5.4. Problems with Meister High Schools and developmental direction… …………………………………… 130
2.5.5. Policy Implications of Mexican vocational education………………………………………………………………………… 143
3. Policy Recommendations for Vocational Education of Hidalgo………………………………………………………………………… 144
3.1. Re-establishment of goals of technical high schools (short term policy)… ……………………………………… 145 3.2. Development of Education Programs Customized to Industry-Academy Cooperation
(short term policy)… ………………………………………………………………………………………………………………………………………………………………… 146
3.3. Enhancement of teachers’ industry experience and qualifications (Mid-long term policy)… …… 146
3.4. Establishment of a system that prevents midway dropout (mid-long term policy)…………………… 147 3.5. Re-establishment and promotion of a system to link enrollment after employment
(mid- to long-term policy)…………………………………………………………………………………………………………………………………………………… 147
3.6. Establishment of a think tank for vocational education training and labor development
(mid- to long-term policy)… …………………………………………………………………………………………………………………………………………… 148 3.7. Establishment of first Mexican Meister High School with government support
(mid- to long-term policy)… …………………………………………………………………………………………………………………………………………… 149
References……………………………………………………………………………………………………………………………………………………………………………………………………………… 151 Contents | LIST of Tables
Imports trend of automobile parts 31
Mexico’s steel production (million tons) 33
Hidalgo’s demographics and employment 36
2011 employment 38
Summary of government’s key policies and effects 45
Summary of Parts & Materials Special Act 48
Summary of Materials & Parts Future Vision 2020 52
Performance of six major root industries 53
Summary of major demand industries’ development 55
Summary of basic industries and parts & materials industry 58
Summary of recommended programs for promoting Hidalgo’s Mechanical parts industry 98
Activities and Problems of Specialized High Schools 120
Summary of recommended programs of Hidalgo’s technical manpower development 150 Contents | LIST of Figures
Automotive sales by brand in Mexico 31 Location of assembly factories of major automotive brands 32 Mexico’s steel market 34 Mexico and the State of Hidalgo 36 Industrial locations of Sahagun 39 Classification of Mechanical parts industry of Hidalgo (1) 39 Contribution by product type of Mechanical parts industry of Hidalgo 40 Import and export of Hidalgo 41 Classification of Mechanical parts industry of Hidalgo (2) 41 Six major root industries 53 Contribution of six root industries to automobile production 60 Global top ten countries in casting (2010) 64 Number of operating metal-casting plants 65 Examples of Z-CAST application 66 Multi automatic transmission and forging 69 Production & trade of Korea’s forging industry (2008) 72 Trade statistics of Korea’s forged products (KITECH) 72 Application of AFDEX to process design 73 Mold exports of Korea (In thousand dollars) 76 Industry-academy cooperating system in the mid-2000s 78 The number of corporate R&D centers in Korea 78 Gyeongsangnam-do’s (province) second phrase of RAP concept chart 80 Industry-academy Research Cooperation Support Model 82 Key Map of e-Design Center 84 Virtual CNC process technology education software 85
Diagram of CONALEP program 110 Course of vocational education policies from 1960 to present 115 Progress of employment and college entrance rate in technical high schools 115 Organization of Meister High Schools 124 Industry-academy cooperation model of Meister High Schools 126 Career path of Meister High School graduates 127 Selected Meister High Schools 127 Achievements of Meister High School promotion policy 130 Collaboration model for a Mexican Meister High School 149
2012 KSP with Mexico
Jeong Seok Kim (Program Officer, Center for Korean Prosperity)
A joint statement over KSP was released when President Lee Myung-bak visited Mexico in 2010, and both sides agreed to push forward the plan as soon as possible during G20 meeting of Finance Ministers and Central Bank Governors in 2012. In 2012, the federa l government of Mexico requested consultation on designing policies to promote Mechanical parts industry, to foster human resources, and to expedite industry-academic cooperation of Hidalgo.
Secretariat of Foreign Affairs (SRE) of Mexico conveyed the result of demand survey to the Korean Embassy in Mexico on September 30th, 2011, and the embassy turned in the result to the Ministry of Strategy and Finance on October 11th, 2011. A demand organization is the Sec- retariat for Economic Development (SEDECO) of Hidalgo and the Secretariat of Public Education (SEP) of the federal government. In the interest of the improvement of Mechanical parts indus- try, SEDECO asked for consultation on policies: 1) to innovate technology in metal-Mechanical sector; 2) to develop new product and production process in metal-Mechanical sector; and 3) to boost the capacity of human resources. In order to foster technical labor force and promote cooperation between industry and academy, SEP requested consultation on measure: 1) to con- nect vocational high schools with corporations in Hidalgo; 2) to develop models to strengthen the ties with the key industries; 3) to specialize human resources of industry-academic com- mittee; and 4) to strengthen multicultural capacity in sectors such as cultures and sports. After looking into the conditions in Hidalgo and having discussions with the demand organizations, the advisory team decided specific topics for the SEDECO’s request: 1) measures to innovate Mechanical parts industry (focusing on casting industry); 2) measures to foster metal forming industry, which is underdeveloped in Hidalgo, focusing on developing new products and new processes; 3) measures to boost industry-academy cooperation and to nurture competent
012 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico manpower; and 4) measures to achieve Korea-Mexico cooperation (for example, establishment of cooperation centers). The team chose specific topics as follows for SEP’s request: 1) how to increase employment of technical high school students; 2) how to develop curriculums con- necting industry, academy, and institutes; and 3) how to develop long-term plans for technical high schools.
Center for Korean Prosperity (CKP) takes charge of the overall project management. Project managers (PM) would be assigned to each topic of the project -- Mechanical parts industry sector, technical manpower, and industry-academy cooperation -- to manage performances.
Consultation Topics Korean Researchers Mexican Researchers 1. Promotion of Mechanical Dr. Man Soo Joun Dr. Gerardo Sánchez Parts Industry Mr. Kang-rak Lee Mr. Eduardo Cuevas 2.Development of Technical Man- Dr. Eun Sang Cho Mrs. Rocio Serrano power and Promotion of Industry- Mr. Young Soo Kim Mrs. Flor de Guadalupe Pérez Academy Cooperation Role Name Senior Advisor Mr. Young Kyo Oh Dr. Octavio Tripp Project Manager Mr. Joseph Im Program Officer Mr. Jeong Seok Kim Ms. Lorena García
A team of 6 researchers, including general PM, visited Mexico City and Hidalgo from August 26th to September 6th in order to understand what the Mexican demand organizations need and to study the real conditions of related organizations, companies, and schools. They met SRE of the federal government and SEDECO and SEP of Hidalgo, and visited three institutes concerned with Mechanical parts industry and five schools concerned with development of technical education. During several meetings, they learned the current state of the country and attempted to figure out the challenges and countermeasures by question and answer.
The four strategies, (technology innovation, process development, new product develop- ment, and education & training), which SEDECO suggested for Mechanical parts industry, ap- pear reasonable in principle. However, other factors, such as sector types and the company scale, should be considered first because of economy distorting factors including overdependence on railway sectors, smallness of most domestic industry, industrial structure excessively focusing on assembly industry. Analytical limits were found due to the lack of structural and quantitative researches. However, SEDECO’s keen interest in KSP and the will to cooperate were considered positive signs.
2012 KSP with Mexico ● 013 The demand survey results mostly dealt with the need to strengthen industry-academy co- operation committee and to create industry-academy cooperation model while the research on actual conditions found structural dilemmas such as discrimination that technical school graduates face in a job market and their consequent choice to go to universities. Korea also had the similar experience until the mid 1990s, so sharing Korea’s experiences would be helpful. The consultation ranges from measures to raise employment of the technical school students, de- velopment of curriculums befitting industry-academy-research cooperation, preferential treat- ment for technicians to improve cooperation between Korea and Mexico.
A delegation of 10 consisting of government workers, including a director of SEP of federal government, undersecretary of SEDECO of Hidalgo, businessmen, and local consultants, visited Korea from October 28th to November 4th in 2012. They shared their survey results with the Korean counterparts during interim briefing session. They also had a chance to learn about the current policies, industry-academy link programs, and curriculums by visiting the relevant institutes and companies.
The party of Hidalgo’s SEDECO, which cared about Mechanical parts industry, showed big in- terests in SME support program conducted by Korea Institute of Industrial Technology (KITECH) southeast regional headquarters, and hoped that the similar research center could be launched in their state. They also visited Gyeongsang National University and Gyeongnam Techno Park and agreed to find cooperative measures for exchanges of technology and human resources. Dong Eun Forging Co., LTD. and Yonghyun Base Materials displayed interests in entering the Mexican market, and the undersecretary of SEDECO promised that the state government would provide support when they establish a subsidiary in Mexico down the road.
The party of SEP director, which cared about technician nurturing, paid a great deal of atten- tion to the role of Korea Research Institute for Vocational Education & Training (KRIVET) as a think tank. Plans to promote cooperation between SEP and KRIVET are on the table. Specific measures to achieve school-work links were discussed when they visited Gumi Electronic Technical High School and Seoul Technical High School (specialized high school), and the division of education, science, and technology carefully listened to the related overall policies of Korea.
Conversations of higher officials and the final briefing session were held at the SRE building of Mexico for two days on February 13th and 14th, 2013. The head of international develop- ment cooperation division under SRE, and the secretaries of SEDECO and SEP of Hidalgo joined, and Korean Ambassador to Mexico Hong Seong-hwa, Senior Advisor Young Kyo Oho, and the project team attended the meeting. A heated conversation took place over the project team’s research results as well as over the school-work links and lowering dropout rate of technical high school which were hot issues for both Hidalgo and the federal government of Mexico.
Many participants argued that Mexico needed to adopt Korean measures to foster six root industries and SMEs in Mechanical parts industry. When it comes to nurturing technicians, the
014 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico relevant division of SEP requested consultation in order to come up with measures to apply Meister High School Program of Korea to CONALEP of Mexico. As a result, the project team agreed to share Korea’s experiences and continue to work together in the future. SRE said that the achievement of the project was remarkable, and hoped that KSP could expand to other ar- eas. Along with that, the project team talked with relevant division of SRE about how to enhance the executive power of federal and local government for the project.
2012 KSP with Mexico ● 015
Executive Summary
Joseph Im (Center for Korean Prosperity)
The federal government of Mexico and the state of Hidalgo called for the promotion of Mechanical parts industry and technician development and school-work links in Hidalgo as the topics of 2012 KSP. In order to achieve the promotion of Mechanical parts industry, the advisory team carried out their research to figure out measures: 1) to innovate technology in Mechani- cal parts industry focusing on casting industry, 2) to foster metal forming industry, which is underdeveloped industry in Hidalgo, to develop new products and new process, 3) to boost industry-academy cooperation and manpower, and 4) to achieve Korea-Mexico cooperation (establishment of cooperation center). The team chose specific topics as follows for technician nurturing and school-industry cooperation: 1) how to increase employment of technical high school students; 2) how to develop curriculums connecting industry, academy, and institutes; and 3) how to develop long-term plans for technical high schools.
1. Promotion of Mechanical Parts Industry of Hidalgo
Hidalgo, Mexico has many strengths and much potential to improve the Mechanical parts industry. In reality, however, it has structural and institutional restrictions. It faces various chal- lenges: inexperience, insufficient industrial infrastructures, poor industry-academy cooperation, a lack of high-quality human resources, labor issues, inadequate industry certification system,
016 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico poor support system, reorganization of small enterprises and advancement of the industrial structure. In order to deal with these problems industry-academy-research cooperation is indis- pensible. Especially, the role of colleges as a main player of innovation is crucial.
Mexico, located in North and Central America where the biggest demand for casting comes from, has great potential to achieve success in the casting industry. The Mexican government has to strengthen viable cooperation between the industry, academy, and research institutes through R&D support in order to fortify self-sufficiency of the casting industry. The authorities also should come up with measures to increase the innovation capacity by encouraging for the companies to establish affiliated research institutes. Needless to say, it also needs to build the favorable conditions for major corporations and SMEs to grow together. Industry, colleges, and researchers should work together to hold a forum and make efforts to secure competent human resources with master’s degree.
Hidalgo has to foster metal forming industry in order to be self-sufficient in forging prod- ucts, quality basic materials, so that the state can produce vehicle parts, particularly parts for sedans which has high added value. The government needs to provide R&D subsidies to firms that make investments in their equipment and facilities. The local authorities should found CAE technology center, forging metal forming technology center, and training center in cooperation with colleges and raise competitiveness of the metal forming industry including forging. The local government also should extend financial aid to the cooperative R&D of industry-academy- institute in order to develop common core technology and to upgrade competitiveness in an early stage. The viable measure to get fruitful results quickly is to attract competitive foreign forging companies in cooperation with a number of assembly firms in Mexico. In addition, as a phased development strategy, it also should invite foreign enterprises in sectors like hammer forging, which the country lost its national competitiveness in advanced nations.
Invigorating industry-academic cooperation is very important, considering Korea’s experi- ences and Hidalgo’s or Mexico’s top-down industrial structure. Establishment of Techno Park is currently carried forward in Hidalgo. TPs should be the institutes which can provide SMEs with practical help.
One of the biggest stumbling blocks of Mexico’s economy is that the nation highly depends on imports for major parts. The fundamental solution for this problem is to attract investments by cooperating with countries concerned about high logistics expenses like Korea. Constant exchange of workforce and information should come first to accomplish more specific and solid cooperation. Korea-Mexico Cooperation Center needs to be founded in universities, and the operation fund should be financed from both countries. One way to boost the interchange and cooperation is that Korea donates CAE software for machine parts production process, developed by Korea, to Korea-Mexico Cooperation Centers in universities or TPs for purposes of education and research.
Executive Summary ● 017 In addition, to attract investment into enterprises and to encourage academic activities, Korea-Mexico Cooperation Centers in both countries need to host academic events or road shows in turns on a medium-and long-term basis. And Korea-Mexico interchange and coop- eration of manpower will be solidified by Korean universities or centers taking full charge of education for graduate students sent from Mexico. Also, the colleges should make efforts to relieve such students’ financial burden by exempting tuitions and to make favorable conditions for their settlement by offering dormitory rooms. It is desirable that students and professors are exchanged on a mutual basis.
2. Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo
The state of Hidalgo, situated two hours away from Mexico City, has agriculture, manufac- turing and mining as its main industries. Despite its proximity to the capital city, the state has characteristics of poor states, with only 54 percent of economically active population employed. Currently, the state government is focusing on promoting manufacturing sector by taking mea- sures to promote automotive parts and train manufacturing industries and by establishing plans for construction of a new industrial complex. However, technical manpower development is hard to achieve at a time when there is lack of technical labor forces in terms of quantity and quality, and students are having hard time finding jobs.
Vocational high schools in Mexico can be divided into a variety of institutions according to managing body and type, and among them, the focus of this study is on two types of vocational high schools: CBTis, a type of technical high school; and CONALEP, a type of professional techni- cal high schools. The former’s ratio of employment to college entrance is two to eight, the latter, eight to two, and most of the students can land a job, if they want to. But since many of them want to go to college, students tend to prefer CBTis.
Korea also saw the tendency for technical high school students to prefer colleges. In the 1990s, as the purpose of vocational education was gradually changed from terminal education in which employment is the ultimate goal, to continuing education, employment rate of special- ized high school graduates dropped. Consequently, industries suffered a labor force shortage while unemployment among college graduates was on the rise.
In order to overcome such a difficult situation, the Korean government rolled out a strategy called “Plans to Modernize Vocational High Schools” in 2010, which included policies to foster more skilled workers and focused on promotion of technical manpower through Meister high schools and specialized high schools. Thanks to this strategy, public perception toward technical high schools has improved and a new paradigm of “Employment First, Entrance Later” was built
018 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico in the area of technical manpower development.
Meister high schools are nurturing technical labor customized to the demands of industries, focusing on regional special industries such as information technology, digital content, visual media, cooking, tourism, ship building and automotive machinery. The government has been providing various supports in the form of scholarship and dormitory provision, and it is estab- lishing support platforms such as Vocational Education Policy Forum (V-Forum). Meister high schools, which was a concern to many at an early stage of introduction, is now showing tangible achievements thanks to their efforts to revise curriculums and improve teachers’ expertise in a close cooperation with enterprises.
As shown in the case of Korea, the focus of Hidalgo’s technical manpower development should be on a close cooperation with local industries. Adequate understanding about each lo- cal industry’s technologies and labor demand and establishment of a close cooperation system should come first in order to keep up with the fast pace of technology development. Also, imple- mentation of Employment First, Entrance Later is needed to help students with desire for college entrance to seek further education in institutions like polytechnic colleges after employment.
Policies should aim at restoration of the original purpose of technical high schools: that is, education for employment. To meet this goal, the state government and local industries should make efforts. In this regard, what’s especially needed is the development of curriculums tailored to the demand of local industries and enhancement of teacher and school staff’s education and field experiences.
There are two reasons Korea’s Meister high schools achieved a tangible success in such a short period of time: the government’s strong will to make it; and support from think tanks such as Korea Research Institute for Vocational Education & Training (KRIVET). The state of Hidalgo also needs to set up a think tank which would propose an overall strategy for vocational training and monitor the system.
Establishment of new varieties of schools is also needed to test new manpower develop- ment policies. Such schools would play a role of test bed for new systems different from existing ones and they would become exemplary cases to other types of technical high schools. In addi- tion, establishment of Mexican-style Meister high schools also requires long-term cooperation with Korea’s related institutions and schools.
The state of Hidalgo drew a blueprint for machinery parts industry development thanks to the KSP project. The state secures a long-term partner for the reform of existing systems like CONALEP to further develop technical labor force. Various measures have been proposed for promotion of machinery parts industry and technical manpower development: for example, industry-academy cooperation; infrastructure construction; and creation of a Korea-Mexico co- operation center. To implement these measures, the project researchers and public officials from
Executive Summary ● 019 the Mexican federal and state governments have conducted in-depth discussions, so this study now concludes that the Mexican government is adequately prepared for implementation of such policies.
However, there remain things to be taken care of: for example, prioritization of policies; establishment of short-mid term action plans based on budgets and time for the proposals; and implementation of these plans. These are not easy tasks to perform and a series of trials and errors are expected. Whether industry-academy cooperation is achieved and technical high school graduates have a sense of belonging is up to the will of Hidalgo state government. Given the fact that the federal and state governments showed active involvement in the process of this project, tangible achievements, which are beneficial to both enterprises and schools, are expected. Enhancement of Mexican public officials’ and school staff’ competency shown in the process of the project can be regarded as an exemplary case for competency improvement of partner country through KSP project.
020 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico
Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry- Academy Cooperation in Hidalgo of Mexico Chapter 1
Promotion of Mechanical Parts Industry in Hidalgo of Mexico
1. Summary and Analysis of Hidalgo’s Requirements 2. Current Circumstances of Mexico’s Key Industries and Hidalgo’s Mechanical Parts Industry 3. Survey of Korea’s Development Experience 4. Advisory Research Result by Topics 5. Conclusion: Implication from Korea’s Development Experiences
Chapter 01
Promotion of Mechanical Parts Industry in Hidalgo of Mexico
Man Soo Joun1 (Gyeongsang National University) Kang-Rak Lee (KR Consulting)
Summary
The state of Hidalgo has a population of 2.6 million with 13 percent of the population aged 15 years or older illiterate, and is considered one of the underdeveloped states in Mexico. One third of its population is petty farmers and the rich-poor gap between urban and rural areas is huge. The economy of Hidalgo is traditionally based on the mining and agricultural industries, and Mechanical parts industry accounts for 24 percent of the state GDP. Even though invest- ments are focused on related basic scientific technologies, the absolute amount is below global standards. Because of the continuous outflow of manpower and lacks of a high quality work- force, competitiveness of its industries has been undermined. One of the strengths of the state is its location; it is situated near Mexico City, which is a densely populated area, and lies in central Mexico, so Hidalgo has the possibility to be developed into a major industrial and traffic point. Also, the state is the second safest state in Mexico. Additionally, Hidalgo ranks fifth in electric power production, first in railway vehicle industry, and fourth in casting industry in Mexico and railway vehicles and their related parts take up 88 percent of the total exports of the state.
Hidalgo has many advantages and opportunities, but it has many difficulties on hand to be addressed: inexperience, insufficient industrial infrastructures, poor industry-academy coop- eration, a lack of high-quality human resources, labor issues, inadequate industry certification system, poor support system, restructuring of small enterprises and advancement of the indus- trial structure. The state government is actively making efforts to cope with these problems. To solve them effectively, industry-academy cooperation and especially, the role of universities, as
1) I am grateful to Mr. Eduardo Cuevas and Dr. Gerardo Sánchez from CIATEQ for their excellent cooperation.
Chapter 1 _ Promotion of Mechanical Part Industry in Hidalgo of Mexico ● 023 a center of innovation, is important.
Technology innovation focusing on existing key industry (metal casting): Mexico has a great potential in casting industry as a country with the largest demand for casting in the North and Central American region. The government should focus on future oriented industries to some extent, but at the same time it should also promote practical industry-academy cooperation through R&D supports in order to strengthen the self-sufficiency of existing main industries. In addition, it should encourage, by promoting establishment of corporate research centers, existing enterprises to enhance their innovation capabilities, and create a business environment where large enterprises and SMEs can help each other.
Fosterage of metal forming of Hidalgo regarding development of new products and new process: Metal forming industry, the entry to whose market poses difficulties due to large scale of prior investments, should play a role of bridge to demand industries, which require mass production. And it is one of the future oriented industries, and therefore, the government’s promotion policies for the metal forming hold a great significance. This is because in order the state of Hidalgo to become industrial area for automotive sector, especially sedan parts produc- tion holding high added value, self procurement of high quality basic materials such as forging products is imperative. The government needs to roll out R&D subsidies to companies which make investments in their equipment and facilities. As in the case of casting industry, establish- ment of university-based specialized research centers like CAE technology centers, metal form- ing technology centers, and training centers is required in metal forming sector, and promotion of industry-academy cooperation by providing financial supports to enterprise-university joint project for common core technology development is also imperative in order for Hidalgo’s metal forming industry to gain competitive edge in an early stage.
Measures for promotion of industry-academy cooperation and personal and material ex- changes: Considering Korea’s experiences and state of Hidalgo or Mexico’s top-down industrial structure, promotion of industry-academic cooperation holds a great importance. The govern- ment’s apprehension of industry itself and perception of the importance of industry-academic cooperation should come first. The government also needs to designate process research teams of six root industries as Common Core Technology Research Team, and consistently provide a certain amount of R&D subsidies and utilize them as nucleus of industry-academic cooperation. As for R&D projects aiming at commercialization, the government needs to constantly increase the amount of fund burdened by enterprises, and focus more the development of core tech- nologies required by Common Core Technology Research Team and Technology Exchange Team and increase its efforts to build a foundation for common core technology development.
Measures to boost Korea-Mexico cooperation (establishment of cooperation centers): Foun- dation of Korea-Mexico Cooperation Centers is needed to promote continuous personal and in- formation exchanges between the two countries. Setting such centers in universities is desirable in order for them to have an influence in practice, and the operation fund should be financed by
024 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico both governments. One method to promote the interchange and cooperation of such centers is that Korea donates CAE software for machine parts production process, developed by Korea, to Korea-Mexico Cooperation Centers, which are established in cooperation organizations like universities or TPs, for purposes of education and research. The education of skillful workers by utilizing such software will enhance Hidalgo’s growth potential and could create better environ- ment for Korean enterprises to enter Mexico. In order to promote attraction of enterprises and academic activities, Korea-Mexico Cooperation Centers in both countries need to alternately host academic conferences or road shows on a medium and long term basis.
1. Summary and Analysis of Hidalgo’s Requirements
The keyword for Hidalgo’s requirements is the enhancement of international competitive- ness in Mechanical parts related industries. To achieve this goal, Hidalgo is currently focusing on finding ways to improve quality and productivity, and cut deadline and production costs in such industries. Furthermore, the state is asking for concrete cooperation to develop new products, new processes and new technologies. This is beyond a general request for consultation about industrial policies. What is worth noting is that the state is asking for consultation and coopera- tion which can practically help the industries of Hidalgo.
In the past, Mexico generally pursued an economic system where it should rehabilitate the economy by its own efforts. But since the 1980s, when an open-door policy was implemented, Mexico has accepted a top-down development model, turning to foreign capitals. In the pro- cess, the country lost its international competitiveness significantly in its traditional key indus- tries, while Mechanical parts assembly industries were rapidly growing, which caused severe polarization. Under the circumstances, there is a need to understand Hidalgo’s current problems in connection with the aforementioned situation.
In Korea, element technologies, which are the basis of Mechanical parts, and its related in- dustries were recently named root technologies and root industries respectively, and the gov- ernment is aggressively promoting them. The country’s top six root industries include casting, metal forming, die-making, welding, surface treatment and heat treatment. These are the key industries which Korea should strategically promote, and basic technologies such as cutting, injection and assembling are also essential for Mechanical parts industries. The development of fundamental industries (such as the materials or machine-tools) and demand industries (such as automobiles and electronics) is of essence, too. However, fundamental and demand industries are the domain of big companies, so the government can go only so far in taking initiative in fostering them. On the other hand, root industries in a broad sense are different. Private sectors have limitations when they cope with the circumstances of the industries and in an economic structure developed by a the other hand, root industries in a broad sense are different. Private sectors have limitations when they cope with the circumstances of the industries and in an eco-
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 025 nomic structure developed by a top-down system, the business environment of root industries is inevitably poor. Under the current circumstances of both Hidalgo and Mexico, a strategic and systematic promotion of root industries in a broad sense is urgent. Therefore, a policy consul- tation is required to help improvement in related public officials’ systematic knowledge and perception as well as establishment and implementation of a long-term development plan.
Currently, Mexico is using top-down industrial development strategies, which are similar to those of Korea. The Mexican economy is thought to lag more than 5 years behind the Korean economy in terms of development. Also, there is high possibility in industrial cooperation be- tween the two countries because they do not compete in same sectors. Hidalgo hopes more than industrial policy consultation from Korea. The state wants Korean companies to invest more in Mexico and to dispatch their employees for technical manpower training. Thanks to its geographical benefit, Mexico secures the broad markets of North America and Central and South America and the country is rich in underground resources. Therefore, it is time for Korean companies to strategically expand to Mexico, focusing on highly competitive or over-invested fields in their own country. Considering the circumstances, establishment of a continuous co- operation system is needed for the partnership between the two countries and its possibility is drawing keen interest.
Mechanical parts industry has inseparable relationship with the demand and infrastructure industries. Especially, automobile industry, which are the biggest demand industry of Mechani- cal parts (accounting for 60 percent), is deeply related to all the industries of the country. There- fore, there is an inevitable need to overview Mexico’s overall economy, industrial development policies and industrial circumstances. The same is true to the steel industry, which is the foun- dation of the Mechanical parts industry. Accordingly, this paper is going to show the whole economy and industry of Mexico (centered on automobiles, their parts and steel) and will later give the particulars of Hidalgo in detail through the spot surveys and data collection.
2. Current Circumstances of Mexico’s Key Industries and Hidalgo’s Mechanical Parts Industry
2.1. Mexico’s industry and exports
The year of 2012 was the 50th anniversary of the establishment of diplomatic relations be- tween Korea and Mexico. Mexico is the first Latin American country to establish strategic part- nership with Korea and has pursued a close cooperation with Korea not only in bilateral issues but also in important multilateral issues such as green growth, climate change and development cooperation as a member of G20, APEC and OECD. Korea is Mexico’s sixth biggest trade partner. The economic relations between the two counties have continued to expand. For example,
026 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico many Korean companies have successfully arranged 1,500 investments in Mexico. Furthermore, there has been a big development in the bilateral relationship in various fields—the opening of Korean cultural centers in Mexico, a rise in the number of Korean tourists to the country, and an increase in discussion between leaders from both countries or among high-level officials.
Mexico is the second biggest economic power following Brazil in Central and South America. The size of territory is 1.96 million km2(the world’s 14th); its population is 114.97 million (the world’s 11th); it is a young country whose average age is 27.1; and it is the 7th largest oil producer and the 8th biggest auto maker. According to the statistics released by the IMF, Mexico is the world’s 14th in GDP ranking with $1,207.8 billion (Korea ranks 15th), accounting for 20 percent of the total GDP of Latin America. Mexico’s GDP, which heavily relies on the US economy, shows a steady growth.
Mexico has been significantly influenced by the US economy because of its geographical location, and it political and industrial circles made various efforts to overcome its overdepen- dence on the US. Since 1946 when its political stability was achieved, Mexico showed a rapid economic growth with an annual growth rate of above 6 percent. Before the 1970s, the country pursued a closed economic policy of self-rehabilitation as well as an import substitution policy by using its enormous oil money. As a result, the country built up an industrial foundation and achieved the promotion of industries to some extent. However, from the beginning of the 1970s, the economy was faced with an era of confusion. Until the 1950s, Mexico’s industrial structure was similar to that of other countries in the region, in which the production of service sectors accounted for high proportion, and the percentage of primary industries was relatively high compared to manufacturing and mining. However, as the country’s economic development strategies were switched to import substitution industrialization, the proportion of agriculture, forestry and fisheries industries decreased, while mining and manufacturing were growing. Such changes were accelerated due to the open-door policy and structural reform. As a result, manufacturing sector held a greater influence on production, employment and export.
After the oil shock in the 1980s, the Mexican economy was hit hard by the drop of oil prices. To make matters worse, the condition deteriorated due to its incapability to repay foreign debt, capital outflow and financial crisis, which aroused the need for reformation. As a solution for the aforementioned problems, the country gave up the policy of an industry protection and a closed economy. And in the 1980s, neo-liberalism, which supports an open-door policy, took root in Mexico. Those efforts contributed to the conclusion of NAFTA in 1994 and the signing of 14 FTAs with 49 countries (as of October 2012). Still, Mexico has yet to conclude the FTA with Korea, and the Korea-Mexico FTA is still a pending issue. The Mexican economy enjoyed a short period of boom thanks to the conclusion of NAFTA in 1994 but lost its competitiveness after China joined WTO in 2001.
The open-door policy of the Mexican economy led to the loss of its international competi- tiveness in some Mechanical parts and related demand industries, which had been maintained
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 027 by the government’s support and protection. In fact, industrial complexes near the border line and industrial areas around Mexico City were able to develop significantly because Mexico had FTAs with the countries in North, Central and South America and because it had geographi- cal proximity to the US. A number of global companies secured production plants there and designated those areas as the outpost to advance into the North American markets. But many industrial complexes in other areas lost their competitiveness. The phenomenon caused not only the outflow of Mexico’s high-quality human resources abroad but also the movement of labor force within the country from rural areas to cities or from small and medium sized cities to big ones. Therefore, Mexico is currently facing some difficulties in securing skilled manpower needed to revive the Mechanical parts industry with foreign capital investment mainly focused on assembly industries.
As an attempt to address the problems with industrial economy, Mexico is making efforts to reform the economic system which is absolutely dependent on the American market. For example, it starts to pay more attention to low-end goods targeting the consumers in South America, abandoning the past strategies of focusing on assembly industries for high-end prod- ucts aiming at the US consumers.
From the beginning of the 2000s, Mexico attracted foreign investments amounting to $25 billion a year. The economy got out of the slump in the early 2000s and realized an economic growth rate of 4 percent from the mid 2000s. However, it was directly hit by the global financial crisis of the late 2000s. Nonetheless, thanks to its rapid economic recovery in the 2010s, Mexico is gradually regaining its confidence. This is because the US economy serves as a buttress. Recently, Mexico is frequently reported to grow rapidly compared to Brazil, which is its rival in the region.
Mexico’s GDP growth rate in the first quarter of 2012 jumped to 4.63 percent, the best per- formance in 18 months. Particularly, agriculture, forestry and fisheries industries shot up at the rate of 6.8 percent. Manufacturing sectors grew by 5.5 percent compared to the previous year, which seems to be caused by the increase of production in manufacturing and the stabilization of domestic demand. Also, the export of consumer goods in the first quarter was up 9.6 percent compared to the previous year, while the import of them showed an increase of 20.6 percent.
Recently, the World Bank raised the forecast for Mexico’s economic growth of 2012 to 3.5 percent. The organization projected that the demand in emerging markets would be normal- ized in 2013 and Mexico’s economy would grow by 4 percent. The growth is contributed by the circumstances that the US economy, one of Mexico’s important trading partners with huge influence on the country, is picking up faster than expected. Therefore, as the US economy turns favorable, Mexico’s economy is reviving faster than expected, compared with other countries in the region. However, such growth may not last long if the European crisis spreads to the US. But it is expected that the demand in the automobile parts industry will increase thanks to the transfer of US and Japan’s auto production bases to Mexico and because of additional plant construction in the Latin country. In addition, aftermarket demand is expected to rise due to
028 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico the boom in Mexico’s used car market.
Currently, what should be worthy of notice is that Mexico is benefited the most from the recent rises in labor costs in China and the slowdown of the Chinese economy. According to the Economic Commission for Latin America and the Caribbean (CEPAl), the labor cost of Mexico recorded an average of $2.2, which was lower than $2.4 of China. A decade ago, the labor cost of Mexico was $2.1 while that of China was a mere $0.7. However, the Latin American country began to narrow the gap in 2011, and both countries recorded $2.2 in the year. From the be- ginning of 2012, the labor cost of China has been higher than that of Mexico. This is because the labor demand has been increasing in China, while labor supply has been decreasing due to the decline of the population, which moves from rural areas to cities, and the decline in labor force growth. Especially, considering the appreciation of the yuan, it can be thought that the increase in China’s labor costs is higher. Mexico’s labor productivity per hour is also higher than that of China, which shows that Mexico’s workforce is cheaper and more productive. However, there are obstacles for Mexico in recovering its competitiveness: its unstable society where drug trafficking has yet to be eradicated; its lack of skilled technicians; and its supply chain network which needs expansion.
Obviously, Mexico has a great potential to develop into the world’s factory as a match for Chi- na. Mexico has numerous advantages: a vast territory, a large population, rich natural resources and proximity to the world’s largest market. Therefore, if the country takes proper measures against its labor problems, which are the obstacles to foreign investment, and establishes an adequate policy to support an industrial and economic promotion, an outstanding continuous growth can be attainable.
2.2. Mexico’s automotive industry
Mexico’s key industries are automobile and electronics. The country is a production base of multinational corporations in electronics sectors, a promising key industry. In Mexico, a cluster mostly centering on major demand companies is formed, and the country depends on foreign countries for main parts. Also, Mexico serves as the production base of the multinational auto manufacturers.
Mexico’s automobile industry has been developed centering on complete vehicle assembly and automobile parts. It is Mexico’s key industry, accounting for 3 percent of the total GDP, 20 percent of manufacturing and 15 percent of direct investment. As of 2011, Mexico ranked the world’s eighth auto-producer in the world. When it comes to production, domestic demand, employment, investment and export, the auto industry is the most active and important among manufacturing industries. A dozen of manufacturers of sedans and vans, and heavy-duty trucks, and more than 2,000 parts companies are operating in Mexico.
In 2011, the total output of automobile sector recorded at an all-time high with 2,557,550
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 029 units, 13 percent higher than the previous year’s total of 2,260,774. This increase is due to the surge of the production aimed at export. The export to the US increased only a little because of the economic crisis, but the export to Central and South America soared.
The growth continued in 2012, so the number of cars produced in Mexico between Janu- ary and September was 1.905 million, which was up 14.7 percent compared with the same period of the previous year. Also the export and domestic demand rose by more than 10 per- cent. Those numbers were an all-time high and the volume of car exports was 1.58 million, an increase of 14.8 percent compared to the same period of the previous year. The domestic demand advanced by 11.6 percent, propelled by the upward trend in sales. In the aftermath of the financial crisis, the car exports to the US, which accounted for more than 60 percent of the totals, showed signs of stagnation, falling into a difficult situation. However, the exports to Latin America including Brazil and Argentina increased. The export to Argentine and the US in the first quarter of 2012 was up 43.7 percent and 3.9 percent respectively, while the export to the European Union was down 5.7 percent. Between January and September in 2012, Mexico sold 631,336 cars to domestic consumers. The sales rose as much as 12.2 percent in just September.
In Mexico, there are complete vehicle factories of Nissan, GM, Volkswagen, Chrysler, Ford, Toyota, and Honda. About a total of 1,000 automobile parts companies exist in the country. Among them, 21 percent are located in Mexico City; 20 percent, in the state of Mexico; and 20 percent, in Nuevo Leon seated in the northeast of the country, which shows most car factories and companies are highly concentrated in certain areas. Recently, however, as Mexico’s auto industry is enjoying its heyday again, a growing number of assembly and parts companies are advancing into and investing in the country. Since 2011, major complete vehicle or automobile parts companies have announced their investment plan once every month. In addition, supply chain for the auto industry has been formed in the country. Korean steel company POSCO is considered an exemplary case thanks to its success in aggressively targeting the supply chain in Mexico.
Recently, Japanese car makers are achieving outstanding performance with Japan’s Nissan, Honda, Toyota and Mazda accounting for 37 percent of Mexico’s car market (as of the first quar- ter of 2012).
Nissan has maintained its position as the top-selling car manufacturer in Mexico for 34 con- secutive years. During the first quarter of 2012, its sales recorded at 61,052 units, 20.5 percent up compared with the same period of the previous year. During the same period, Honda recorded the sales of 12,991 units, Toyota, 12,936, and Mazda, 6,882. In addition, as new Japanese brands, such as Suzuki, Mazda, Mitsubishi and Subaru, were launched in Mexico, Japanese car compa- nies’ market share is soaring On the other hand, the market share of American car companies, which was once in the position of high market dominance, is on the decline. In the early 2000s, Asian brands including Japanese ones occupied a mere 26 percent of the Mexican market, but Mexico’s automobile parts industry, which depends on the complete vehicle industry of the
030 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico their market share was up to 40 percent in 2011. Moreover, as Japanese car makers are improving their standing there, the above manufactures and others are announcing new investment plans in Mexico one after another.
Automotive sales by brand in Mexico
Honda Toyota 5.6% 5.5% Ford Nissan 7.9% 26.1%
Chrysler 8.6%
Volkswagen GM 13.4% 18.6%
US, Japan and Germany, suffered a heavy blow from the financial crisis. The production of 2009 was down 29 percent compared to the previous year in the midst of the economic slowdown. That resulted in the loss of 130,000 jobs in that year. In 2010, parts companies operated at just 50-55 percent capacity. After 2010, the industry has been recovering from the slump and an- nually achieved a high growth of 20 percent. It is expected that the industry will be recovered to the level of 2008 by 2013 and 2014. The annual size of Mexico’s automobile parts market is $16 billion, and 60 percent relies on import.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 031 As shown in Table 1-1, nowadays, Mexico’s import of automobile parts from the US is falling but still takes up a great part. In the meantime, the proportion of German cars is on the rise. What is worth noting is that the proportion of the export to the US and Canada amounts to 94 percent, which resulted from the fact that many automobile parts companies of the two North American countries entered the Mexican market.
However, due to the earthquake and tsunami which struck Japan in 2011, Japan’s complete vehicle factories in Mexico suffered from the shortage of parts supplies. So they plan to construct parts factories in Mexico to ensure reliable parts supplies. Nissan plans to invest $2 billion and build parts factories with production capacity of 600,000 vehicles with an aim to start opera- tions in late 2013. The car maker also plans to establish three assembly lines and produce core parts like engines. Mazda plans to invest $500 million and construct factories to open them in 2013. As Honda, Nissan and Mazda announced the plan to build new factories in Mexico, Japan’s automobile parts companies released their plan to make inroads in Mexico’s market to supply parts. Most of the facilities will be located in central Mexico such as Guanajuato, San Luis Potosí and Aguascalientes where there are already the existing vehicle assembly factories. Therefore, it seems that parts supplies will become more stable. Twelve Japanese auto-parts makers including Tigers Polymer, Denso, Yachiyo, Nifro, Akebono Brake, and Jatco plan to build factories in Mexico. The total investment of these companies for factory construction reaches to $524 million. Also, BMW and Mercedes Benz are considering building factories there. Their new factories are expected to create at least over 3,000 jobs. It is expected that $2 billion will be invested to construct auto-parts factories in Mexico in 2013.
Location of assembly factories of major automotive brands
FORD FORD DAIMLERCHRYSLER GENERAL MOTORS
TOYOTA GENERAL MOTORS
DAIMLERCHRYSLER FORD NISSAN GENERAL MOTORS NISSAN
HONDA VOLKWSAGEN
GENERAL MOTORS
NISSAN
Source: KOTRA
032 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico 2.3 Mexico’s steel industry
Mexico’s machinery industry is not easy to understand at a glance. Generally, the steel in- dustry is enough to play as a barometer of the machinery industry because the steel industry is the base of the machinery industry and at the same time, the major core industry to determine the size and competitiveness of the machinery industry.
In Mexico, steel is the main industry, accounting for 2.6 percent of the country’s GDP as of 2010. It comprised 7 percent and 18 percent of the total energy and gas consumption respec- tively. As of 2011, Mexico is the world’s 13th biggest steel producer, and in terms of the produc- tion volume, it ranked sixth. The country’s steel production amounts to 28 percent of that of Korea. From 2000 to 2011, the industry annually grew 16 percent and manufactured 16 million tons of steel products a year. Mexico’s four big steel companies are Arcelormittal, AHMSA, Ter- nium Mexico and DeAcero TAMSA, which accounts for 85 percent of the total production in the country. AHMSA is in partnership with POSCO, a Korean steel producer. The Korean company is expanding its investments in Mexico. In steel sector, Mexico’s exports and imports were recorded at $4 billion and $6.5 billion respectively on average per annum from 2000 to 2011. In 2011, the exports and imports were $6 billion and $9 billion respectively. These numbers suggest that Mexico is still unstable in terms of the supply and demand of basic materials.
Mexico’s steel industry was hit hard by global financial crisis. In 2009, the production index recorded an all-time low in five years due to weak steel demand along with intensifying com- petition caused by excessive steel production facilities around the world. However, Mexico’s steel industry is competitive. As of 2011, the industry recorded 18.1 million tons of production. In terms of production capacity, it ranked at the world’s 13th (1.2 percent of the world’s produc- tion) and at Latin America’s second (26.7 percent of the region’s production) position. From 2010, as the domestic economy shows signs of recovery and particularly, the auto industry began booming and the country’s domestic steel demand has jumped up. As a result, the country’s steel industry is showing a high growth rate. The growth rate of 2011 was 7.3 percent, which is beyond the record of 2007 when the industry was in full swing.
Mexico’s steel production (million tons)
Year 2006 2007 2008 2009 2010 2011 Production 16.4 17.6 17.2 14.1 16.9 18.1
Source: Camara Nacional de la Industria del Hierro y del Acero
However, the steel production dropped 1.7 percent during the first quarter of 2012 com- pared to the same period of the previous year, while the consumption rose 15.8 percent. Mex- ico’s steel exports fell 24.8 percent while the imports were up 54.5 percent. Currently, the steel sector seems to turn a favorable turn, but they are facing the issue of trade imbalance—imports are exceeding exports. The country is importing mostly from the US, China, Japan and Korea.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 033 In the case of steel products, the US is the largest exporter to Mexico, followed by China and Japan. Nowadays, Mexico is increasingly importing steel products from Korea and Japan. In the first quarter, the import of Chinese and Korean steel products was up 134 percent and 129 percent, respectively.
In addition, Mexico’s steel production was decreasing significantly because of the increased steel export of China to Central and South America. In 2010, China exported as much as $60 bil- lion of steel and metal products to Brazil, Mexico, Argentina and Columbia, but the four countries exported only $2 billion of those to China, a mere one thirtieth of Chinese exports. Such trade imbalance was the cause of the requirement from related industries that steel tariff should be raised again. Mexico’s steel association and related industries have opposed tariff cuts and the FTA. China’s low-priced steel products are permeating the Mexican market, and a rapid growth of their sales is expected. There is an urgent need for measures to address the situation.
Mexico’s steel market
(million tons) 27.0
24.2 production facilities 21.4
consumption 18.6 production 15.8
13.0 2007 2008 2009 2010 2011p
Another problem of Mexico’s steel industry is the country’s overall unstable public order. Robbery cases of steel products during train and truck transportation are on the rise. Accord- ing to insurance company, Chatris Mexico, the aforementioned robbery increased 40 percent in 2010, which inflicted a loss of 35 million dollar on the steel industry. Such robberies take place mostly in the northern areas of Mexico where public security is threatened. The government tries to address the problem, but steel sector says that the situation will not improve unless fundamental security problems are resolved.
The Mexican government recently eliminated non-tariff policy on steel products and starts to impose a 3 percent tariff on them. The ongoing anti-dumping investigation into Korea’s cold rolled steel plates is interpreted as a series of measures in line with trade protection policies. Also, Ternium, one of Mexico’s big three steel companies, invested $1.1 billion over the past ten years and is constructing a new factory in Nuevo León located in Northeast Mexico, which will produce steel sheets used for vehicles, with the aim of starting production in July 2013. The fac-
034 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico tory is expected to be capable of manufacturing 1.5 million tons of products a year. Therefore, after the beginning of its operation, the country is expected to stop importing from Korea, Japan and the US.
2.4. Mexico’s major pending issues
The Mexican economy excessively relies on the US. Among the countries which are con- tinuing to invest to Mexico, the US accounts for as much as more than 50 percent of the to- tal investment. And the North American country constitutes 80 percent of the total export of Mexico. While targeting both the US and the Mexican market, Japanese and German companies invested to Mexico, utilizing NAFTA, but they are importing major production equipment and components from their own country because of infrastructure gap in Mexico. Therefore, even though Mexico has achieved an economic growth, its ripple effect is small, and the growth can- not give competitiveness to the Mexican economy, which is Mexico’s structural problem. Most of foreign investment companies depend on the assembly industry based on low wages. In case of an EMS (electronic manufacturing service) cluster, its self-reliance on their components stays at a mere 15 percent.
Mexico’s GDP per capita of 2010 is as much as $9,600, but as much as 51.3 percent of the population is officially designated as the poor by the government. The gulf between rich and poor (especially between urban and rural areas) is enormous. Various natives inhabit the coun- try, and 62 different languages are spoken by them. They are marginalized in the society.
Over the past ten years, the unemployment of the youth between 15 and 29 years old has risen. It increased 15 percent every year on average, and in 2010, 73,000 young people lost their jobs. In 2000, among young population aged 15 to 29, the proportion of the unemployed was 0.9 percent, but it increased to 3.3 percent in 2010. The unemployment rate for male and female youth went up by 308 percent and 387 percent respectively.
Mexico achieved economic reform over the past thirty years, but its attempts to directly address youth unemployment and the results were not sufficient. Among the employed in -in formal sectors, two thirds are young people between 15 and 29. Because formal sectors are offering poor-quality and low-wage jobs, most youth are working in informal sectors.
2.5. General situation of Hidalgo
The state of Hidalgo is situated 65km north east of Mexico City. Its population is 2.6 million, 2.4 percent of the total population. The state accounts for 1.6 percent of the country’s total GDP. In Hidalgo, 13 percent of its citizens aged 15 years or older are illiterate, and the average monthly wage is at the level of 83 percent of the national average. It is one of the underdeveloped states in Mexico. The population of Hidalgo is dispersed, and social overhead capital investment is insufficient.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 035 One of the strengths of the state is its location; as shown in Figure 1-4, it is situated near Mexico City, which is a densely populated area, and lies in central Mexico, so Hidalgo has the possibility to be developed into a major industrial and traffic point. Also, according to Hidalgo, it is the second safest state in Mexico. Additionally, Hidalgo, which ranks fifth in electric power production, has an advantage of energy resources.
Mexico and the State of Hidalgo
The industrial structure of Hidalgo comprises of the primary industry (2 percent), the second- ary industry (41 percent), and the tertiary industry (57 percent). Considering that one third of its population is employed in agricultural sectors, the rich-poor gap between urban and rural areas is huge. The demographics and employment of Hidalgo is summarized in Table 1-3.
Hidalgo’s demographics and employment
zz Category Population of Hidalgo (A) Total Contry Population (B) Percent(A/B) Total Population(PT) 2,722,566 114,259,114 2.4% Population under 14 755,918 29,782,024 2.5% Working Age Population 1,966,648 84,477,090 2.3% (PET) Economically Inactive 849,107 34,203,625 2.5% Population (PEI) Economically Active 1,117,541 50,273,465 2.2% Population (PEA) Employed Persons 1,070,977 47,836,056 2.2% Unemployed Persons 46,564 47,836,056 1.9% Source: Mexico’s National Statistics Office (Instituto Nacional de Estadistica y Geografia, INEGI), National Employment Statistics (Encuesta Nacional de Ocupacion y Empleo, Q3 2011)
036 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico In Hidalgo, the secondary industry accounts for 41 percent of the GDP, and investment is focused on the areas of relevant basic scientific technologies. However, the secondary industry of the state is below the international level. Because of the continuous outflow of manpower and lacks of a high quality workforce, its industries are uncompetitive.
However, Hidalgo is near Mexico City, which has the developed auto and parts industry, so it is possible that the employment, industry and economy of the state will improve. Recently, the state has shifted its policy of the car industry from focusing on medium and high priced vehicles, targeting the US, to supporting the low and middle priced car industry, targeting the Central and South American market. The market expansion derived from the change of its policy is increas- ing the possibility of the improvement of Hidalgo. But in the field of machinery manufacturing, the existing major industries of the state are small quantity batch production industries, such as the railway vehicle sector, which is not much related to the car industry. This is the first-priority issue to be addressed.
2.6. Industrial situation of Hidalgo
The economy of Hidalgo is traditionally based on the mining and agricultural industry. But recently, the role of manufacturing is growing. Most industries are located in Corridor, an urban and industrial area in the south. Since the mid 1990s, Hidalgo has shown the average growth rate of 7.7 percent and has kept the balance in the black. Like other states in Mexico, 97 percent of the tax revenue of Hidalgo is used as the financial resources of the federal government. The debt of the state is low compared to other areas of Mexico.
The industry of Hidalgo is concentrated on Mechanical parts materials, which account for 24 percent of the state’s total industry. Among those materials, non-metallic minerals except for oil constitute 25 percent, but the major industries of the state are oil refining and automobile/train manufacturing, which are based in Tula. Automobile and train parts industries are concentrated in the city of Sahagun, and the products manufactured there are consumed in Mexico City. And the other industries of the state include cement and textile. The cement industry is located in Tula de Allende, and the textile industry, in Tapeji del Rio and Tulancingo. In 2011, about one million had jobs in Hidalgo. As shown in Table 1-4, among the employed, 157,660 are working in manufacturing sectors.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 037
2011 employment
zz Category Hidalgo’s population (A) Mexican population (B) (A/B) Total Economically 1,070,977 47,836,056 2.2% Active Population Population Employed 234,446 6,668,539 3.5% in Agriculture
Population Employed in 4,827 368,638 1.3% Electric Power Industry
Population Employed 157,660 7,241,774 2.2% in Manufacturing Population Employed 102,560 3,571,783 2.9% in Construction Population Employed 191,472 9,504,398 2.0% in Commerce Population Employed 378,418 20,143,149 1.9% in Service Industry
Other works 1,594 337,775 0.5%
Source: Mexico’s National Statistics Office (Instituto Nacional de Estadistica y Geografia, INEGI), National Employment Statistics (Encuesta Nacional de Ocupacion y Empleo, Q3 2011)
The major demand industries of Mechanical parts are transportation machinery industries, which achieved development under the national support. Representative companies are DINA, which produces trucks, buses and military transportation vehicles, and Bombardier-Concarril, which is a Canada-invested company manufacturing 70 percent of the railroad vehicles of Mexico.
The development of major parts enterprises have been connected with that of the demand industry. Major parts companies are concentrated in Ciudad Sahagun, Tepeapulco, Tenango de Doria (Refer to Figure 1-5). But because of NAFTA and the opening of local markets to foreign competitors, the key demand industries of Hidalgo lost their competitiveness, which led to the loss of competitiveness of relevant parts businesses. In the state, there are about 100 registered small and medium sized enterprises (SMEs) along with 1,000 small businesses. SMEs have 50 employees on average. Among them, 30 percent are directly dealing with demand enterprises within the region, while the rest (70 percent) are delivering their products to the direct-dealing companies. And some of 1,000 small businesses are the ones which are non-registered or at the level of a cottage industry. To develop or restructure those small businesses is one of the important pending issues of Hidalgo.
The analysis of the Mechanical parts industry on Hidalgo reveals the high proportion of the companies engaged in machine work, as shown in Figure 1-6, which is similar with the situation
038 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico of Mechanical parts industries in underdeveloped regions in Korea—the old industrial areas in Busan or the areas in Jinju, which are concentrated with manufactures of agricultural machinery. About 150 of the surveyed enterprises are considered relatively no small–scale enterprises. Most of the ones which are excluded from the survey are thought to be small businesses at the level of a cottage industry. Therefore, there is an urgent need for them to be bigger and reformed.
Industrial locations of Sahagun
Classification of Mechanical parts industry of Hidalgo (1)
0% 1% 0%
Foundry 14% Foundry Metal forming 6% Metal forming Machining & Assembly
The city of Ciudad Sahagun, which belongs to the municipality of Tepeapulco, was trans- formed into as Mexico’s industrial hub in the 1950s. Sahagun is the model of the Mechani- cal parts industry in Hidalgo. Figure 1-5 conceptually represents the Mechanical parts industry
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 039 of the city. As of 2012, there are 100 registered companies manufacturing Mechanical parts. Among them, 30 percent are auto-parts businesses whose employees are approximately 5,000.
The total production of Mechanical parts in Hidalgo is $600 million a year as of 2010, and the industry accounts for 7.4 percent of the jobs offered by enterprises in the state. Figure 1-7 shows the current situation of the Mechanical parts industry in Hidalgo. As shown in this figure, the industry accounts for a very high percentage of employment (59 percent), but the proportion of its total production remains at 23 percent. On the other hand, the railway vehicle industry, which accounts for 21 percent of the employment of the state, comprises of 54 percent in terms of production. The output per capita of railway vehicle manufactures is six or seven times as high as that of the Mechanical parts industry. That is very high compared to the sales per person of the demand enterprises or their cooperative companies in Korea. The reason seems to be that most important parts are being imported. Hidalgo ranks top in the railway vehicle sector in Mexico. In addition, Hidalgo has the developed bus or truck manufacturing industry and is third-largest investor to the sector in Mexico.
Contribution by product type of Mechanical parts industry of Hidalgo
Hidalgo:Percentage of occupied personnel and production of the metalworking sector, by group of activities in 2010 96.3
59 54
23 21 14 15 7 8 17 1.9 0.1
Basic materials Machine parts Machinery&equipments Railway cehicles
Employment Production Number of enterprises
It is not remarkable that there are especially lots of Mechanical parts & materials enterprises in Hidalgo. But an overwhelmingly high proportion of them (93.6 percent) is contributed from their high reliance on some demand industries and the large proportion of small or cottage industries as mentioned above.
Figure 1-8 shows the import trend of Hidalgo between January and September in 2011, revealing a definite imbalance of the industrial structure. Railway vehicles and relevant equip- ments account for 88 percent of the exports in Hidalgo. Obviously, that will negatively affect the improvement of the Mechanical parts & materials industry of the state, which Hidalgo is focus- ing on, because the localization of the core parts of railway vehicles is actually very difficult. For
040 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico example, high technical skills are needed to produce core parts like a bearing, but its production is small in terms of quantity, so the development of them involves a considerable risk. As seen in the above example, railway vehicle parts require high reliability, but the demand is limited. Therefore, the benefit of technology development is not clear, so the elements of technology development and innovation are very limited.
According to Figure 1-9, Hidalgo’s Mechanical parts & materials industries are divided as four categories: transport and auto-parts, casting, machinery and equipment, and others. What is worth noting is that casting takes up a greater part of them. The casting of steel and non-ferrous metals is relatively developed in Hidalgo, which ranks fourth in the country in the sector. Nowa- days, Mexico continues to develop in the casting sector, but the proportion of underdeveloped countries like China and India are high in the sector in the world, which acts as an obstacle to the continuous development of Mexico in the field.
Import and export of Hidalgo
1% 4% 7%
Vehicles and equipment for railways
Electrical equipment, appliances and machines
Cars, tractors and other land vehicles
Aircraft, spacecrafts and its parts
88%
Note: Exports were directed to countries such as Argentina, Germany, Australia, Austria, Canada, USA, Malaysia, United Kingdom and Guatemala.
Classification of Mechanical parts industry of Hidalgo (2)
vㅋ • Spare parts
Mechanical parts industry • Auto parts Transport and Auto parts • Assembly • Bodyworks • Plastics
• Transport Machinery and equipment • Agricultural • Mining • Industrial
• Furniture Others • Structures • Others
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 041 Hidalgo has many advantages and opportunities mentioned above, but it has many difficul- ties on hand to be addressed: inexperience, insufficient industrial infrastructures, poor industry- academy cooperation, a lack of high-quality human resources, labor issues, inadequate industry certification system, poor support system, reorganization of small enterprises and advancement of the industrial structure. The state government is actively attempting to cope with those prob- lems. To solve them effectively, industry-academy cooperation and especially, the role of univer- sities as a center of innovation should be considered important.
3. Survey of Korea’s Development Experience
3.1. Meaning of Korea’s related development experience
Korea was one of the world’s poorest countries even in the early 1960s in the aftermath of Japan’s colonial rule and the Korean War. Farmers, who were the vast majority of the popula- tion, had to dedicate themselves to providing the necessities of life such as food, clothing and shelter. Because of poor family circumstances, countless Koreans gave up their studies, irrelevant to their will. Also generally, in agricultural off-season, farmers gathered firewood in mountains and idled away their time gambling. Most families blew clandestinely, and commonly, they spent their time in drinking. A majority of people fell into defeatism, thinking they can’t do even if they try. Also because of the centralized monarchy, which had ruled the country for a long time in the past, and the legacy of the colonial rule, there were not only a social trend that government posts, especially judges, were regarded highly, but also a social phenomenon that a higher value was set on scholars than technicians. Accordingly, people were reluctant to enter technical schools or engineering colleges. In addition, there were few companies in those days for engineering college graduates to work for.
In the early 1960s, food self-sufficiency was not achieved in Korea because of its high popu- lation density. Also Korea was poor in natural resources, so it was fundamentally impossible for the country to rehabilitate the economy without help. Therefore, even if the Korean industry had no international competitiveness at that time, the pursuit of strategies to survive by depending on international trade was inevitable. Korea has implemented the strategies of its industrial economy promotion based on such an open-door policy. After forming capitals and inviting foreign capitals, centering on the light industry in the 1960s, Korea started the promotion of the defense and heavy chemical industry from the 1970s. At the initial stage of the process, the government implemented the policy of promoting demand industries (or pioneering industries led by large corporations) and key industries. In the 1980s, it also adopted strategies to foster SMEs along with parts & materials companies.
The promotion policy of the government was in harmony with the efforts from both relevant enterprisers and the agents of the industrial economy. In the 1970s and 1980s, most of the Ko-
042 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico rean major demand industries achieved much development. Prior to the development, under the circumstances of poor industrial foundation, the government constructed infrastructures such as Pohang Iron & Steel Co. and Seoul-Busan express highway, which is a policy worth being a model. Along with developing demand and basic industries, the government fostered high-quality technical manpower by using exceptional laws, and established and promoted research institutes specialized in relevant areas, which is also worth being a model. Such a policy support and the entrepreneurial spirit of private sectors, along with Confucianism values, which put emphasis on organizations and study, formed three pillars of the modernization of Korea.
Thanks to the aforementioned policy and active cooperation of private sectors, Korea be- came the eighth largest trade giant in the world in a short time of fifty years. Since 2011, Korea recorded $1 trillion consecutively in 2011 and 2012 in trade volume. In 2012, its trade surplus exceeded $90 billion in the parts & materials industry. That represents that Korea got out of government-initiated top-down development and entered the stage of industrial development led by private sectors. Also, it shows that reorganization is on-going in the desired direction of increasing the contribution of SMEs. Currently, Korea has reached to the international level in most demand industries including shipbuilding, electronics, automobiles, iron and steel manu- facture, plant, and machinery. Thanks to the development of demand industries, along with the promotion of key industries, a very favorable environment has been set up for the develop- ment of the parts & materials industry. Creative efforts of private sectors can be compiled into the parts & materials industry if the sector is vitalized. In this regard, the possibility of its future development is very high.
Still, the demand industry, that is to say large companies, has too much significance in Korea. Actually, most young Koreans prefer large corporations, and the initial salary of conglomerates is twice as much as that of parts manufactures. Recently, however, a new legislation on the pro- motion of root industries has been enacted, and economic democratization has emerged as a hot issue. Considering the situation, it seems that national policies will be certainly switched to focusing on SMEs. Because China’s assembly industry, which is based on low wages, will neces- sarily keep going the way it is, Korea will be able to rapidly transform into a powerhouse in the field of high value-added Mechanical and electronic parts.
Korea’s experiences of compressed growth deserve to be a textbook example for developing countries in a similar position with Korea in the past. Mexico is not a country which will readily take consultation from Korea. Therefore, while taking a careful approach and sharing its factual experience, Korea should need the strategies to encourage Mexico to voluntarily establish a supplementary and long-term policy. Therefore, for the purpose of concretely showing the de- velopment process of Korea, the relevant contents are arranged in chronological order in this paper. On the basis of that, Korea will provide advice and suggestion on request from Mexico.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 043 3.2. Sectoral summary of development process
3.2.1. Industry policy and industrial economy development
Government’s consistent policy should not be left out, when discussing the economic de- velopment of Korea. At that time of economic growth, the government made an investment for the next generation, which deserves to be a good example in human history. In the 1960s, the government developed an export-driven light industry in an effort to form initial capitals in an economic wasteland after the war. In the process, the government established industrial infrastructures and promoted key industries, which are essential to develop the heavy chemical industry. It braced itself for promoting the heavy chemical industry by making its best effort to found research institutes and train an outstanding workforce. The government unified national capabilities through the movement for community development and enlightenment (The New Community Movement or Saemaul Undong), which had been developed on a national scale since the 1970s. What should be emphasized is that Saemaul Undong was an enlightenment campaign which made something out of nothing, and it was a driving force of national devel- opment.
The promotion of the heavy chemical industry, which kicked higher gear in 1973, was a turning point for globalization of the Korean economy. Korea faced a lot of challenges, but it overcame them and achieved economic development for a very short time—it recorded a one trillion won ($920 million) in trade volume consecutively in 2011 and 2012, and it became the world’s eighth biggest trader. The driving forces of the economic growth are as follows: 1) the proper policy of the government; 2) the high zeal of the people for education and diligence; and 3) entrepreneurial spirit of challenge.
For the purpose of consultation on the establishment of the industrial policy of Hidalgo regarding to the Mechanical parts industry, this study summarizes followings in Table 1-5: the Korean policies of the promotion of key Mechanical parts; the establishment history of industrial infrastructures; the privatization of state corporations; the process of the change of industrial structures; and social problems associated with the development of the industrial society.
3.2.2. Promotion policy of parts & materials and root industries
In Korea, the promotion of the industry was based on a typical top-down way. In the 1970s, the foundation of key demand industries was established, led by the government and large companies. In the 1980s, lots of policies relevant to SMEs were introduced, and related systems started to be implemented. In the 1980s and 1990s, the growth in terms of quantity, which was led by big corporations, was remarkable, but the suppliers of key parts including Japan reaped a considerable part of the benefit.
044 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico
Summary of government’s key policies and effects
v
1950s 1960s 1970s 1980s 1990s 2000s
- Abolition of Industrial Advancement - Establishment of Administration Industrial in 1996, and Advancement establishment of Small Administration in and Medium Business 1973 Administration and regional offices in 1996
Govern- - Regional - The Third Republic of Korea in 1962 ment Advancement - Five-year economic development - Establishment Establishment of the policy -Postwar project plan of key industrial basis for industry- recovery - Balanced - Announcement of promotion infrastructures academy cooperation regional policy of Heavy Industry in 1973 advancement
- Promotion of demand and key industries through foreign capitals - Focusing on parts industry - Open-door and export-driven policy - Improvement of trade deficit with Japan - Assembly industry-oriented economic growth - Roots Industry Promotion Act in 2012 - Expansion of roads and harbors
- Opening of Seoul- Busan Expressway in 1970 - Opening of KTX - Establishment - Reliance on - Construction of Gumi and nuclear energy of Ulsan Changwon National reached 34%, - Construction of Industrial Industrial Complex - Establishment the 2nd in the nuclear power plants Complex - Establishment of Namdong world - Amendment of Law - Establish- of Banwol-Sihwa National - Rapid increase Industrial National Industrial of Military Service ment of Industrial of cooperative infrastruc- Complex Exemption to make KIST Complex firms and turesand - Establishment of a separation between - Establish- - Construction affiliated parts others Daedeok Science technicians and ment of of nuclear companies Town professional experts Pohang power plants - Increase of - Establishment of - Focusing on SMEs Iron & KAIST temporary Steel Co in - Nuclear power employees 1968 generation after the IMF - Enactment of Law crisis of Military Service Exemption in 1973
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 045 v
1950s 1960s 1970s 1980s 1990s 2000s
- Korea Oil Corporation - Bank of Seoul - Korea Heavy - Korean and Trust Industry and Air, Korea Company, - Korea Tungsten Co. Construction Privatiza- Express, Choheung - Korea Fertilizer - Daehan tion of Korea Bank, First City - Korean Air - Kookmin Bank Oil Pipeline state cor- Shipping, Bank of Korea, - Korea Exchange Bank Corporation poration Incheon Hanil Bank, - KT Heavy Pohang Iron & - KT&G Industry Steel Co. - Korea Electric Power Corporation
- Korea - Korea Institute - ADD - TP-affiliated Institute of Industrial - Establishment - KIMM Specialized of Science Technology Research of Korea - Korea Research Center and - Korea - Korea Automotive institute/ Atomic Institute of - Local branches/ Technology Aerospace Technology Institute Education Energy Standards and centers (KIST) Research - Korea Railroad institute for Research Science - Local Small - Korea Institute Research Institute workforce Institute in - Korea Institute of Business Testing - Small Business 1959 Energy Research Training Laboratory Training Institute Institute
- Assembling Industrial - Light - New growth - Heavy industry and processing - IT industry structure industry industry Industry
046 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico va
1950s 1960s 1970s 1980s 1990s 2000s
-2002 World Cup -Pro-democracy -China has movement become #1 -1988 Seoul economic Olympics partner -The world's #1 -Widening of shoes exporter income gap, -Expansion - Active environmental prevailing -Beginning of labor of college campaigns preference for movement in the enrollment - Trade with China -Power -Military big companies mid 1970s quota soared Political, so- shortage Revolution -Reluctance -Rapid decrease in -Decrease -Relief loan from IMF cial events -Political on May 16, to enter population growth in absolute in 1997 instability 1961 engineering rate poverty rate -Reluctance to enter colleges -Concentration provincial colleges -Increase on capital areas -Rise in poverty rate in absolute -Radical labor poverty, Serious movement, polarization of Organization wealth of the Korean -Increase in Confederation temporary of Trade Unions workers
v
In an attempt to actively address those problems, the Korean government devised a basic plan to develop the parts & materials industry in 2001 and enacted Special Act on Promotion of Enterprises Specialized in Parts & Materials (Parts & Materials Special Act), which was in force only for a decade. Over the past ten years, the government made continuous efforts, and as a result, the proportion of the parts & materials industry was up to 41 percent to 49 percent in total exports. This served as a foothold for participation in the international market.
Parts & Materials Special Act aims to contribute to the balanced development of the national economy through establishing the foundation for the development of the parts & materials industry and their production facilities as well as through promoting the specialized enterprises. The law requires the government to devise and implement a basic plan to develop the parts & materials industry (Basic Plan) in order to set a development direction and establish a develop- ment foundation. According to the Act, the minister of a relevant department shall formulate Basic Plan after taking all the plans of relevant central administrative agencies into consideration. And the plan shall be fixed after deliberation of the Parts & Materials Development Commis- sion. The plan shall include the followings: the development prospect of parts & materials sec- tors; the domestic trend of supply and demand; the achievement and improvement of relevant technologies; reliability enhancement; and those which are considered necessary to strengthen competitiveness in the sectors.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 047
Summary of Parts & Materials Special Act
v Category Hidalgo’s population (A) To contribute to balanced development of national economy through Objective establishing foundation for development of parts & materials industry and their production facilities as well as through promoting specialized enterprises To devise and implement a basic plan to develop the parts & materials industry (Basic Plan) including: - Development prospect of parts & materials sectors - International trade and domestic trend of supply and demand Government roles - Technology achievement including improvement in relevant technologies - Reliability enhancement - Those which are considered necessary to strengthen competitiveness in the sectors - Investment associations specialized in parts & materials - Special treatment to foreign investment - Investment in funds for parts & materials specialized enterprises - Project to support the composition, management and technologies of the “Parts & Materials Integrated Research Body” - Support for the enterprises specialized in developing parts & materials technologies - Technology Specialist Nurturing Program - Leave of absence for public educational officials and special exception for workers at parts & materials companies - Special exception for public educational officials’ holding two or more positions and start-up businesses - Special exception for stock buying options Major articles - Measures for systematic production and management of information on parts & materials and for enhancement of materials development - Reorganization of parts & materials related enterprises - Development and commercialization of parts & materials technologies - Starting of development work for parts & materials and commercializing its outcomes - Korea Core Industrial Technology Investment Association - Sharing of parts & materials - Support of international cooperation in parts & materials area - Establishment, management and support of groundwork to enhance reliability - Parts & Materials Development Committee - Korea Materials & Components Industry Agency
v
Source: Mexico’s National Statistics Office (Instituto Nacional de Estadistica y Geografia, INEGI), National Employment Statistics (Encuesta Nacional de Ocupacion y Empleo, Q3 2011)
048 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Thanks to the aforementioned efforts of the government, the trade surplus of the parts & materials area grew almost thirty times, from $2.7 billion in 2001 to $77.9 billion in 2010. In 2012, its trade surplus exceeded $90 billion. In the same area, however, Korea’s trade deficit with Japan increased more than two times, from $10.5 billion in 2001 to $24.3 billion in 2010, which reveals the situation that Korea imports the most of core parts & materials of IT products, such as semi- conductors and displays.
The parts & materials industry accounts for 80 percent of the total deficit with Japan. The Ko- rean government is trying to address the imbalance in various ways. The government is striving to develop the parts & materials and the root industries of the country, while meditating ways to diversify parts & materials suppliers through Korea-US FTA and Korea-EU FTA.
Dependence on imports from Japan has considerably decreased especially in the field of pri- mary metals and transport machinery parts. The decrease was achieved by improving the com- petitiveness of Korean companies along with changing the suppliers of core materials. In 2009, Japan accounted for 25.3 percent of total imports, but in 2010, 25.2 percent, in 2011, 23.6 percent, and in 2012, 23 percent. There has been a continuous decrease in imports of parts & materials from Japan. Meanwhile, the import from the US and Europe has inched up. During the same period, dependence on imports from the US was 14.6 percent, 14.8 percent and 15.8 percent respectively, while from Europe, 10.9 percent, 10.7 percent and 11.4 percent.
Last year, Korea reached a consecutive record of one trillion won in trade volume, and it be- came the world’s eighth trade giant. The parts & materials area, which recorded a trade surplus of $91 billion, is thought to be a major contributor.
According to the report the Ministry of Knowledge Economy released in commemoration of on the tenth anniversary of the enactment of Parts & Materials Special Act of February 2001, the exports and trade surplus of materials & parts hit a record high, reaching $ 229 billion and $77.9 bil- lion respectively. The exports and trade surplus were increased by 3.7 times and 28.5 times respec- tively, compared to 2001 when the Act was introduced. Korea ranked sixth, following Germany, China, the US, Japan and Hong Kong, in the market share in the world. Its market share expanded to 4.6 percent. In 2001, Korea ranked tenth, but its ranking was up to sixth in 2010, overtaking the UK, France, Italy and Singapore. Under the rapid growth, the imbalance among parts & materials sector is being corrected. The proportion of top five export items of the parts & materials industry (47.2 percent in 2000) was down to 40.6 percent last year. And top five items were switched from memory semiconductor, integrated circuit semiconductor, computer card, synthetic fiber textile and weaving, and resin to liquid crystal display, memory semiconductor, automobile parts, inte- grated circuit semiconductor and resin. Particularly, high value-added products, such as liquid crystal display, broadcasting and communication equipment, turned into a big surplus. As a result, Korea’s industrial structure was reorganized centered on high value-added products, and the rate of localization of uncompetitive items—steel, semiconductor and display, etc.—surged.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 049 In 2001, eight items of Korean parts & materials came under the world’s top products, which were accounting for more than 5 percent in the market share. Last year, the number increased to 37. The number of parts & materials companies which exported more than $100 million of products with annual sales of more than 200 billion won was 241 in 2009, up from 155 in 2004. In addition, the average output and the number of employees grew in the sectors, and consequently, they made a bigger contribution to the economy. Their overall industrial competitiveness stayed at 74.2 percent of that of the US, but it was 92.6 percent in 2009. According to the government, this is the proof that Korea’s parts & materials industry is close to the level of advanced countries. It is undeniable that this achievement is thanks to the financial investment of 2 trillion won ($1.8 billion) over the past ten years under Parts & Materials Special Act.
However, the structural vulnerability of SMEs still remains a challenge in Korea. Among small and medium-sized parts & materials enterprises, 44.1 percent are transacting with less than five demand enterprises, and 29.3 percent, with less than two. So to speak, SMEs are exposed to the changes of external factors. That is because of the subordinate business structure of the parts & materials industry in Korea, which is an obstacle to the establishment of an industrial ecosystem of equality and fairness between demand conglomerates and small and medium-sized parts & materials companies. Moreover, the trade deficit with Japan widened. It rose more than twice over the past ten years, from $10.5 billion in 2001 to $24.3 billion in 2010. Especially, when it comes to core parts & materials of Korea’s major exports, such as display and automobiles, Korea highly rely on Japanese products. Therefore, as Korea is exporting more complete products, the trade deficit with Japan is getting wider. Such a vicious cycle is continuing. When it comes to core materials like carbon fiber, anode active materials for lithium secondary battery, and luminous materials for OLED, Korea’s competitiveness lags behind global leaders by four to seven years, which is considered as a problem by the government.
Parts & Materials Special Act, which was enacted as a ten-year temporary legislation in 2001 thanks to the governmental awareness on the problems, was extended for additional ten years in 2011. Also, Parts & Materials Future Vision 2020, which is the vision and blueprint of the parts & materials industry, was announced.
The government plans to put the parts & materials industry on the fourth place in the world by 2020 by implementing four strategies and twelve core tasks without a glitch under the vision. If it is carried out successfully, parts & materials export will rise to make up 55 percent of the total export in 2020 (49.1 percent in 2010), and Korea will be the undisputed powerhouse of the field. The export of parts & materials will increase to $650 billion in 2020 (2.8 times that of 2010), and the trade balance will be $250 billion (3.2 times that of 2010). As core corporations in the industry will be the center of industrial structure, the number of parts makers will jump to 800 in 2020 (241 in 2010), and specialized parts & materials makers will go up to 6,000 (3,353 in 2010).
Materials & Parts Future Vision 2020 is expected to serve as a compass in determining the policy direction and making an investment decision. The vision, along with the revised Parts &
050 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Materials Special ACT will also play a power engine to carry out policies over the next decade. The direction of Materials & Parts Future Vision 2020 is as follows.
One of the cores of the vision is to move the industry’s focus from parts to materials for Korea’s parts & materials industry to drop an old “Catch-up” strategy and to have the structure of advanced countries. To this end, the government plans to raise the share of material subsidies out of the total R&D budget from 43.5 percent in 2010 to 60 percent in 2020 and to promote various material development projects. The parts industry aims to ditch the existing practice to focus on a single part. It will put more efforts to develop the parts for hardware-software fusion system, reflecting various demands of customers such as software, environment, and emotion, and the latest trend of convergence and integration of technology.
At the same time, the government plans to support various methods to acquire technology as well as global cooperation between the demand industry and parts & materials & equipment companies. The authorities set up four core tasks. First, to put emphasis on the development of core materials to gain the upper hand in global market in the world. Under this plan, 30 strategic core materials that would gain monopolistic status in the global market, and 10 core military materials which can be applied to private and military industries will be developed by 2020. The government will support “Special Materials Development for Ventures” to help the venture firms to be the global companies armed with world’s top technology. It will also lay the foundation for venture materials firms to acquire related information, to resolve difficulties in developing technol- ogy, and to support mass production of prototypes by evolving the existing Materials Bank and Test-bed to “Materials Solution Center.” Second, to make highest quality parts with software and reliability. The government plans to develop 100 core parts as future growth engine by combining software with machinery, shipbuilding, electrical, electronics, and automobile parts. And the de- velopment of highest quality parts that are embodied with reliability will be pursued by phasing in mandatory reliability to the whole steps of the technology development. Third, to establish “Parts & Materials Ecosystem” to lead the growth. The customized support will be offered to ease the growing pain that parts & materials firms feel when they suffer from slow growth during a certain period (when the sales hovers from 10 billion won to 50 billion won). In addition, solid founda- tion of the manufacturing industry and the new growth engines will be set up by nurturing root industries which have direct connection with competitiveness of parts & materials. “Emotional Parts & Material Research Center” will be open in order to prepare for the future trend which puts importance on emotional technology. The Ministry of Knowledge Economy will nurture core tal- ents in the parts & materials industry by strengthening the capacity of the current professionals in the fields of technique, material fusion, and management. Fourth, “Global Pioneering Strategy” led by domestic companies. Differentiated strategies according to the business types and territories will be promoted, and forums for parts & materials technology exchange will be arranged on a global scale by combining various skill sessions, exhibitions, and conferences home and abroad in order to build parts & material supply network led by Korean companies. More intensive support for M&A -- such as M&A strategy for SMEs, information on companies worthy of an acquisition, and investment capital aid) -- will also be given.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 051
Summary of Materials & Parts Future Vision 2020
v Four Core Tasks Core Programs Develop 30 strategic core materials and 10 core Develop core materials to lead future global military materials market Develop materials for venture firms Develop 100 core parts as future growth engine Make highest quality parts with software and high Develop highest quality parts that are embodied reliability with reliability Offer customized support to parts & materials firms Establish Parts & Materials Ecosystem to lead the Nurture root industries growth Open Emotional Parts & Material Research Center Nurture core talents in parts & materials industry Establish global parts & materials supply network Steer global pioneering strategy led by domestic led by domestic companies companies Provide support for SMEs’ M&A
The root industry policy, which will be the milestone for Korea’s Mechanical parts indus- try that draws the keen interest of Hidalgo, Mexico, is summarized as follows. In fact, the Mechanical parts industry is included in the root industry, but “Root Industry Promotion and Upgrade ACT” stipulates that the root industry includes the businesses to employ six major process technologies such as casting, metal forming, die-making, welding, surface treat- ment, and heat treatment. In other words, the term “root industry’” is defined in a limited sense of so-call “six major root industries.” Figure 1-10 demonstrates the concept of root industry.
The size of the root industry of Korea reaches around 30 trillion won in terms of a pro- duction output, and the nation’s technique level is 65-90 percent compared to developed countries. Table 1-7 shows the current performance of Korea’s root industry.
052 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Six major root industries
Surface Heat Casting Casting Welding Metal forming treatment treatment
Making a shape of product Special treatment to material
Performance of six major root industries
v
Technical level Contribution to Industry Main products compared to de- other industries veloped countries Sand casting Casting Engine block piston, Metal casting 65% (5.1 trillion won) wheel Key industries Die casting (automobile, Rolling Car chassis, Impact shipbuilding, Metal forming Extrusion beam, strip, 69% machine, plant) (6.3 trillion won) Forging cylindrical rods, tube Die-making (5.5 Injection mold Plastic 90% Growth engine trillion won) Press die lead frame (semiconductor, Welding (5.5 Arc welding display, mobile and Ship, automobile 83% trillion won) Conjugation IT device) Carburizing, nitriding Heat treatment High frequency Steel, nonferrous 67% (2.1 trillion won) Heat treatment materials Environment, Vacuum heat energy (wind treatment power, fuel cell, solar cell, photo- Electroplating Surface treat- Printed circuit board catalyst, filter) Dry surface ment (PCB), cell phone 72% treatment (4.7 trillion won) case, LCD frame Painting
Source: Report on Root Industry of Korea Institute of Industrial Technology (KITECH)
The root industry has been classified as industrial-based industry and has been nur- tured under the government support for a long time. However, as the demand industry has developed, the root industry has suffered from manpower shortages. Relatively insufficient support was given by the government for the Local Promotion Project, and business environ- ment became unfavorable due to consumers’ call for reduction of unit cost. As a result, even though the industry played a critical role in the industrial development, it was not able to enjoy
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 053 the benefits of growth, which widened the interregional disparity. Especially, the root industry suffered from the double torture of carrying burden of increasing production cost resulting from the rising material and energy costs because the industry is at the bottom of the food chain. In order to resolve the problem, recently “Root Industry Promotion and Upgrade ACT” was passed, which opened the way to foster the root industry. The summary of the ACT is as follows.
Chapter 1, general provision, stipulates that the state should come up with comprehen- sive measures to promote the root industry and to secure necessary financial resources. It also says that a local government is capable of drawing up necessary measures in consid- eration of the national policies and the regional characteristics.
Chapter 2, ground plans for the root industry, stipulates that the government should set up the ground plans for the root industry promotion every three years and carry out them as planned. The ground plans should include basic policy directions, policies according to sectors, policies to accelerate the conversion to modernized, automatic, and eco-friendly industry, training and education of human resources, development, distribution, diffusion of root technology, shared growth with demand industries, international cooperation, and pen- etration into foreign markets. The head of the relevant central administrative agency should establish execution plans based on the ground plans and implement them accordingly.
Chapter 3, manpower training and education, stipulates that in order to recruit human resources for the root industry, the government is capable of promoting various projects that aim at vocational training, development of vocational capacity, promotion of the influx of new talents and employment stabilization, utilization of skillful workers like retirees, improvement of working environment, and improvement of benefits for workers. The knowledge economy minister can designate the education institute for skilled workers, make a preferred assign- ment of researchers, technicians and foreign workers to root industries, and select long-term employed persons and outstanding workers and give them preferential treatment.
Chapter 4, designation of root technology and specialized company, stipulates that the government can designate roots technology and specialized companies and give them sup- port for technology development and R&D result diffusion. It can provide subsidies for aspi- rants with root technology to start-up their own firms.
Chapter 5, infrastructure for the root industry, stipulates that when a group of root com- panies is established collectively, or a root company wants to move into the complex, the government can designate a specialized complex for the root industry to set up infrastructure and a joint research center. In addition, the government can promote projects for the develop- ment of surrounding areas of the complex. “Root Industry Promotion Center” will be set up to make the R&D and support more effective.
054 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico 3.2.3. Demand industry development
Despite a short history of industrial development, most major industries including auto- mobile, electronics, and shipbuilding have competitiveness or at least fulfill their part on the global stage. These demand industries have led the development of the parts & material industry and driven the country to be the world’s 8th biggest trading states.
Summary of major demand industries’ development
Industry 1950s 1960s 1970s 1980s 1990s 2000s 2010s Companies
- Complete localization of general Facility Mass agricultural Localization - Daedong Production establishment Mass production Agricultural production of machines of the most - LS Mtron of Kerosene with ICA loan of tractors in the machinery tillers in the - Import of of agricultural - TYM engine in the early early 1980s early 1970s advanced machines 1960s foreign technology
- Four-wheel - Development - Hyundai car - Hyundai and of prototype - High class joining top 5 - Engine Kia, World’s - Production sedans in the US production top 5 maker - Hyundai of three- - SUVs - Construction - Production of Van, - Develop - Kia Automo- wheel car - domestic of overseas Pony in 1975 sedans export to ment of - GM Korea bile - Import engine plants with foreign the US in 1986 next genera Ssangyong of Ford - Completed - International technology tion of diesel Motor technology engine level of - 90% engine for Production of line up Engine localization sedans Cortina quality
- World #1 - Large-scale shipbuilder/ Floating dock, investment plant builder on-ground - Hyundai - Reorganization - Develop- - Hyundai building and Samsung of Japan Supertanker, ment of - Samsung Shipbuild- method, high Heavy and Europe submarine, HiMSEN - DSME ing value-added Industries, – Beginning LNG ship engine - STX shipbuilding, DSME Offshore - 60% of World’s #1 plant b large ship shipbuilder usiness engines in the world
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 055 Industry 1950s 1960s 1970s 1980s 1990s 2000s 2010s Companies
Establishment Construc- - Production - Securing - HHI of Construction tion equip- of domestic global com - Doosan equipment ment excavators petitiveness Infracore factories
- Magnetic - Securing Production of levitation train, - Production global com high-speed -Production Special - Production of stainless electric of High- petitiveness train with - Hyundai of Electric and vehicle Train Vehicles vehicles speed train in railway domestic Rotem diesel vehicles - K1 tank - K1A1 tank trains technology - K2 tank only
- Produc - Securing tion of T-50, - Import competitive secreting - Production of of foreign advantage of - Production of advanced ‘Engine technology to aircraft parts of F-16 with trainer Depot manufacture - Development - Korea imported - Production Maintenance’ aerospace of unmanned Aerospace Aircraft technology of Korean - Production engine aerial Industries - Production mobile of small - Production of vehicle, - Korean Air of K-1, basic helicopter helicopters engine parts establish trainer - Production 500-MD - Production ment of parts of fuselage of F-5F company, parts of civil world’s top 15 aircraft
- Production of - World #1 - Lead in - Samsung - Samsung switchboard, - Production of in DRAM in memory Electronics Electronics gas stove in air-conditioner, 1992 semicon reaching investment in partnership DDD phone, - World #1 ductor $200 billion - Foundation semiconductor, - Export of TV, stereo in memory sector in 2011, of LG Production of - Samsung radio cassette business in - Lead in TFT becoming Electronics RAM Electronics Electronics - Foundation of - Foundation 1993 LCD market, #1 mobile in 1958, - Production of - LG Electron semi-conductor of Electronic - Production TV and phone Production VTR, color TV, ics company parts company of LCD home appli brand, of radios refrigerator, flat Establishment - Samsung - Expansion of ance market strong TV, computer, of Samsung buying Korea Electronics - Lead in mo player in Developed Electronics in Semiconductor parts bile phone smartphone TFT-LCD 1969 company sector sector
- Export of power - Increase generation in global - Korea equipment - Construction competitive Heavy - Establishment parts of nuclear - 13,000 tons of ness in wind Industries & of Korea - Launch of Construction power plant, Power forging press power gen Construction Heavy Seawater of nuclear desalination plant operation in eration, forg - Samsung Industries & desalination power plants plant and 1982 ing, nuclear Engineering Construction projects oil plant power - Daerim - Participation overseas plants con - Hyosung in nuclear struction power plants construction
056 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Even though it is true that the original technology is deficient, the forthcoming problems can be absolutely resolved on the strength of the experiences from the past. Therefore, the experiences of major demand industries’ development would be a meaningful reference for developing countries. Table 1-8, which demonstrates a summary of demand industries in Korea, will help Hidalgo, Mexico to draw up its industrial policies.
3.2.4. Development of basic industry and parts & material Industry
Table 1-9 shows the related basic industries and the parts & materials industry of Korea to advise Hidalgo, Mexico on designing industrial policies of the parts & materials industry. Usually, 60 percent of Mechanical parts are used for automobiles. The parts & material in- dustry is divided into three categories: 1) manufacturing basic form such as casting, metal forming (including forging), and wielding; 2) processing the final form by Mechanical working, jigging, and die-making; and 3) giving the final form the necessary properties by painting, surface treatment, and heat treatment. Each category has their own characteristics and does not have similarities in process. Metal forming facilitates fast production of Mechanical parts at low cost, but requires massive equipment investment. Casting allows producing complex forms and requires relatively less equipment cost, but can cause environmental problems. As wielding is a part of assembly process and the size of parts is generally large, major firms usually do the job, resulting to relatively small number of wielding SMEs. In terms of the number of the businesses, Mechanical working firms form a large majority.
Firms to assemble final products or primary vendors mainly do the Mechanical working of mass-produced products such as automobiles. It is because the quality of assembly sig- nificantly affects performance of the product, and the parts require careful handling. Another reason is that because Mechanical working cannot take advantages of fast production, many machines are needed, resulting to large scale of equipment cost. However, Mechanical work- ing of small quantity batch production is mainly conducted by the small companies in under- developed region. The primary examples are agricultural machinery, construction equipment, commercial vehicles, railway vehicles, ship, and aircrafts.
In the 1970s, the Mechanical parts industry along with car production went through the first restructuring in Korea. The overall share of metal forming significantly increased, lead- ing to the rise of yield rate of materials and of Mechanical parts quality. In the 2000s, the auto industry saw rapid growth in scale, and forging businesses achieved impressive growth both in quality and quantity thanks to the significant increase in auto parts exports. Asa result, forging companies began to do Mechanical working. A few companies doing both jobs advanced even to the assembly industry. In other words, the second restructuring of the Mechanical parts industry caused forging companies to lead the Mechanical parts & materi- als industry. It is because as seen in Figure 1-11, the development of the auto parts industry led the development of metal forming and heat treatment technologies. Another reason is that related companies had no choice but to enter the Mechanical working industry in order
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 057 to remedy the problems including drop in added value resulting from production increase, and profit structure that highly dependent on raw material price. These problems emerged in the casting industry as well. However, they were more serious in forging businesses, and the development of the auto parts industry and the forging industry has affected the overall development of the Mechanical parts & materials industry.
Summary of basic industries and parts & materials industry
Industry 1960s 1970s 1980s 1990s 2000s 2010s Companies
- Import of - Establishment casting, of large-sized forging, - Development agricultural and process of machine machine parts - Growth of auto equipment tool, mold company in the - Development of parts industry with ICA loan and machining - Conversion Development early and mid automobile parts as nation’s major in the early industries to eco History of metal 1970s industry industry 1960s - Development friendly parts & materials - Establishment of - Development of special- - Development - Invitation of forging production industry automobile purpose equipment of automation of pollution industry parts company industry a equipment industry - Establishment - Development industry - Development of casting of casting of defense complex and machining parts industry industries
- POSCO, - Overseas Hyundai Steel investment - Production of - Dongkuk - Pohang Steel by POSCO 30 million tons Steel, Dongbu - Establishment Mill(1970) - World-class - Foundation - POSCO’s capacity by POSCO in Steel of Pohang - Construction of capacity Materials of Gwangyang reaching 28 million 2009 - Husteel, Seah Iron & Steel shaft furnace #1 and quality Steel Mill(1985) tonnage in 1999 - Construction of Steel Co. in 1968 - Export of thick Establish shaft furnace by - Seahbesteel plate ment of Hyundai Steel - Hyundai Hysco Mexico CGL - Other shaped Basic in 2008 steel mills In- - Establishment dus- of machine try - Production tool division in of CNC milling - Doosan automobile- - Globally machine and Infracore General related subsidiary competitive - Introduction lathe - World-class general- - Hyundai purpose - Development machine tools - Global of machine - Development purpose machine tools Mobis machine- and of NC except some competitiveness tool industry of NCTC except controllers - WIA tool byHwacheon high-precision - Development - Hwacheon Machinery ones of machining Machinery exhibition of NC center at international
fairs
058 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Industry 1960s 1970s 1980s 1990s 2000s 2010s Companies
- Domestic
production of Special - Copycat - Injection machine - TongMyung large press purpose production - Low-class press - Export of - Jaewoo Press - Domestic machine- of simple - Import of automated forge press - Hanoul Press production of tool equipment forge technology - WIA steel-making
equipment
- 3,675 mold
- Setting up companies
supporting 48,171 employees - Establishment of Mold plan for die in the early 2000s - World top Jaeyoung Cooperation Complex and mold - HR Capacity 5 country in Solutec - Introduction - Designation of Mold industry Building Plan mold sector - Nara Mold of precision sector as an advanced - Establishment - Mold CAD - Expecting & Die machine tools technology industry Metal - Dependence of Mold competition further - A Tech - Establishment - Spin off of mold forming on technicians Cooperation - Revenues from growth with Solution of Korea Die & operations from District in companies with press die - Dongil Metal Mold industry conglomerates Namdong 10+ employees - export- - Ilji Tech Cooperative Exploration of foreign Industrial and history of oriented - S-Connect markets Complex 9-year and industry - Kishin
- Introduction of longer amounting
CAD/CAM to $ 570 million
- Generalization of
CAE development - Design and application - CAE entering depending on - AFDEX global drafter - Introduction of CAD/ Dependence - Z-STAMP software - Copycat CAM Others on foreign - Z-CAST market design - Import of low cost used technology - Domestic - Early stage - Import of equipment equipment of technology affordable used - Import of new independence equipment equipment
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 059 Contribution of six root industries to automobile production
(Source: Report on Root Industry of KITECH)
The first driving force of Mechanical parts development of Korea came from the rapid growth of the demand industry. The policies to foster conglomerates, which compose the demand industry, were apposite to the case of Korea, and it was hard to deny that the govern- ment played the biggest role in designing the policy. In addition, the development of the basic industries, including material, general purpose machine-tool, and metal forming, backed up. It is true that major manufacturing equipment and metal forming have a high level of depen- dence on Germany and Japan compared to the nation’s industrial scale. However, rapid growth of the automobile industry has expedited the development of high-tech manufacturing equipment in recent years. It is because the auto industry cannot thrive without the indepen- dence of not only general purpose machine-tools but also manufacturing equipment.
Excellent equipment lays foundation for the development of Mechanical parts, and it is human resources that use the equipment and achieve fruitful results. Until the late 1970s, the government encouraged talented students to go to vocational high school, including Kumoh Technical High School and Busan National Mechanical Technical High School, and to study engineering at university. To this end, military service exemption law was introduced, and various kinds of special favors were granted to those students. It is noteworthy that those high quality human resources were on the forefront of the Mechanical parts development.
However, since college entrance rate considerably increased due to graduation quota system, and a number of colleges were newly founded, many people flocked to universities. Besides, many students have been reluctant to study natural sciences and engineering and flocked to the metropolitan area. As a result, manufacturing sector now faces serious man- power shortages. Most of manual labor jobs are done by foreign workers, and Mechanical parts SMEs have difficulty in hiring technicians.
060 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico The enthusiasm for education in Korea stems from Confucian values that emphasize learning and the endless pursuit of study even under difficult circumstances. Many students chose to study engineering out of patriotic spirit that they learned during the Japanese colo- nial period and Korean War. However, as the traditional values have been undermined, they decide their major based on each individual’s own interests, resulting to severe engineering avoidance. Even though preference for engineering among high school students has been recently growing, some experts say that it is because of a medical college admission system. Furthermore, general technicians highly tend to claim individual rights through labor unions. As a result, average wage of big corporations, such as Hyundai Motors, is more than two times higher than that of SMEs. The wage has long been a social issue. The price of raw materials usually soars during a boom. However, big corporations, which forms the demand industry, do not take into account the increased costs and calls for cost reduction every year, giving such a hard time to SMEs to conduct their businesses. It is common practice for domestic conglomerates. For various reasons, key Mechanical parts and auto parts manu- facturers in Korea strive to increase profitability with exports. It is reality that unfair distribution is frequent. It should be solved along with excessive labor movement. This is why recently “Economic Democratization” has emerged as a hot issue.
4. Advisory Research Result by Topics 4.1. Topic selection and background
4.1.1. Topic 1: Technology innovation focusing on existing key industry (casting)
Hidalgo is the center of the casting industry which ranks 4th in the Mexican economy. The biggest Mechanical parts & materials corporations are casting companies, and the demand for casting products from railway vehicles, in which Hidalgo holds No.1 position, is plenty. There are a number of steel and nonferrous metal-casting firms and related small businesses. Hidalgo, which pursues development through the innovation of these small businesses, pays the greatest interest to this industry.
The recent increase in labor cost in China has made Mexico a production base of casting products which are demanded by North America. Actually, increase rate of casting production in Mexico is higher than that of other sectors. Considering the current industrial ground of Hidalgo, casting has a great potential to grow further as it does not require much investment and quality requirement. The overview of the casting industry is given in the business plan of this project as casting was not included in the initial data of Hidalgo. However, the casting industry was selected as topic 1, based on the research over the city and at the request of Hidalgo. Topic 1 focuses on how to increase the value of the Mechanical parts industry.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 061 4.1.2. Topic 2: Fosterage of underdeveloped sector (metal forming) of Hidalgo regarding development of new products and new process
Topic 2 deals with the structural advancement of the Mechanical parts industry and an increase in the parts production in Hidalgo. Hidalgo asked for consultation on development of new products and processes. The data showed that the ground for the metal forming industry, which is indispensable for Mechanical parts, was not firm. Metal forming products are relatively expensive, and affect the industry productivity, quality improvement, and prices. In advanced countries, the share of the casting industry becomes smaller while that of the metal forming industry becomes bigger. Especially, clean production technology draws much attention because of global warming, and one of the core technologies is metal forming.
Therefore, topic 2 focuses on providing Hidalgo with necessary information to design development plans and sensible policies, and implement them by learning the development process of Korea’s metal forming technology.
4.1.3. Topic 3: Industry-academy cooperation and exchange of manpower and goods
Topic 3 is one of the topics that Hidalgo called for. Colleges, actually, play pivotal roles to vitalize regional industries in underdeveloped areas. The related policies have a consider- able influence on the level of cooperation. Korea’s economic development was led by the government and major corporations. In the 1990s, the country reached breaking point, and when the country was under the control of IMF, problems came to the light. On the surface, excessive dependence on exported parts and equipment was a problem, and the underlying fundamental problem came from industrial structure. In other word, weak SMEs were at the center of the problem. Since then, industry and academy have made intensive cooperation amid the turmoil. They are still undergoing trial and error, and the biggest problem is that the role of colleges has shrunk. The main reason is that colleges are not deeply engaged with in- dustrial foundation, resulting to less opportunity to work with businesses. In addition, colleges put more emphasis on releasing academic papers. These trials and errors and compressed experiences in the cooperation would be helpful for Mexico to set up its own policy.
Topic 4 deals with ways to make the Korea-Mexico cooperation official by taking this project as an opportunity. Advisory team considered this topic important from the first, and Hidalgo directly asked the team to cover this topic during the on-site visit.
062 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico 4.2. Advisory research results over the topic 1
4.2.1. Global casting industry
Casting plays a pivotal role not only in traditional key industries such as automobile, elec- trical and electronics, ship, industrial machines, but also new industries such as new renew- able energy, wind power, nuclear waste disposal, LED, desalination, and plant.
As seen in Figure 1-12, China is the undisputed leader of the global casting industry in terms of output. China, which has achieved rapid growth since 2000, accounts for 45 percent of the total casting production (80 million tons) of top 37 casting countries. It was possible because foreign casting firms invested in China dues to its lower labor costs and to avoid environmental restrictions. China currently faces severe environmental problems, and has reached the limit of growth as its labor cost is rising. Korea, the eighth biggest producer, ac- counts for around 2.5 percent of the world’s production. Korea has made continuous growth since the 2000s, but the growth size is not significant due to environmental problems, rapid decrease of the inflow of high-quality human resources, and rising labor cost like advanced countries. Clean technology and automation have been pursued continuously in order to resolve these chronic problems, leading to an increase in casting production in advanced countries. As of the late 2000s, Mexico had a large number of firms, but most of them were small as seen in Figure 1-13. In addition, nonferrous metal-casting took up bigger part than steel casting. Mexico has grown to be the third biggest exporter to North America. The country is expected to benefit from China’s slowing growth and the casting production has gradually increased in recent years.
In the US, steel casting has been sluggish while aluminum casting has constantly in- creased. As of 2011, production of aluminum casting came to the 80 percent of steel casting. If the current trend continues, the production of the two castings is expected to be similar in 2015.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 063 Global top ten countries in casting (2010)
China 13% India 2% U.S.A 2% 2% Japan 43% 1% Romania Germany 5% Brazil 5% Korea France 5% Italy 9% 10% China Other
(Source: Report on Root Industry of KITECH)
4.2.2. Korea’s development experiences
Before Korea’s independence in 1945, there was a foundry run by Japanese. After the independence, the managerial right of the company was handed over to Koreans, and the foundry industry developed under the Second Economic Development Plan. It relied on American technology in the early stage. The casting industry made rapid growth in the 1970s thanks to heavy and chemical industries promotion policy and stable supply of pig iron from POSCO. The industry enjoyed the greatest boom in the 1980s thanks to the development of the automobile industry, and a casting industrial complex opened. However, the industrial scale was reduced by 50 percent in the mid 1990s because of China’s low-cost products. Since 2002, after Korea recovered from IMF crisis, the number of foundry has been increas- ing. Particularly, the Korean casting industry has seen small but steady growth (2.9 percent in 2010) as labor cost and commodity cost have risen in China after Beijing Olympics.
064 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Number of operating metal-casting plants
0500010000 1500020000 2500030000 Number of Metalcasting Plants in 2008 Ref. - Modern Casting, Dec.2008 China 26000
As of 2010, the casting industry of Korea produced 2.23 million tons (steel casting: 1.85 million tons), around 2 percent of global casting production. Since 2002, aluminum casting has soared. In 2008, 60 percent of the products were used for automotive parts, 10 percent for construction followed by general purpose machines, industrial machines, heavy equipment, and ship. Less than 0.1 percent was used for rail parts. As of 2010, there were around 900 foundries and over 450,000 people worked in the field. More than 70 percent of the casting firms are small businesses with less than 50 employees and the yield per foundry of 2,535 tons, becoming the sixth in the world.
Main production region matches with where the machine industry and the heavy industry are located. Almost 70 percent of yield comes from Yeongnam area. There are four casting complexes across the nation, but they have been losing their ground due to the over devel- opment of the nearby areas and a series of civil complaints. The casting industry calls for an exclusive casting complex that allows them to conduct their business free from all anxiety. Kyeongin foundry is the first casting complex founded by private companies 30 years ago, and currently 41 firms are operating. They have worked together to develop through coopera- tive projects such as group purchase. The pressing issues they face now are how to make an eco-friendly complex and how to deal with over supply of casting products during economic recession.
Foundry of Korea has contributed to the machine industry development in spite of many difficulties. It was possible not only because skyrocketing demand, caused by the demand industry development, was the driving force, but also the government, the private sector, colleges, and research sector fulfilled their duties.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 065 The government has put efforts for the establishment of the complexes and better working conditions, and continued to provide research centers and colleges with financial support for element technology development. In the 1980s, it strengthened the competitiveness of the casting industry by opening KITECH and developing common core technology required by SMEs. Local development projects, beginning in the late 1990s, undermined R&D support for the basic industries including casting and forging. However, since the early 2010s, the government has tried to rejuvenate the basic industry such as casting, metal forming, die- making, surface treatment, heat treatment, and welding. The government policies in the past focused on the medium-term R&D aid needed for manufacturing process, while recently it has put stress on the long term aid to develop core technology of new materials, innovative processes, and eco-friendly casting technologies.
KITECH develops not only specialized technology required by individual firms but also CAE technology, one of the element technologies of the casting industry, in order to upgrade casting of Korea. In the field of academy, Korea Foundry Society (KFS) was set up to encour- age academic activities, and strengthened cooperation between industry-academy-research through metal club activities in each region. The industrial circle organized Korea Foundry Cooperative Association (KFCA) to promote cooperative development of its members, and Korea Foundry Human Resources Supply Association makes efforts to strengthen man- power capacity. Examples of Z-CAST application
One of the challenges that Korean foundries encounter is unfavorable circumstances that affect unit price. Excessive competition among businesses and an increase in material and energy costs can considerably deteriorate the profitability. However, this problem has been somewhat resolved as KFCA held emergency meeting and organized conferences for unit price rationalization. The companies that do the business with advanced countries like Japan say that their customers in the advanced economies have reasonable and flexible attitude
066 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico toward the negotiation over unit cost. The casting industry, suffering from rising raw mate- rial costs, calls for the major corporations to agree to reflect the rise in raw material price in the unit price. The forging industry faces the same problem. The committee for economic democratization, which has had a high profile, needs to pay extra attention to this problem. Needless to say, the casting industry should make more investment to equipment and should be more dedicated to quality and technology innovation thorough R&D.
To secure stable supply of pig iron and scrap metal and to maintain certain level of price are critical in foundry. The raw material price has continued to rise since the 2000s. Especially, to secure raw material has been big issue since scrap metal demand soared and industries of automobile, ship, construction equipment, plant, power equipment manufacturing began recovery. The foundry industry hopes that POSCO is willing to raise pig iron supply.
The key words to describe foundry in Korea are: small scale, concentration near residen- tial area, subcontractors, excessive use of energy, environmental problems, ageing workers, shortage of skilled manpower, and dependence on foreign laborers. All of them are negative, and this is reality. Among them the biggest stumbling block for future foundry of Korea is to secure workers and technicians. The work of the industry is considered 3D jobs with poor working conditions, resulting to the obstruction to hire employees. As a result, foreign work- ers as well as the aged over 50’s are employed. Working environment, wages, and welfare should be improved in order to solve the problem.
Foundry in Korea faces following challenges. The first is structural upgrade. To that end, construction of a specialized complex and the application of information technology to the industry are required. The second is to nurture human resources. Constant education for employees, better welfare, and morale boost are required to achieve it. The third is manage- ment innovation, and the forth is technology development. Korea Foundry Society (KFS) chose eight agendas of Korean casting industry: cost, energy, material, reliability, productivity, environment, delivery, and quality.
4.2.3. Development plan for Hidalgo
The biggest producer of casting products in the world is China followed by India and the US. China has recently tightened environmental regulations since Beijing Olympics. Foundry in China is considered to reach the breaking point as the raw material price jumps. Therefore, Mexico, located in North and Central America where the biggest demand comes from, has great potential to achieve success in the casting industry.
Hidalgo has the fourth biggest casting industry in Mexico. According to the research data from Hidalgo, there are 18 firms that local authorities looked into. Some of them have as many as 700 employees, while others are very small. A number of steel and nonferrous casting companies conduct businesses. All the facts taken together, casting is the key industry in
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 067 Hidalgo. The Mexican government has to strengthen viable cooperation between the indus- try, academy, and research through R&D support in order to nurture competitiveness of key industries while focusing on future-oriented industries. It also should come up with measures to increase the innovation capacity by encouraging for the companies to establish affiliated institutes. Needless to say, it also should build the favorable conditions for major corporations and SMEs to grow.
Korea’s experiences show that the more advanced casting industry a country has, the more pressure it comes under due to environmental issues and manpower shortages. Poor working environment affects hiring. Therefore, the government needs to build common en- vironment facilities to encourage eco-friendly production, and hold forums where industry, colleges, and researchers can work together to secure competent human resources.
Manufacturing facilities determine the quality of casting products. Mechanization and au- tomation are indispensable for quality products. Therefore, the production method should move from employing simple manual way to automation. It cannot be achieved in a short period of time. The development history of Korea’s manufacturing industry demonstrates that investment of and partnership with foreign companies in advanced countries plays a big role in improving the related industries. Mexico should heed this lesson and make efforts to build relations with their foreign counterparts.
The government ought to aggressively encourage consolidation of small casting firms that are not capable of meeting international standards in order to upgrade quality and com- petitiveness. To this end, international quality guarantee programs or strengthened quality verification system needs to be introduced. In addition, casting specialized firms and other metal forming firms should be developed.
Competitiveness of foundries relies on maintaining certain level of quality and minimizing defect rate. According to the data, process management technique highly affects the defect rate of casting. Therefore, R&D of process management technique along with raw materials, equipment, and casting process technology is necessary. In addition, efforts to reduce energy use should be made as foundries require high amount of energy.
Environment protection and labor relations management are also important to elevate the competitiveness of the casting industry. Environmental issues can be solved by establishing specialized complexes. Labor relations management requires much attention. Employees’ health and welfare has to be improved because of poor working environment. Supervision and monitoring are required to prevent serious labor-management disputes. Institutional strat- egies such as legal obligation need to be prepared in order to prevent acrimonious disputes.
Local governments should strengthen the competitiveness of foundries by opening CAE technology center, foundry & metal forming technology center, and manpower training center
068 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico in cooperation with colleges. It also ought to give subsidies to industry-academy-research R&D in order to develop common core technology. Furthermore, it needs to implement pro- grams to foster talents with master’s degree to secure highly competent employees.
4.3. Advisory research results over the topic 2
4.3.1. Global forging industry
Forging is a basic industry not only for the Mechanical industry but also for the nation. It is because the Mechanical industry is the key industry in major economies. Therefore, forg- ing yield can be a yardstick of an industrial and national competitiveness. In fact, powerful economies account for big part in forging, befitting their status. In terms of production yield, as of 2011, China yielded $ 6.8 billion, North America $ 6.1 billion, Japan $ 4.1 billion, and Korea $ 3.2 billion. These figures can be considerably different from the total yields of the countries. It is because even though forging production of major corporations including Hyundai Mo- tors is big, it is highly likely that it was not counted in the statistics. In addition, many forging equipment which is owned not by forging specialized firms but by general businesses (ex, Doowon Heavy Industries) might not be counted as well. The actual output of forging would be much bigger than the mentioned figures. For automobiles, the weight of forging products accounts for 15-20 percent of the total weight, and the price of them is more costly than that of other parts. Forging parts go through machining, heat treatment, and surface treatment, so it’s hard to put a price on them without taking into account all other treatments. Neverthe- less, the weight of the parts affects the competitiveness (Figure 1-15), and forging technology determines the competitiveness of the cars.
Multi automatic transmission and forging
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 069 Forging technology is deeply related to the following technologies: material, equipment, processing, metal forming, heat treatment, quality guarantee. Germany and Japan are the powerful leaders with competitiveness followed by late comers such as Korea and China. If Germany and Japan have competitiveness of 100, as of 2012 Korea has 88, the US 87, and China 75. Korea and the US lag 3 years behind Germany and Japan in terms of the technology development. Moreover, when it comes to core technologies such as precision metal forming and high performance manufacturing facility, the gap widens to as long as 10 years. The forging technology of China is generally 10 years behind that of Korea, but considering its fast pace of development, the gap between the two is mere 5 years.
There is not useful information about the metal forming industry in Mexico now. The industry has much lower competitiveness than the auto manufacturing industry, considering the scale of the steel industry and experts’ opinion. Several Korean firms currently export forging to Mexico. If forging factory is set up in Mexico, the pressing problems include sup- plies of materials, dies, and talented employees.
4.3.2. Korea’s experiences
It is no exaggeration to say that the history of the Mechanical parts industry goes hand in hand with that of agricultural machinery which began in the late 1940s. A kerosene engine, created in the 1950s, was the flagship machine made in Korea at that time. In the 1960s, modernized manufacturing equipment was introduced using post war economic revival fund. In the early 1970s when made-in Korea cultivators were produced in mass quantities, major Mechanical parts companies, including forging firms, and a number of subcontracting firms were founded. The defense industry made big contributions to the success of agricultural machinery and the early Mechanical parts, especially the forging industry. Agricultural machinery and the defense industry led the machine industry devel- opment in the 1970s, given the fact that Hyundai Motors launched Pony in 1976 with the technical help from Italy, Britain, and Japan.
Metal forming is indispensable in the automobile industry. Therefore, mass production of cars in 1976 was the direct cause of the metal forming development. In the early stage, used equipment, technology of forging process, and a metal mold relied on imports. The development of forging process and producing metal molds began by imitating imported ones. In the 1990s, the production of heavy equipment significantly rose. As heavy equip- ment consumed a large number of forging, it played the critical role in the growth of the forging industry along with the car industry.
In the 1990s and early 2000s, it was easy to obtain used forging equipment thanks to the collapse of the former Soviet Union, economic recession of Japan, and downturn of the manufacturing industry in Europe. At that time, a number of forging companies were founded as the demand for forging surged in the field of automobile, electronics, and con-
070 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico struction equipment. In the mid 2000s when the demand for new equipment soared due to the rising price of used equipment, domestic forging equipment were explosively released in the market, bringing the real boom to the forging industry. Automatic cold former forging and the related the process industry significantly improved at the request of mass produc- tion, and hot forging and plate forging made a rapid growth both in quality and quantity as the multi range transmission was adopted. Fast growth of the Mechanical parts industry, including steady growth of the shipbuilding industry and soaring demand for large vessel engines and wind generators, had direct influence on the forging industry development, making Korea No.1 large forging producer in the world.
As seen in Figure 1-16, forging production of Korea has continued to increase since 2007. It did not stop growing even during global financial crisis on the strength of the growth of the automobile industry. An increase in the use of forging, in order to reduce energy use consumed during not only manufacturing process but also operation, greatly contributed to the forging development in Korea, affecting the automobile industry as well as the au- tomotive parts industry. Main customers of Korea’s forging are China, the US, India, and Japan. The products are shipped in forms of raw or processed materials for automotive parts (Figure 1-17). Imports mainly consist of high-end and low-end products. Low-priced imports from China have been skyrocketing. Imports from Japan account for as much as 38 percent, vividly revealing the technology gap and the need for R&D.
Forging development played a big role in upgrading competitiveness of automobile parts in the global market. It is noteworthy that the Korean government designed policies to foster the material industry, resulting to the rapid growth of the forging industry. The fact that the government built favorable investment condition by extending financial aid to large R&D projects had positive effect as well.
Meanwhile, until the late 1990s, Korea relied on advanced countries such as Japan or Germany for major forging process. For example, the process of simple forging like a bolster was imported from Japan or developed with the instruction of advanced countries’ technicians. By then, the research on CAE technology conducted by a college made a great contribution to developing domestic forging process. Other facts that Japanese metal forming companies had no choice but to enter the global market due to long economic downturn, and that its key technologies were easily handed over to Korea presented good opportunity for the development of the metal forming industry of Korea. Korea now faces more hurdles to clear than Japan or Germany in order to manufacture metal forms, die, and specialized equipment. Advanced countries keep their eyes on Korea to check the country’s development of new technology and its application. Nevertheless, there is no doubt that Korea stands on solid foundation to overcome the difficulties at any time.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 071 Production & trade of Korea’s forging industry (2008)
Trade statistics of Korea’s forged products (KITECH)
[Export] [Import]
World World China China (554,327) (448,881) (120,170) (146,076) 22% 33%
Korea Korea
India Japan Germany Japan (48,764) (43,852) (36,090) (171,281) 9% 8% 8% 38%
USA USA (59,200) (30,816) 11% 7%
As mentioned before, the development of the demand industry and the basic industry pre- ceded that of the forging industry. Technology research (Figure 1-18) and manpower cultivation conducted by colleges, industry-academy-research cooperative research led by KITECH, and support of the Korean Society for Technology of Plasticity and Korea Forging Cooperative added an important quota to the development of the metal forming industry.
Amid the remarkable achievement, however, several problems are emerging. Supply of qualified human resources has been ceased. Despite huge subsidies from the government to R&D, much of them went to development of too simple parts. As a result, self-sustainable R&D foundation could not been built. That is why metal forming is shunned by colleges. In addition, pressure to lower the price and increasing raw material price exacerbate the profitability of the industry, imposing burdens not only on industry but also on colleges and research. The burdens
072 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico will ultimately fall on customers. Against this backdrop, economic democratization and distribu- tive justice have become one of the most urgent issues.
Application of AFDEX to process design
Forging is highly dependent on equipment. It is not often included in the equipment indus- try because process design and metal forming technology are very important, but equipment is critical for the forging industry. In the late 1990s and early 2000s, Korea was able to achieve considerable growth in a short period of time, taking advantages of easy access to used equip- ment. However, things have much changed. First of all, as Hyundai Motors has become a global automobile maker, Korea needs to have its own equipment manufacturing technology. It is not easy to introduce core technology and cutting-edge equipment now. Fortunately, increasing numbers of forging companies favor domestic equipment, and the development of equipment manufacturing is tangible. However, to manufacture precise metal form has been at a standstill. In addition, the foundation of specialized forging firms has been obstructed by the facts that related companies have not grown in size, and that most major forging companies have metal forming equipment. Some experts point out that the reason for the standstill of the industry, despite huge support of the government, is that the R&D support policy has fundamental prob- lems.
In the late 1990s, right after the IMF crisis, Korea saw a plunge in forging production because the industry highly relied on the domestic consumers such as Hyundai Motors. However, ma- jority of forging companies are currently export-oriented, and big forging companies conduct their business both home and abroad by investing in foreign markets. There are some domestic firms whose major market is Mexico. Therefore, Mexico needs to invite Korean forging producers to Mexico, and Korea needs to consider investment in Mexico which is situated far away from
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 073 4.3.3. Measures to nurture forging in Mexico
Considering Korea’s experiences explained above, Mexico seems to have very favorable con- dition to boost the metal forming industry because the volume of automobile production keeps certain level. However, the reality is different. There are not many metal forming companies or forging companies on the corporation list of Hidalgo. Many experts of Mexico agree with it.
Competitiveness of the metal forming industry depends on element technologies such as manufacturing equipment, process, metal form, production, and quality. Developments of material technology, heat treatment, precise processing, surface treatment, and lubricating are critical. Besides, demand industries, which require mass production, ought to play the role of lo- comotive, and large scale of up-front money is necessary. That makes it hard to enter the market at first. However, the development policy designed by the government is indispensable for the industry to be future-oriented. The government needs to provide equipment and facility invest- ment firms with the R&D subsidies. In addition, strengthened industry-academic cooperation is required to lift competitiveness by establishing specialized research centers in universities.
The metal forming industry of Korea was able to develop because demand industries such as automobile and electronics improved, and the material industry backed up them, making a virtuous cycle. Considering that, apparently Mexico does not have favorable conditions for the material industry and the metal forming industry. However, the metal forming industry is highly indispensable to nurture high value-added industry and to upgrade industrial structure. Especially, Hidalgo needs to be self-sufficient in quality basic materials, such as forging products, in order to produce vehicle parts, particularly parts for sedans which has high added value.
The forging industry in Hidalgo is underdeveloped, so the industry cannot grow on its own. Instead, the viable measure to get fruitful results quickly is to attract competitive foreign forging companies in cooperation with a number of assembly firms in Mexico. In addition, as a phased development strategy, it also should invite forging sectors that lost their competitiveness in advanced countries such as hammer forging. For instance, if the Mexico attracts the ship parts free forging industry that lost its ground for excessive investment in Korea and apply it to the petroleum industry or the heavy equipment industry, the chance of success would be good. Aggressive efforts and the policies will bring positive results under the current circumstances that Korean forging companies are increasing foreign investment.
The favorable conditions for metal forming companies along with forging companies should be built. In detail, first, the Mexican central government and local authorities of Hidalgo should come up with measures to steadily supply quality forging materials with a competitive price. Sec- ond, they also should guarantee attracted foreign firms to procure basic parts to make molds by founding metal forming support center. Needless to say, competent human resources should be fostered through industry-academic cooperation. Hidalgo has improved the assembly industry for railway vehicles, commercial vehicles, buses, and agricultural machinery, so to build special
074 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico complex to produce large & medium sized hot forging can bring good results. Especially, for- eigners-only industrial complex should be founded in order to guarantee foreigners comfortably conduct their businesses for decades. Support to build industrial foundation, to hire qualified employees, as well as to devise policies for labor-management cooperation need to be set up.
Techno Park (TP), which is under construction now, seems to be related to major corpora- tions, judging from the data presented by Hidalgo. It is because either the purpose of TP is not clear or its purpose is to support the work of private companies not the work of the central or local government. Considering the failure of Technology Innovation Center (TIC) of Korea, Hidalgo should find out what causes bottleneck phenomenon in the local economy and which industry should be fostered in the medium-long term, and then it should make an intensive investment into it. Of course metal forming can be the candidate.
Metal forming including forging technologies is recommended to be divided into long term and short term ones. Needless to say, short term technologies take priority at first. Process de- sign and metal forming process technologies are included in the short term technologies be- cause they offer significant help to boost competitiveness on the global stage. There are two players to implement this plan. First is research center founded by the government. KITECH of Korea or Beijing Research Institute of Mechanical and Electrical Technology (BRIMET) of China are the examples. The centers are relatively so big that the budget cannot be used efficiently and it takes long time to settle in. However, big research centers can do more specialized job. The second is colleges. For example, in Turkey, research centers in colleges (for example: Metal Forming Center of Excellence at Atilim university) provide related companies with support. Col- lege research centers can effectively operate for a long time with limited budget. If they can make the most of their characteristics, they also can vitalize cooperation between industry and colleges and nurture human resources capable of doing technical work. Needless to say, reason- able operation would follow.
The advisory team recommends that the local authorities should found a CAE technology center, a technology center for forging and die-making, and a training center in cooperation with colleges and raise the competitiveness of the metal forming industry including forging. The local government also should extend financial aid to the cooperative R&D of industry-acad- emy-research in order to develop common core technology. Especially, as seen in Figure 1-19, Korea exports a fair amount of molds to Mexico. Even though forging molds or casting molds composes small part in the total metal forming industry, the advisory team recommends active technology cooperation with metal forming institute of Korea in order to learn the nation’s CAE technology and to develop metal forming technology of Mexico.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 075 Mold exports of Korea (In thousand dollars)
600,000
500,000
400,000
300,000
200,000
100,000
0 2001 2002 2003 2004 2005 2006 2007 2008
JapanChina IndiaUS Thailand Mexico Others
4.4. Advisory research results over the topic 3
4.4.1. Korea’s experiences
Until the 1980s, Korean universities focused on education and pure paper study. In the 1990s, however, the global trend and avoidance of engineering and regional universities shed light on the need for measures to vitalize education and research using industry-academic collaboration on the national level. As a result, huge investment went to R&D projects and industrial founda- tion projects such as TP, TIC, RRC, and ERC and to plans to attract more students to engineering. Local autonomy system, introduced in the mid 1990s, accelerated the localization of industrial technology policies and funds. (Before then, majority of R&D budget was decided by the central government, and allocated inefficiently regardless of industrial characteristics of each region.) As a result, in the mid 2000s, cooperation between industry and academy become vigorous.
Until the late 1990s, industry-academic cooperation was pursued under the principle to utilized universities and revitalize regional industry, but they were rather poorly organized. Re- gional Advancement Project (RAP), which started in 2000, contributed to the systematization of the cooperation project. The term “innovation” became a key word representing those days, and innovation promotion model (Figure 1-20) was built to concretize the plan. Based on the model, universities, industry, the government, institutes, industry support groups, private or- ganizations, and NGOs were regarded as main agents of innovation. And close liaison among them were pursued to prevent projects from overlapping and to strengthen the partnership of cooperation. In the beginning, the central government, research institutes such as Korea
076 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Development Institute (KDI) and Korea Institute for Institute for Industrial Economics and Trade (KIET) and regional universities were the main players. It was because the regional governments and SMEs support organizations had lack of understanding of industrial technologies and R&D, and universities were willing to change, and they showed enthusiasm toward the cooperation.
After the mid-1990s, however, TPs which set up in regional areas, the operating bodies of RAP, took on a main role of industry-academic cooperation system, and then local governments became to take charge in strategies, budget, and organizations. As a result, the role of universi- ties was limited to education projects, and at last, the academic sectors were degenerated to the nominal institutes which did not actively participate in the cooperation. There were definitely positive effects through many innovative activities preceded in the early 2000s; with the univer- sities’ help, the regional governments’ poor capacity to design projects improved to the level of the central government. And the roles of universities, and technical development researchers which led R&D until the 1990s were transferred to private companies through above-mentioned innovative activities. Figure 1-21 shows the outcome, the development of the increasing num- ber of corporate R&D centers. The innovative systems and activities in the early and mid-2000s are expected to accelerate localization of industrial policies and to be driving forces of indus- trial structure change. The innovation system has been operated on the strength of enormous fund aids, and those above-mentioned are representative effects of RAP. Recently, the regional industrial policies, however, have been implemented by groups of a few metropolitan together. Some experts pointed that this trend could intensify the central government’s influence and cause inequality between regions.
Meanwhile, in the late 2000s, as a part of universities’ restructuring plan, academy-related policies on university evaluation turned harsh. Influenced by the new assessment system of teaching staff and by the introduction of annual salary program, universities had to focus on pure research such as releasing paper. As a result, the direction of industry-academic coopera- tion at large has been changing since 2010. What the government wanted was, needless to say, universities and SMEs working on R&D together. However, as many professors remember industry-academic cooperation in the 2000s, which was illogically and forcefully run by the gov- ernment, the policies which require sacrifice of academic field are unlikely to succeed. And there are the possibilities that a number of institutes organized in the mid-2000s would have negative effect on efficiency of the government’s R&D fund.
Until the mid-2000s, colleges were not paid for that they offered for the cooperation projects. Nevertheless, universities had to work hard for the projects, as the participation was directly related with competition and survival among universities. That was why even though they emulatively jumped into the cooperation projects, fruitful outcome was not guaranteed. The government-aid projects, which were experimental, went through trials and errors, and the sys- tem under which participants could not receive any incentives, couldn’t help being blamed for failure of implanting a sense of responsibility and for closure of projects with no tangible results.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 077 One example of failure was Technology Innovation Center (TIC) program. The program was harshly criticized in the mid-2000s, and the initiative in plans to develop industrial foundation was transferred to TPs under the government’s influence. What made the situation worse was that the financial support toward most major government-aided R&D projects increased, and the development schedule lengthened, and advanced planning researches were required. Consequently, recently the participation of SMEs into R&D was reduced, and development of industrial foundation for SMEs was also shrunk. The cooperation program was not carried out properly, resulting to the deepened polarization between large and small companies. In addi- tion, other projects, including creating industrial foundations, are likely to entail high cost, and, might lose their vibrancy in the end. Another problem is that although private companies have a duty to invest in R&D, some of them showed the tendency of highly relying on the government for fund aid. This can ruin the right attitudes toward R&D and industry-academic cooperation, and depreciate potential of technology innovation.
Industry-academy cooperating system in the mid-2000s
Central government Committee for Balanced Central government -Develop policies & National Development -Develop policies & projects projects -Control policies and projects -Audit and monitoring -Audit and monitoring
Special Regional Accounting for Development Region Cooperation program
RDA Planning and Control
Regional Innovation System Regional Industry Platform Supporting institutions Industrial production Supporting institution Science & Technology Techno Enterprise system SME Support System Park, industry- supporting system Center, Korea University, basic & academy Anchor industry, Service industry for Industrial Complex applied research consortium, skill related manufacturers Corp, public -private institute transfer, technology enterprises, loc (finance, marketing) business service support al enterprises Central complex, small and medium specialized complex, common facilities
Infrastructure Industrial Cluster Infrastructurefor for Education Information & & Training Communication
7,500 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Korea Industrial Technology Association
078 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico On the other hand, as shown in Figure 1-22, the number of corporate R&D centers in Korea soared. Mostly, middle sized companies are building the centers. They are given several incen- tives including tax cuts and the military service exemption. They also get bonus points when submitting R&D plans for government subsides, and the ones without in-house R&D centers cannot participate in the projects. Most corporate R&D centers play positive roles. However, as many people avoid going to graduate school, superabundant establishment of the institute could be problematic. For instance, some corporations might build R&D center only aiming to take benefits such as the likes of fund-aids, taxation exemption, or the military service ex- emption. The R&D center policies are needed to promote industry-academic cooperation and graduate school education.
Industry-academy collaboration in Korea is still incomplete. Half price school fee issue and reduction in the number of students will force universities to restructure themselves and influ- ence on the cooperation. The industry-academic cooperation system and related programs in Korea, which are leaded by universities, do not have fixed direction and are very unstable. For- eign countries can learn lessons from Korea’s experience not to make the same errors.
Unlike many developed countries, TPs in Korea put too much emphasis on the government and hardware. TPs in European countries focus on business incubation programs to develop underdeveloped or economically depressed regions, but those in Korea are usually located in major industrial cities or provincial capitals. Korea’s TPs ideal goal was to be self-reliant com- plexes which could assist start-ups and R&D and provide equipment, educational, informative, legal and administrative supports to regional industries, but in fact, they are used as a forward bases for the central and regional governments to foster industries. They played important roles in lifting efficiency through planning RAP, and evaluating, managing and supporting govern- ment-aid R&D projects. However, they could cause organizations to be bulked up, and their self- reliance can be disturbed by bureaucrats’ intervention, shrinking the roles of academic institutes and undermining industry-academy cooperation.
Korea has been continuously executing education programs for industry-academic coopera- tion. In a bid to promote the education and research programs, now some college campuses are moved into industrial complexes. And School to Work program (for both undergraduate and graduate school), one of cooperative education programs, funded by the governments or com- panies has been established in order to train industrial manpower. In the past, one university organized a project team alone, or a group of schools worked together and composed a team. And they usually focused on a specialized field. Recently, however, convergence educations for industry-academic cooperation, in which various majors participate, are executed. And, gradu- ate programs have been aided since the late 1990s to foster highly-qualified human resources. RAP, which started 15 years ago, played a vital part in localization of industrial technology policies and budget and reinforcement of cooperation between innovative agents. The program is implemented with 5 year intervals and now is at the end of the third phrase. During the first phrase, the program focused on the principle of selection and concentration. The second phrase
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 079 was carried out under the principle of integration and connection. The third phrase rather shrank due to diagram industry promotion program. The second RAP put TPs in the front and achieved systematization by improving the errors in the past phrase, but it had problems reflecting vari- ous opinions. Figure 1-22 is a concept chart of Gyeongsangnam-do (province), a center of Ko- rea’s machine industry. This chart shows the region’s second phase of Regional Advancement Projuct. Approximately 400 billion won was in put into each stage for 5 years.
Gyeongsangnam-do’s (province) second phrase of RAP concept chart
Capital- - Labor force based industry Knowledge- - Knowledge & information based industry intensive - Low added value industry 20C 21C intensive - High added value industry machinery - Conglomerate focused subcontract structure machinery - SME focused cooperative structure industry - Environmental pollution industry industry - Environmentally friendly industry
Knowledge · Information
infrastructure for technological Technology-intensive SME’s nurtured Distribution structure based on Creative production innovation set up information is improved groundwork set up
- High added value machinery technology - Transfer of technological skills and start-ups - E-commerce is strengthened - Enterprise accumulation by category of developed are promoted - Export of Parts are promoted specialized business - Information software technology is used - Integrated support systemis established - Technology transfer is invigorated - Complex support service expanded - Specialized regional talent is fostered - Venture companies are nurtured - State of the art production technology development is promoted
4.4.2. Development measures for Hidalgo
Considering Korea’s experiences and State of Hidalgo or Mexico’s top-down industrial struc- ture, invigorating industry-academic cooperation appears very important. First of all, the gov- ernment’s understanding of industry and the importance of industry-academic cooperation are vital. To that end, Mexico needs to study Korea’s case. Even though industry-academic col- laboration in Korea is incomplete, it will provide good opportunity to learn as various trials were made in a very short duration.
As seen in Figure 1-20, the innovation agents of industry and regional development in- novation are the government, universities, enterprises, research centers, and other institutes. In the middle of 2000s, influenced by storming fever toward balanced regional development and innovation, information interchange and communication were made between the agents. Various activities at the time had positive effects. Figure 1-21 shows that many corporates built R&D centers, and thereby the capacity of R&D significantly improved. Information exchange in IT sector as well as Mechanical parts industry was boosted not only by social gathering, which are more common in Korea than in the US or European countries, but also by the support from the government. There are definitely negative aspects of those interchanging activities, such as leaking of individuals’ or enterprises’ know-how, administration information, strategies, or hu- man resources. However, it will be still useful for least developed among developing countries to innovate technologies and promote mutual study. Therefore, State of Hidalgo needs to find and execute methods to invigorate information exchange.
Now in Hidalgo, TPs establishment is carried forward. However, strategic approach to make TPs the institutes which can actually help SMEs should be put first before their establishment
080 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico (The current TPs’ construction plan is rather abstract). In Europe, where TPs or science parks were introduced as the centers of RAP, business incubation programs mainly run by nearby universities, and self-sufficiency were considered as important issues. Likewise, Mexico should constantly establish the foundation of industry and R&D by putting academic institutes in the middle of system and promoting TPs and related government organizations’ participation. In addition, fund aids for short term R&D projects needs to be provided for a long period of time to pursue fair innovation for enterprises and universities.
The technologies which SMEs need require expert knowledge. The knowledge about dy- namics which materials undergo in high temperature or high pressure and physical property changes of materials can be acquired in graduate school programs, so Mexico should make a full commitment to training professional manpower. Korea’s “master doctorate training programs” are worth studying for Mexico. The government also needs to designate process research teams of six root industries that belong to universities or state-run institutes as common core technology research teams, and consistently provide a certain amount of R&D budget and consolidate them as nucleus of industry-academic cooperation. As seen in Figure 1-23, the support should be done in the form “petal package method,” and the common core technology research team always has to sit in the core. In short, the financial supports should be provided comprehensively, in the manner of packaging system which includes aids for technical developments (common core technology development projects), shared research equipment, industrial engineers, commer- cialization and industrialization, administration, facilities, cooperate research centers, hosting forums and technology exchange, so that the government can raise ability to self-support and transparency. As for R&D projects aiming at commercialization, the amount of fund burdened by enterprises should be constantly increased, and give more weight to development and estab- lishing the foundation of common core technology development which common core technology research team and technology exchange team require.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 081 Industry-academy Research Cooperation Support Model
Common core technology development Administarative projects Service Facilities
School to Work Research Industry-Academic Technology Research Team Cooperative Development Schools Equipment Professors Enterprises
Cooperation Manpower Centers Engineers Commercialization Industrialization Capital
To vitalize the project, technical research meeting should be formed with its members from various fields, and the members of forum promotion institute and common core technology development institute ought to be chosen from the project members. Self-sufficiency and -dy namicity of interchange activities innovation agents should be raised by linking all provided sources together.
In every industrial project, exchange of human and material resources should be obliged among regional innovation agents, and the government should promote them to use the exist- ing infrastructures. To realize actual industry-academic collaboration, common core technology development projects should be given, and financial aids mainly should go to those projects led by industry-academy consortium. The environments of cooperation should be formed by promoting periodic technical exchange conferences and forum activities, providing engineers and professors with a chance to meet and study together. Also industry-academy collaborative enterprise attraction team needs to be composed to invite regional businesses to promote es- tablishment of innovation clusters.
4.5. Advisory research results over the topic 4
Scholars in Korea and Mexico worked together for a long time in casting industry. They have experiences of intellectual exchanges through the governments’ international operation proj- ects, and periodic academic interchanges for many years. However, it was not easy to maintain non-governmental interchanges due to geological limitation. Most related staff who partici- pated in the projects said that if the governments’ supports had been existed, they could have
082 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico expanded their cooperation to industrial fields. Therefore, budgets and institutional cooperation system which allows manpower interchange are indispensable to build practical international cooperation.
Considering the two countries’ geological locations and many other conditions, coopera- tive partnership, than competitive relationship, is desirable. Mexico adjoins the US, the second biggest market of Korea, and Korea and Mexico have conditions which can make up for each other’s weakness.
One of the weaknesses of Mexico’s economy is its high level of dependence on foreign markets, and solving that problem is one of the important goals. Korea already experienced the similar problem and now has reached an early stage of self-supporting in terms of parts & materials, manufacturing equipment, and production process. Since Mexico is still looking for the solutions, Korea’s experiences can be good landmarks. Now, State of Hidalgo is acutely hoping to attract investment of Korean and other foreign enterprises. However, visible outcome cannot be immediately accomplished under the current circumstances. Due to the global eco- nomic crisis, investors’ confidence has still shrunk, and Mexico’s industrial structure seems not to be stabilized enough to reinforce the self-sufficiency of demand industry. Therefore gradable approach is required.
The first step is widening the width of mutual understanding by strengthening interchange and cooperation. Hidalgo should establish a goal of independence on obtaining main compo- nents and strive for constant industrial restructuring and promotion of new industries. Generally, if Mexico is provided with components from its neighboring countries, technology transfer and localization of parts & materials will be hard to be accomplished. Therefore, the methods to supply key Mechanical parts are required in partnership with Korea or other remote countries. When the size of the partnership becomes large enough, it is desirable to let Mexico or Hidalgo localize the production of main components through joint ventures or technical cooperation. But this process will take time to be done.
To crystallize this process, continuous exchange of workforce and information must take precedence. To attain this end, Korea-Mexico Cooperation Center needed to be founded. The center should be located in a university to be an effective organization, and the operation fund should be given from both countries. At this stage, one method to promote the interchange and cooperation is that Korea donates CAE software for machine parts production process, de- veloped by Korea, to Korea-Mexico Cooperation Centers, which are established in universities or TPs, for purposes of education and research. Recently, in the fields of metal forming, casting, injection, and cutting, internationally competitive CAE software packages were developed in Korea and widely used at home and abroad. To educate skillful workforce with the software will enhance Hidalgo’s growth potential and could create better conditions for Korean enterprises to enter Mexico. As seen in Figure 1-24, Korea Institute of Industrial Technology (KITECH) made e-Design Center and encourages SMEs to use various manufacturing engineering software to
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 083 lead enterprises’ technology innovation. CAD, CAM, CAE and computer graphic application tech- nologies are actively used in education. Figure 1-25 is educational software about virtual CNC process technology used in most technical high schools in Korea, which is suitable to attract students’ interest. In Korean vocational high schools, CAE technology is covered in books about casting and metal forming and applied in on-the-job training. Now Korea has international com- petitiveness in this field, so Korea-Mexico cooperation in the field will be possible. In addition, to promote attraction of enterprises and academic activities, Korea-Mexico Cooperation Centers in both countries need to host academic events or enterprise attraction events in turns on a medium-and long-term basis.
Key Map of e-Design Center
And Korea-Mexico interchange and cooperation of manpower will be solidified by Korean universities or centers taking full charge of education for graduate students sent from Mexico. Also, the colleges should make efforts to relieve the students’ financial burden by reducing and exempting of school fees and make favorable conditions for their settlement by assigning dormitory rooms.
Intellectual exchange between students and professors are desirable to be mutual, and fi- nancial aids from both countries are essential for the interchange and cooperation activities of Korea-Mexico Cooperation Centers.
In Korea, the best that the private sector can do is securing the minimum requirement of budget through international exchange supported by National Research Foundation of Korea (NRF). Academic sectors in Hidalgo need to show enthusiastic attitude, and State might need inducement. If the two governments step forward and secure special budget, they will be able to do not only academic activities but also enterprises invitation, investment promotion, work- force exchange and education projects together.
084 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Virtual CNC process technology education software
(a) Milling b) Lathe
And Korea-Mexico interchange and cooperation of manpower will be solidified by Korean universities or centers taking full charge of education for graduate students sent from Mexico. Also, the colleges should make efforts to relieve the students’ financial burden by reducing and exempting of school fees and make favorable conditions for their settlement by assigning dormitory rooms.
Intellectual exchange between students and professors are desirable to be mutual, and fi- nancial aids from both countries are essential for the interchange and cooperation activities of Korea-Mexico Cooperation Centers.
In Korea, the best that the private sector can do is securing the minimum requirement of budget through international exchange supported by National Research Foundation of Korea (NRF). Academic sectors in Hidalgo need to show enthusiastic attitude, and State might need inducement. If the two governments step forward and secure special budget, they will be able to do not only academic activities but also enterprises invitation, investment promotion, work- force exchange and education projects together.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 085 5. Conclusion: Implication from Korea’s Development Experiences 5.1. Policies
Hidalgo needs to organize Think Tank. It should consist of state’s agencies, which mainly study about Hidalgos industrial-economic development strategies (sort of metropolitan devel- opment institutes, and if Hidalgo doesn’t have any similar agency, to establish a proper one is desirable), and federal agencies, working on the government’s industries, economy, and tech- nologies (similar to KDI, KIET, KIST, etc. in Korea). Think Tank, the government, academic circles and industrial circles have to create State of Hidalgo’s master plan for long-term development. In the plan, the vision of Hidalgo should be stated as well as regional specialized industry and its specific measures to promote. When writing the master plan, it is suggested Hidalgo refer- ence Korea’s economic development plans and hire experts who participated in establishment of Korea’s plans or who studied Korea’s cases in depth as consultants.
To establish reasonable policies to promote regional industry, close relationship among ex- perts and institutional system that applies enterprises’ opinions is required. When drawing up major policies, local governments should enhance their capacity to design policies in order not to excessively depend on universities or research institutes or other interest groups, and their administration should value demanders, enterprises. It is recommended to professional- ize industrial policies related officials, to assure to pick people in charge of major tasks and to provide proper incentives. The federal government should plan regional development projects with state governments, so that each state acquires capacities to design its own regional indus- try development model by itself. And then, the federal government should provide required budget in order to invigorate regional industry and economy.
Continuous economic development policies played vital roles in Korean economic growth. Those helped nurture light industry in the early stage of development to raise funds, to build high ways, to establish industrial complexes, and the steel industry as well as to secure high technologies and skillful manpower. Besides, the state-run agencies made by those policies, attracted talented workforce at home and abroad and let them contribute to R&D projects and development of future technologies. Also, The New Community Movement, a political initiative, used stereoscopic strategies and implanted the idea of better-off to Korean people. Korean development policies were elaborately planned and powerfully pushed ahead. Korea’s short
086 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico history of economic growth will be a role model to developing countries. However, as industrial- economic promotion policies and models are easily influenced by cultural and traditional ele- ments, Hidalgo’s officials need to visit Korea for mid-long term to learn and study at firsthand, and then, to design realistic development model for State of Hidalgo.
In the early stage of economic development, Korea had to focus on nurturing only a small number of major companies which had global competitiveness, and the government and the enterprises strived to frontier new markets. In the 1970s, the period of nurturing heavy industry and defense industry, the majority of current Korea’s big companies were already fostered. In the 1980s, parts industry started to be brought up, and programs for balanced regional devel- opment and industry-academic cooperation, which started in 1998, played important roles in parts & materials industry promotion. In short, the promotion strategies for Korean economic growth were, in the beginning, “Selection and concentration,” and later, “liaison and coopera- tion.” To devise strategies and action plans for economy promotion, in-depth study into those of Korea is suggested.
Korea and Mexico both adopted a top-down development model. In the late 1990s, Korea encountered with serious industrial and economic problems because of development led by major companies and demand industry but rather poor SMEs and parts & materials industry. Economic crisis which broke out in 1997 is one of the examples. Fortunately, Korea made the crisis an opportunity to rearrange its economic structure, and Parts and Materials Special Law, introduced in 2001, is one example. In the parts & materials industry, Korea recorded a trade surplus of more than $90 billion, and raised itself as a powerhouse of the industry. Since the special law involves core promotion policies and was executed to improve the industry, Mexico is recommended to study and mend it to fit in Hidalgo’s reality. Competitiveness of Mechani- cal parts industry depends on root industry technologies. Therefore, Hidalgo is considered to concentrate on research Root Industry Fosterage and Promotion Act (enacted in 2011). In short, Mexico needs to legalize related polices, and the two examples of Korea can be good references.
Mexico has very good conditions to bring up parts & materials industry. Geologically, it ad- joins North America and Central and South America. And it is underdeveloped country with low wage, which is a good environment to foster the industry which highly relies on simple labor. On the other hand, if Mexico attracts oversea enterprises which are included in assembly industry, making finished products, talented workforce in the country will be taken to low added value industry. It could lead lack of manpower in parts & materials field, and if so, no investment will be made into the industry, making impossible the field prosper. Many experts in Mexico tend to regard Mechanical parts similar to finished products. However, to vitalize the industry, as Korea did, considering it as parts of root industry, that is, elemental techniques will be required. If the
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 087 federal government doesn’t pursue to develop parts & materials industry, disparity between states with and without assembly industrial facilities will cause other social issues. So, Mexico has to strategically nurture the parts & materials industry in the states which neighbor the states owning assembly plants. Investment in R&D, social overhead capital, and key industries should be increased.
Participation of a number of experts and enterprises is essential to foster the industry. Ef- ficient cooperative system, thus, is very critical. Korean government has affiliated organizations such as policy research centers and technology research centers and gets specialized consults when needed. Metropolitan governments also get help from regional development institutes and TPs to find measures to develop. Furthermore, related organizations and enterprises are obliged to take part in development strategy. Designing appropriate system is necessary to establish and understand organized and long lasting policies.
Railway vehicle industry is the key industry of Hidalgo. Therefore, the state has to try to localize the parts & materials industry, and nurture the similar industry related to small and middle size ships, agricultural machineries, heavy-duty trucks, or buses. Since fostering finished products manufacturing such as tractor or excavator is difficult, relatively easy parts & materials manufacturing, especially materials or molds manufacturing (the material with certain forms such as casting or forging products) should be the centers of RAP. After that, gradual develop- ment from producing material toward machining or assembly manufacturing is advisable. Now Hidalgo is focusing on small quantity batch production. From where it is, it should progressively pursue mass production in small variety which has higher innovative elements.
Establishing innovation system or innovation promote model must take precedence for economic growth.. Every economic agent should be innovative, and when it breaks away from conventional passive and pessimistic views and behaviors, and actively take part in innovative activities, the change will surpass the expectations. Of course, setting up innovation system along with fund aids, especially mid-long term affluent financial support, to build industry-acad- emy cooperation and industrial foundation is essential to induce the agents’ participation. In- novative agents, including universities, enterprises, institutes, the government, industry support organizations, and NGOs have to construct close interchange and cooperation systems. To this end, both federal and local authorities should work together and develop innovation promotion model. It is advised Mexico to benchmark Korea’s regional industry promotion system employed by Regional Innovation System (RIS) and TPs in the mid-2000s.
088 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico
Innovation activities among innovative agents occur when the budgets are used for R&D or building industrial foundation. In the beginning, the government should fund the great part of budget and, as time goes by, have enterprises increase their loads. Also it should make them install affiliated research centers to strengthen their capacities to innovate. Innovative agents should introduce circle activity system, innovation suggestion system, and corporate R&D center systems so that they can always pursue innovation. In the early stage, the only way to innovate is to deliver the strategies and knowledge generated by high-tech expert groups to the lower organizations. And the government should help and induce these transfers. For instance, strate- gies of the central government and related think tank go to the local governments and related think tank, and elemental technologies which universities or institutes owned are delivered to business sectors. These processes are valuable opportunities for mutual study, so supporting them systemically help innovative agents pursue their goal.
Mexico should install TPs in universities campus and establish affiliated self-support R&D centers specialized in parts & materials to lead development in root industries. In addition, it is recommended to assign planning function to TPs and to let them cooperate with regional development institutes to establish regional development plan and play the core role to imple- ment the plan. R&D centers specialized in specific fields must be installed under the principle of selection and concentration, and widen ranges of their liaison and cooperation. Otherwise, they will fail easily.
The government’s investment must take precedence for industrial revival after five to ten years. At the moment, Mexico’s overall R&D budget is extremely low, so huge expansion of bud- get is necessary to vitalize cooperation between industry and academy. Also the government must entrust enterprises with the current key industry development and provide financial sup- port to invigorate industry-academy collaboration. Meanwhile, supports for TPs or universities’ superior research grouping projects should be concentrated on the field of regional specializa- tion projects.
Mexico’s demand industry (including auto industry) can be said international in size and products’ quality, but it is assembly sector leads the industry, and the major components are mostly imported. This causes the decline of Mexico’s self-sufficiency. As a result, negative out- comes, which could be similar to the excessive recession during the global economic crisis in the
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 089 late 2000s, can be followed. To prevent them from occurring, development of parts & materials industry must be preceded, and constant exertions ought to be made to foster basic industries including general purpose machine-tool, metal forming, and material industries. If a specific parts industry suffers damage or is not attracted due to poor fundamental industry, temporary direct and indirect support must be provided.
Small manufacturing businesses have trouble meeting international standards of quality and environment. Therefore, the government should encourage cooperation among regional busi- nesses and enterprises growth in scale by vitalizing M&A and constructing joint infrastructure. For example, a metal forming enterprise can expedite technical innovation by using apartment- type factory neighboring government-aid technology support centers. Certification systems which are centered by demand industry, or which are driven by government for superior enter- prises should be made and implemented to accelerate business expansion and collaboration. Requirement for certificate acquisition is installation of research center whose prerequisite is to secure the certain number of researchers. The government should protect enterprises from facing troubles not long after restructuring by executing many support policies.
The government should legalize nurturing policies for regional specialization projects, which are stated in the master plan, and construct the related industrial foundations beforehand. Then it should identify State of Hidalgo with the specialization projects through active advertisements at home and abroad. Hidalgo has to be recognized as a good place for the specialized industry, and it should be able to show persuadable reasons. For example, register a business friendly labor relations act or a special law of labor movement at foreign companies and use them with a purpose of promotion. To this end, the state government needs to enlighten and persuade people on a regular basis.
The strategy required in the beginning stage is to figure out what kind of jobs are needed but avoided in Mexico City due to various reasons such as environmental issues, and to spe- cialized them. And Mexico has to gradually shift them to high value-added industries which accumulating wealth. For example, if the government decided to nurture casting industry first, then, when sees the necessity of reducing environmental contamination from the industry, it should start forging industry together. Later, when high valued-added industries are needed to be developed, it can start fostering mono auto part manufacturing through Mechanical working after casting or forging. The next step will be promoting auto parts assembly producing industry. In other words, fostering auto parts & materials industry into high valued-added industry comes first before the fosterage of auto parts industry. In addition, as for application, heavy equipment
090 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico and heavy agricultural machinery begin first, which can use the investment of the current key industry, and later, parts for buses, heavy commercial vehicles, and sedans follow.
5.2. Establishment of infrastructures
Considering history of Korean economic development, investment was made in major fun- damental industry first. For example, before nurturing heavy chemical industry, POSCO, a steel manufacturing enterprise, was founded even though its demand was unsure. To build major industrial infrastructures, such as an industrial complex, the proper size of the site, high acces- sibility, and well-prepared supply and demand system are required. History of Korean industrial development shows that Korea formed industrial complexes only for the enterprises featuring fundamental industrial characteristics, and parts industrial complexes were made later. Form aspect of cluster sampling, which is globally proven effective, the complexes in the early stage were well established. Therefore, as for installation of industrial parks, Korea’s examples are worth studying in depth. Especially, Ansan SME Industry Park is a good model for benchmark.
Industrial complexes in Korea can be divided into national industrial complexes, general industrial complexes, agricultural industrial complexes, and foreign investment zones. Each kind has different development agents, and the characteristic of each industrial infrastructure, which is formed along with industrial complexes, is different. Before Hidalgo founding an industrial complex, it is recommended to look into Korea’s examples.
Korea has built Foreign Investment Zones in major regional industry developmental areas and provided several incentives to foreign companies. One example is long-term (about 50 years) free land lease. The zone can be formed when the ratio of foreign in the complex is over 60 percent. Sacheon Foreign Investment Zone is recommended for benchmark. The complex’s industrial location is relatively not good, but the regional government actively attracted over- sea enterprises by building foreign schools and creating special measures to deal with labor movement.
Industry-academy cooperation system and the facilities to support innovation agents’ activi- ties and practical TPs should be built. Establishing ties with TPs, common core technology R&D centers in the field of root industries need to be set up in university campus. In addition, CAD, CAM, and CAE support centers and educational technology R&D centers should be built at major universities in local areas and help small enterprises’ technical innovation.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 091
In Korea, legal grounds to establish specialized complexes for six root industries were recent- ly prepared. Branches of Korea Institute of Industrial Technology (KITECH) and regional centers are built in major industrial areas and actively support SMEs. And state-run research centers are sending their personnel to enterprises. Mexico is suggested to consider Korea’s policies to promote technical innovation. As for industry which causes environmental pollution, such as casting, it’d better establish a complex exclusively for environment contaminating industries and actively deal with the problems
5.3. Fosterage of vulnerable field and investment attraction
Considering Korea’s Parts and Materials Industry Special Law and Root Industry Promotion Act, Mexico needs to introduce realistic laws and prepare policies which can help foster related industries regardless of administration changes. And it has to build specialized research cen- ters, CAD, CAM, and CAE or molding technology support centers in underdeveloped areas and specialized industrial complexes. And it also should improve industrial activity conditions while nurturing the industries. At the same time, it requires to spend budgets efficiently and train manpower by using regional universities actively. Also, Hidalgo has to form a complex only for parts & materials industry or specialized complex, and assign parts & materials industrial com- plex for foreigners. In case of Korea, it provided several incentives to train skillful workforce and to promote high technologies, and it established research centers beforehand and formed an industrial location.
By making a list of demanding companies, Mexico should use it to develop parts & materials industry and to invite enterprises. Localization of major components’ production is required. It can demand finished products assembly industry to use parts domestically or regionally manu- factured, and it can encourage localization through incentives. To this end, precedent invest- ment in related fundamental industry must be followed.
Since fosterage of core parts industry goes through trial and error and takes time, attraction of domestic and foreign enterprises which already secured competitiveness is advisable. As
092 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico certain amount of trading is prerequisite before inviting enterprises, the central government needs to encourage international cooperation. Inviting foreign businesses is not a temporary project, so a enterprises attraction system needs to be prepared all the time. To this end, the in- dustrial field should be able to supply the proper sites and facilities in time. Mexico is suggested that it develop industrial complexes, which take long time to be formed, along with building apartment-type factories so that new SMEs in specialized field can start their business and meet demands of attracted enterprises. Korea’s forging industry is highly developed, and many companies in the field invest in China, India, Thailand, and Pakistan. Influx of young skillful workforce drastically declined, and oversea investment is regarded as one of the solutions. Especially, auto industry, the biggest demand industry of forging, has been invested in the US, and Brazil. Since forging industry is vulnerable in Mexico, with proper strategies and plans, Korean forging companies’ vivid investment in Mexico can be possible. To attain this end, thorough preparation for inviting enterprises and advanced investment based on master plan are essential.
The government needs to induce parts & materials businesses to enlarge their sizes through vitalization of M&A. To attain this end, the government needs to encourage cooperation among similar businesses, to establish specialized complexes, to implement of certification system in close cooperation with demand industry, and to provide financial support for R&D centers or facilities toward enterprises over a certain size.
5.4. Industry-academy cooperation and manpower training
When it comes to industry-academy cooperation, Korea has executed various education and research projects, developed and employed many programs, and experienced a number of trials and errors. Now cooperation between the two fields is essential in most school curriculum and research projects. In the middle of 1990s, the industry-academy cooperation was not that active, but now some school campuses are moving into industrial complexes. Most of universi- ties at the moment run based on the collaboration. Schools create additional industry-academy cooperation agencies which take charge of the related activities, and professors’ performances in the related projects are reflected to their evaluation. Considering the nature of university’s program, the system cannot change at once. Federal and state governments should support innovative activities for the collaboration in various ways. Mexico should analyze Korea’s errors and establish proper and realistic cooperation model.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 093 To invigorate universities’ industrial-educational research is critical. To attain this end, Ko- rea’s industry-academy consortium program and R&D center projects can be good models. A consortium was held in the early 1990s on the purpose of R&D promotion in the early days of industrial-educational cooperation. The essential of the program was that when a regional uni- versities and companies decide to work together, the governments support small size or R&D budgets to many enterprises. In the middle of the 1990s, Korea had the cooperation centers, such as Regional Research Center and Engineering Research Center built in universities and pro- vided financial support to the group of enterprises and that of professors in regional specialized industrial field and superior research field in universities. Those government policies expanded their sizes of support through technical innovation challenges and RAP in the 2000s, and later became catalysts of the cooperation. In addition, the government set up policies, such as send- ing collage staff to parts & materials enterprises for dispatched service and supporting venture startups, to systemically support the collaboration. Those policies led fosterage of workforce in fields and participation of regional enterprises.
Mexico and State of Hidalgo’s poor industry-academy cooperation is becoming a barrier to decline Mexico’s dependency on foreign markets and improvement of regional industry. The root cause seems to be the government’s small R&D budget. Therefore, the federal and state governments should exert great efforts to secure budget and set up and carry out mid-long term activation measures for economic development, referring Korea’s experience of gradual diffusion policy.
Organizing corporate support is another core part of industrial infrastructure. Mexico needs to install specialized R&D centers, CAE support centers, reorientation center for field employees, and high-priced shared equipment center by using universities’ human and material resources, so that universities can help solve problems which enterprises face. Efficient use of budget and magnification of synergy effect can be possible if the centers establish ties with universities and use their original functions: training human resource and R&D. In Korea, as the role of universities shrank in establishing industrial infrastructure in the late 2000s, there is a concern that negative effects can outweigh the positive effects.
Parts & materials technology requires extensive understanding of Mechanical and mate- rial engineering and proficient use of CAD, CAM and CAE. In short, high-quality workforce is needed. Fosterage of high level human resource can be accomplished by training employees who studied master’s course. High level manpower training program for regional innovation of Korea could be referred. Also, to open corporate R&D centers which could absorb the skillful workforce and to organize retired experts groups for consultant are desirable.
94 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Korean graduate school programs are similar to those of the US, which means graduated students are paid a certain amount of money. In Japan, the students hardly receive financial support. However, all the enterprises which young Japanese people hope to work for prefer people with master’s degree so that the youth invest in themselves and go to graduate school. Japanese system is more desirable, but in the early stage, recruiting students by providing sup- port and activating the education program seems inevitable. Under the Korean government- aided R&D projects, financial aids for students are similar to SMEs employees’ salary. Also in the projects like BK21, the government supports budget for the graduate courses for project teams in the field of specialized regional industry and that of regional universities’ superior research. Likewise, Mexico’s financial aids for activation of the graduate program appear to be essential in the early stage. However, the government needs to consider the way to gradually shift to Japanese system to increase the efficiency of R&D budget, and so does Korean government. In other words, Korean government and enterprises have to strive to found a system which leads students to go to graduate schools voluntarily.
Capacity of universities can constantly decline due to industrial depression or stagnation, regional industry’s relatively slow growth, inactivation of industry-academic collaboration, local governments’ limited financial support, region’s stationary population, and leak of workforce. Therefore, rearing universities is essential to build virtuous cycle where procuring a constant supply of high-level manpower from near regions leads to local industry development. To attain this goal, industry promote programs should go along with development of academic institutes.
To nurture high level field workforce, Hidalgo is recommended to research and analyze Ko- rean reeducation program run by short-term classes and workshops, and to implement Korea’s School to Work program which connects graduate programs with enterprises.
5.5. Regional and international cooperation
To promote interchange and cooperation between regional enterprises is necessary. To this end, the government should analyze Korea’s interchange gatherings among the same and dif- ferent types of businesses, convergence technology exchange meeting and graft advantages from them. Many types of business organizations are located in North America. For example, as for forging, Mexican forging industry cooperative organization cannot be found on the internet. If typing “Mexico” and “forging” together at a search engine, Forging Industry Association (FIA),
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 95 a North American forging industry association appears at the top. Only four or so Mexican cor- porations are included in the association, and some of them seem to be investment companies of the United States’ enterprise. Mexican corporations’ active innovative activities cannot be expected under these circumstances. It is encouraged to form Mexico’s own economic organiza- tions, especially in the parts & materials industry, on the national level.
It is suggested that Hidalgo encourage international cooperation which put regional govern- ments, universities, industrial and economic organizations in the center, so that the cooperation can constantly promotion and progressively approach to build up trust. The two major prob- lems that Mexico is facing are; high-level of dependence on the US and underdeveloped parts & materials industry. If Mexico nurtures this labor-intensive industry, in a low-income state like Hidalgo, global competitiveness of parts & materials industry will largely improve. As China is experiencing inflation of wages and serious environmental pollutions, some experts foresee that Mexico will be the world’s manufacturing base over China. Unfortunately, there is a chance that the conventional simple assembly industry will prosper because of wide markets in the US and Central and South America. In that case, more skillful manpower will be taken to low value-added industry and states like Hidalgo, where geological conditions are not suitable for large size assembly corporations, will suffer further, deepening the polarization and bringing up factors of social conflicts. Therefore, the federal government needs to make Hidalgo, a state of underdevelopment, parts and material specialized region in order to achieve stable and future- oriented industrial development. Diversification of global cooperation will effectively accelerate those regional developments.
In Korea, technical high schools commonly use virtual CNC education for cutting, and many universities teach CAE. Enterprises use CAD for process design, CAM for metal forming and machining parts, and CAE for process development. Especially, CAE technology is essential for quality enhancement, productivity improvement, and cost reduction. In case of Korea, thanks to forging simulation technology, it succeeded to overcome developed countries with accumu- lated experiences. Korea has domestically developed software to analyze production engineer- ing process. Survey says that Korean engineering analysis software consortium has intention to donate main software to Hidalgo if it wants them. This technology is extremely useful for not only training high-level workforce but also connecting universities and enterprises. It is also effective to help Mexico’s self-support on process design technology where accumulation of experience is important. Above all, since it could raise young people’s curiosities and desires to accomplish, it might be able to deal with some of challenges Mexico have: Decreasing high school dropout rate, and raising collage entrance rate. Through CAD, CAE and CAM in the field of production engineering, cooperation between Korea and Hidalgo could be available in the early stage. Since the CAE software is the most advanced technology in the related field, it can
96 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico be a catalyst to accomplish technology exchange.
The specific measures for Korea-Mexico cooperation are: Korea donates CAE software which holds global competitiveness in the field of production engineering, Hidalgo chooses three cooperation organizations (one university, one technical college, and one technical high school) for pilot project using the given software package, and choose one university located in Mexico City to lead mutual study, having connection with the three chosen organizations. And the center for general support needs to be set up in the federal government because, in that way, establishment of necessary hardware and budget for the education is relatively easy, and when the project succeeds, the government can spread the education model efficiently. Since Korean government needs to attain actual results by itself, it would be better if Korea-Mexico Coopera- tion Center is located at equivalent department of Mexico. In addition, the cost required for smooth operation of the project will be minimized. This project gets attention in the aspect of training skillful manpower and innovating process technology to promote Mexico’s weak parts & materials industry, and related officials in both countries agree on the need for the project. As for Korea, since the government is directly introducing the best expert group in the field of parts & materials to Mexico by encouraging participation of Korean engineering analysis soft- ware consortium, it can pioneer future market and help the project to evolve into the plan to private sector-oriented interchange and cooperation, a model of international exchange which has potential to remain permanently.
Those mutual interests will enable Korea-Mexico production engineering technology con- ference to be held on a regular basis through engineering design and simulation technology, and universities in Mexico, especially in State of Hidalgo, will be connected with their counter- parts in Korea for human resource exchange. Ultimately, the success of this project will lead establishment of self-support engineering company in Mexico, which will ensure supply of the software and consulting business. When the related industries settle in Mexican soil, Korean parts & materials enterprises’ will invest in Mexico. If Hidalgo preceded investment with those long-term visions, it will achieve great success. Executive organizations of Korea-Mexico Co- operation centers needs to be set up in universities of both countries in order to operate the project systematically.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 97
Summary of recommended programs for promoting Hidalgo’s Mechanical parts industry
v Responsible Sector Program Priority government
Creation and application of Think Tank Federal, Hidalgo High
Improvement of local governments’ Federal, Hidalgo High capacity to design policy Economic development model Federal, Hidalgo High Strategies to promote economic growth Federal, Hidalgo High
Policy to promote parts & materials industry Federal, Hidalgo High
Promotion of parts & materials industry Hidalgo Long-term Policies Regional Innovation System and agents Federal, Hidalgo Medium Inducement, systematization of innovation activities Hidalgo Long-term Techno Parks, innovation leading organizations Hidalgo Medium R&D investment Federal, Hidalgo Long-term Fosterage, protection of fundamental industry Federal, Hidalgo Long-term Superior enterprises certification system Hidalgo Medium Branding regional strategic projects Hidalgo High Gradual development strategies Hidalgo Long-term Establishment of Industrial Complexes Federal, Hidalgo Long-term Foreign investment zones Federal, Hidalgo Medium Establishment of Establishment of the foundation for industry- infrastructures Hidalgo Long-term academy cooperation Industrial complexes for six root industries Hidalgo Medium Rearrangement of existing systems and Fosterage of Federal, Hidalgo Medium establishment of infrastructures vulnerable Inducement of regional production Federal, Hidalgo Medium field & Attraction of enterprises which already secured investment Federal, Hidalgo Medium competitiveness attraction Inducement of growth in Hidalgo Long-term Education based on industry-academy cooperation Federal, Hidalgo High Active participation of professors in industry- Federal, Hidalgo Long-term Industry- academic cooperation academy Establishment of industrial foundation in Federal, Hidalgo High cooperation & university campuses manpower Activation of the graduate courses Federal, Hidalgo Medium training Liaison between university development and Hidalgo Long-term regional advancement Education of field employees Hidalgo Medium Activation of various economic organizations Hidalgo Medium Regional, inter- Reinforcement of international cooperation Hidalgo Long-term national Measures for international cooperation Federal, Hidalgo High cooperation Korea-Mexico cooperation center Federal, Hidalgo High
98 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico References
Ahn, Seong-hee (July 16, 2012), Global Insight: Mexico and Its Hidden Story, The Herald Business. Clarin, El Cronista Comercial (December 7, 2011), Worsening Trade Imbalance to China in the Central and South American Metal & Steel Industry. Camara Nacional de la Industria del Hierro y del Acero (2007-2011), Peril de la Industria Siderurgica en Mexico. Electronic Buyer’s News (October 5, 2012), Mexico Launching an Anti-Dumping Investigation on Im ported Cold Rolled Steel Plates from Korea. Heo, Bo-young (August 15, 2012), The 160th National Conference: The Metal-casting Industry’s Today and Future in Korea, Nagoya, Japan Foundry Engineers Society. Heo, Bo-young (October 30, 2012), The State of the Korea Metal-casting Industry (a seminar for Mexican visitors to Gyeongsang National University). Hwang, Jeong-han (February 2010), Mexico’s Signs of Recovery in Automobile Parts Industry, Korea Trade-Investment Promotion Agency (KOTRA). Institute of Statistics and Geography of Mexico (Instituto Nacional de Estadistica y Geografia, INEGI), National Occupation and Employment Survey (Encuesta Nacional de Ocupacion y Empleo). Japan External Trade Organization (January 2012), The Research on the Mexican Machine Tool Market’s Trends. Jeong, Gyeong-won, Kim, Won-ho, Moon, Nam-gweon & Ha, Sang-sub (December 2011), Guidelines for Small & Medium Companies to Advance into Mexico, Small and Medium Business Corporation. Joun, Man Soo (October 30, 2012), Metal Forming with Emphasis on Forging (a seminar for Mexican visitors to Gyeongsang National University). KDI (2012), 2011 Joint Projects to Share Economic Development Experience with Cooperation Partners: Peru. Kim, Chang-rok (December 26, 2006), Promising Growth Technologies of Key Industries in the 2010s and the Measures to Foster Them, 2006 Techno Report, Korea Development Bank (KDI). Korea-Japan Cooperation Foundation for Industry and Technology (July 2010), Study on Trade Imbalance to Japan. Korea Institute of Industrial Technology (2011), Planning Report for Root Industries. KOTRA (April 2010), Expectations for Recovery and Main Economic Issues in Mexico. KOTRA Mexico City Trade Center (July 2011), The Current State of Mexico’s Steel Industry. KOTRA Mexico City Trade Center (August 2012), Mexico Re-raising Tariffs on Steel Products. KOTRA Mexico City Trade Center (October 2012), Mexican Steel Companies Filing Anti-Dumping Com plaints on Korean Steel Producers.
Chapter 1 _ Promotion of Mechanical Parts Industry in Hidalgo of Mexico ● 99 KOTRA Nagoya Trade Center (May 2012), Japanese Automotive Industry Expanding Its Production Bases in Mexico. KOTRA Mexico City Trade Center (May 2012), Growing Presence of Japanese Automakers in Mexico. KOTRA Mexico City Trade Center (February 2012), Leading Automakers Raise Investments in Mexico. KOTRA Mexico City Trade Center (February 2012), Mexico’s 2011 Automobile Output Logs. KOTRA Mexico City Trade Center (June 2012), Industry Trends in Mexico. KOTRA Mexico City Trade Center (December 2011), The Outlook for the Mexican Economy and Exports. KOTRA Mexico City Trade Center (July 2012), Mexico a Hub Country for Free Trade Agreements. Lee, Geun-an & Kim, Eung-ju (November 2, 2012), The State of Korea’s Forging Industry and Assistance Policy of Korean Government (a seminar for Mexican visitors to Gyeongsang National University). Ministry of Economic Development, Hidalgo, Mexico (August 2012), Integral Development of the Metal- Mechanic Sector in Hidalgo, Mexico. Material No. 1 provided by The State of Hidalgo: Hidalgo’s Railway Industry. Material No. 2 provided by The State of Hidalgo: The List of Hidalgo’s Mechanical Parts Manufacturers. Material No. 3 provided by The State of Hidalgo: Mexico’s Metal-casting Industry. MK Business News (August 21, 2012), Mexico in American Neighborhood Is Korea’s Export Platform. Park, Jae-bum (January 2012), Nissan Expanding Its Production Base in Mexico, Automotive Business. Park, Yeol-woo (July 2010), Mexico’s Automobile Parts Industry is Recovering, KOTRA. Posco Daily (September 27, 2012), Keynote Speech to the Congress of the Mexican Steel Industry. Ryu, Seung-mok, (November 2, 2012), Current State of Affairs of Korean Foundry Industry and Government Policy (a seminar for Mexican visitors to Gyeongsang National University). Secretary of Communications and Transportation: Investment Portfolio 2011, Gobierno Federal, SCT. Small and Medium Business Corporation (2012), Foundry Industry Road Map 2012. Small and Medium Business Corporation (2012), Metal Forming Industry Road Map 2012. Son, Min-joong (December 2004), The Recent Trends in Labor Productivity and Its Implications, SERI Economic Focus, Samsung Economic Research Institute. Spada, Alfred, North American Metal-casting Competing Globally, American Foundry Society. Statistical data provided by Mexico’s Automobile Dealership Association (AMDA). State of the Metal-casing Industry by Country (2011), The Folk Group. The Korea Economic Daily (September 17, 2012), Mexico Covetous of China’s Role as the World’s Factory. The Wall Street Journal (September 16, 2012), For Mexico, an Edge on China.
100 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico
Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry- Academy Cooperation in Hidalgo of Mexico Chapter 2
Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo
1. Current State of Hidalgo’s Technical Manpower Development 2. Korea’s Similar Experiences and Implications 3. Policy Recommendations for Vocational Education of Hidalgo Chapter 02
Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo
Eun Sang Cho2 (Korea Research Institute for Vocational Education & Training) Young Soo Kim (Moravian Fratrum Consulting)
Summary
The Mexican vocational institutions can be broadly categorized, based on their managing bodies and purposes, into three types: technical high schools (CBTIS); professional technical high schools (CONALEP); and centers for industrial job training (CECATI). Technical high schools’ curriculums consist of general courses, vocational courses and field internship programs, and each school has different composition of these three courses and the different ratio of theories to practices. The state government of Hidalgo has three education plans. First, provide education and language classes for natives of ethnic minorities and multilingual classes. Many natives in minority groups do not know Spanish, the official language of Mexico (many ethnic minorities in the state are still illiterate of Spanish). Second, open education courses that connect to local industries and nurture core talents. Third, establish the foundation for local economic develop- ment through innovations in science and technology. Based on Korea’s experience of setting up specialized high schools and later Meister high schools, this report presents seven policy suggestions to the state of Hidalgo.
Re-establish technical high schools’ vision: The main purpose of technical high schools is to nurture specialized workers with skill sets customized to a certain industry and provide them to enterprises. The state needs to re-establish the vision of employment after graduation and develop support policies to help students achieve this vision.
2) I am grateful to Mrs. Rocio Serrano and Mrs. Flor Pérez from Profesor José Ibarra Olivares for their excellent co-operation.
102 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Develop industry-academy cooperative curriculums customized to industry demands: The demands of industries should be reflected when vocational schools develop curriculums and provide employment to their graduates. To this end, industrial experts, teachers and research- ers should work together to develop curriculums which would help students gain knowledge, skills and attitude required by industrial sites, and at the same time, schools should make em- ployment agreements. This way, it is made possible to build a new educational system which instantly responds to the demands of enterprises by fostering skilled labor force through cus- tomized curriculums and simultaneously bringing employment opportunities to students.
Enhance teachers’ industry experiences and qualifications: Development and delivery of cur- riculums that accommodates industrial demands requires teachers to be capable of reading the trends and needs of enterprises correctly. To this end, a system that makes it mandatory to employ a certain ratio of teachers with an industry background should be established. It is also recommended that enterprises set up exchange courses at vocational high schools and administrate the courses with teachers, while schools simultaneously run exchange programs in cooperation with Korea’s Meister high schools and specialized high schools.
Establish dropout prevention system: To bring down dropout rates, provision of minimal liv- ing expenses to the most impoverished students is required to help them continue their study. As for students who suffer from family issues, counseling and treatment programs should be offered to their family members in cooperation with schools, NGOs, and the local churches. In addition, parental participation programs are needed to encourage parents to have interests in education programs, and other projects which can give students dreams and hope should be developed in cooperation among schools, the state government, civic groups and parental associations.
Re-establishment and promotion of a system to boost college enrollment after employment: There is a need to establish a system which helps college entrance after employment. To this end, there remain tasks to be done: enhancement of industry-academy cooperation structure relating technical high schools; and promotion of selected industries based on the needs of each locality. Analysis of the demands of local industries is needed to help graduates find em- ployment. And in order to gather correct information regarding characteristics and enterprises of each locality’s industries, industry-academy cooperation system consisting of local colleges, local enterprises and the local government should be established by a means of setting up an inter-regional network. Companies should provide further education, through in-house univer- sity programs, to their employees who are willing to study more, and organize an education program that fits the demands of enterprises in cooperation with polytechnic universities in the locality while providing scholarships.
Establishment of a think tank for vocational education training and labor development: Mexi- co needs to establish a think tank which would play roles and functions similar to those of KRIVET which presents overall strategies for vocational training and monitors their implementation.
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 103 Establishment of the first Mexican Meister High School with government support: Federal government-level policy support is required in order to provide industry-academy cooperation, facilitate employment, expand facilities, and support educational materials. In the meantime, local governments’ roles are also important, such as creation of connections with local industries and provision of operation funds for local technical high schools. Technical high schools need to sign a MOU with partner enterprises so that processes such as student selection, education, and hiring could be performed in cooperation between schools and partner companies. The gov- ernment’s administrative and financial support is also imperative for the technical high schools’ cooperation with industries under the large goals of fostering local industries and creating jobs.
1. Current State of Hidalgo’s Technical Manpower Development
1.1 Employment in Hidalgo
Hidalgo is a state in Mexico located about 2 hours northeast of Mexico City, the capital of Mexico, and it consists of 84 municipalities. In 2011, the population of Hidalgo was 2,722,566, which was 2.4 percent of the country’s total population of 114,259,114.
2011 Hidalgo census
Category Population of Hidalgo (A) Total Contry Population (B) Percent(A/B) Total Population(PT) 2,722,566 114,259,114 2.4% Population under 14 755,918 29,782,024 2.5% Working Age Population 1,966,648 84,477,090 2.3% Economically Inactive 849,107 34,203,625 2.5% Population Economically Active 1,117,541 50,273,465 2.2% Population (PEA) Employed Persons 1,070,977 47,836,056 2.2% Unemployed Persons 46,564 47,836,056 1.9%
Sources: Mexico National Institute of Statistic and Geography (Instituto Nacional de Estadistica y Geografia, INEGI), National Occupa- tion and Employment Survey (Encuesta Nacional de Ocupacion y Empleo), 3rd quarter of 2011
Hidalgo’s economy is traditionally based on mining and agriculture, and manufacturing has begun to take part recently. Industrial activity is mostly concentrated in a region called Urban Industrial Corridor of the South, and most economic activities take place in this area. Hidalgo has posted a growth rate of 7.7 percent on average since the mid-1990s and constantly recorded surplus. Like other states of Mexico, 97 percent of Hidalgo’s revenue is financed by the federal government, and the state’s debt is relatively lower than other regions.
104 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Mechanical parts is the main industry of Hidalgo, accounting for 24 percent of the total industry in terms of production output. Nonmetallic mineral, other than petroleum, takes up 25 percent. The core industries are mostly automobile and train engine manufacturing and petroleum refining industry based in the region of Tula. Automobile and train parts industry is concentrated in Sahagun City, and the products made here are sold in Mexico City. There are also other industries including cement manufacturing in Tula de Allende and textile industry in Tepeji del Rio and Tulancingo. About 30 percent of employed population is engaged in these industries.
In Hidalgo, about one million were employed in 2011, and as shown in Table 2-2, 157,660 people were engaged in manufacturing.
2011 Employed population in Hidalgo
Population of Hidalgo Total Contry Category Percent(A/B) (A) Population (B) Total Employed 1,070,977 47,836,056 2.2% Population Employees in 264,446 6,668,539 3.5% Agriculture Employees in Electric 4,872 368,638 1.3% Power Industry Employees in 157,660 7,241,774 2.2 Manufacturing Employees in 102,560 3,571,783 2.9% Construction Employees in 191,472 9,504,398 2.0% Commerce Employees in Services 378,418 20,143,149 1.9% Other Industries 1,594 337,775 0.5%
Sources: Mexico National Institute of Statistic and Geography (Instituto Nacional de Estadistica y Geografia, INEGI), National Occupa- tion and Employment Survey (Encuesta Nacional de Ocupacion y Empleo), 3rd quarter of 2011
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 105 1.2. Current State of Education System in Hidalgo
1.2.1. Mexican vocational education and training system: technical high schools
The basic compulsory education in Mexico includes primary and lower middle education, which ends when the student is 15 years old. About half of the students 15 to 19 years old are enrolled in full-time or part-time education programs. All education programs at upper middle level charge tuition.
Vocational education and training (VET) is provided as upper middle education and includes three main programs.
Technical high school awarding technological baccalaureate (bachillerato tecnológico) and professional technician (técnico profesional) is provided by various subordinate systems. It fo- cuses more on general courses (60%) than vocational courses (40%).
Professional technical school for professional technician-baccalaureate (profesional técnico- bachiller) is offered by various subordinate systems, and two thirds of the students go to Col- lege for Professional Technical Education (Cologio Nacional de Educación Profesional Técnica, CONALEP). The programs consist of general courses (35%) and vocation courses (65%). Students are required to complete 360 hours of practical training.
Vocational training (formación para el trabajo) course is a short training program at ISCED 2 level which takes three to six months to complete. The curriculum consists of 50 percent theory and 50 percent practice. After completing the training, students enter the labor market.
Mexico’s upper middle VET system includes more than a dozen of subordinate systems, and each is different from others in contents.
106 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico
Upper middle VET system in Mexico
School
Upper middle schools affiliated State schools in partnership with the Federal Ministry of with the Decentralized federal schools Vocational Education federal government Training Program Administrative Administrative Administrative School School School Department Department Department
Center for Tech- nology Studies Directorate Directorate and Service State Colleges General of General of Center for Tech- Industry (CETIS) for Scientific Industrial Industrial Tech- nical Industrial Center Bac- and Techno- Technology nology Studies calaureate logical Studies Education Education (CETI) of Industrial (CECyTE) (DGETI) (DGETI) Technology and Services (CBTIS) Center Baccalaureate Directorate of Agricultural Technical high General of Technology school Agricultural (CBTA) (Bachillerato Technology Center tecnológico) Education Baccalaureate (DGETA) of Forest Technology (CBTF) Center for Marine Techno- Directorate logical Studies General of (CETMAR) Marine Science Center for Con- and Technology tinental Water Education Studies (DGECyTM) (CETAC)
State Colleges Directorate Professional for Scientific College for Pro- College for Pro- General of In- technical school and Technologi- fessional Techni- fessional Techni- dustrial Technol- (Profesional cal cal Education cal Education ogy Education técnico-bachiller) Studies (CONALEP) (CONALEP (DGETI) (CECyTE)
Directorate Directorate Vocational train- Training Centers General of General of Institutes of ing school for Industrial Training Centers Training Centers Training for (Formación para Work for Work for Work Work (ICAT) el trabajo) (CECATI) (DGCFT) (DGCFT)
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 107 The Mexican education law states that both federal and state government hold responsibil- ity in VET administration. The federal government manages upper middle VET schools through three directorate generals of industrial technology education (DGETI), agricultural technology education (DGETA), and marine science and technology (DGECyTM). The federal schools are funded from the federal budget.
The state governments manage institutions such as State Colleges for Scientific and Tech- nological Studies (CECyTE) and Institutes for Training for Work (ICAT) with participation of the federal government. These institutions are funded 50 percent by the federal government and 50 percent by the state government. The state governments also manage decentralized institu- tions of the federal government such as College for Professional Technical Education (CONALEP). These institutions are funded from the state budget, except for CONALEP schools in Oaxaca and Mexico City which are financed by the federal budget.
1.2.2. Current state of vocational education in Hidalgo
Since 1999-2000, Hidalgo government founded 7,421 education centers for 33,994 teachers and 743,771 students. But the participation rate turned out low, with only 19.1 percent of the students at middle school level, 8.3 percent enrolled in vocational schools, and 3 percent taking upper middle or higher education. Most students in higher education are concentrated in cities like Pachuca, Tula de Allende, Huejutla, Ixmiquilpan, and Tulancingo. According to the 2003- 2004 statistics of high school enrollment and dropout rate of each Mexican state, only 53.5 per- cent of students enter high school or vocational school after graduating middle school. Also, the state’s dropout rate has appeared to be 18.0 percent, which is higher than the national average, 15.5 percent. Main colleges of Hidalgo include Universidad Autónoma del Estado de Hidalgo.
Based on understanding of the upper middle VET system in Mexico as mentioned above, Hidalgo’s upper middle VET schools are summarized as following.
2008-2009 Education infrastructure in Hidalgo
Upper middle education Higher education Hidalgo (Educación media superior) (Educación superior) Number of schools 307 162 Number of students 100,541 58,878 Number of teachers 58,878 58,878 Sources: Secretariat of Public Education (Secretaría de Educación Pública, SEP)
108 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Hidalgo’s upper middle VET schools are divided into technical high schools and vocational training school. The former is divided into fields of marine, agriculture, and industry. Vocational training programs that are related to Mechanical parts are CONALEP and CBTis, which are also in connection with Center Baccalaureate of Industrial Technology and Services in Hidalgo.
Upper middle VET schools in Hidalgo
va
(1) Center for Continental Water Studies in Hidalgo (Centro de Estudios Tecnológicos de Aguas Continentales en Hidalgo)
(2) Center Baccalaureate of Agricultural Technology in Hidalgo Technical high school (Centros de Bachillerato Tecnológico Agropecuario (CBTA) en Hidalgo (Bachilleratos tecnológicos en Hidalgo) (3) Center Baccalaureate of Industrial Technology and Services in Hidalgo (Centros de Bachillerato Tecnológico Industrial y de Servicios (CBTIS) en Hidalgo)
(4) Center for Technology Studies and Service Industry in Hidalgo (Centros de Estudios Tecnológicos Industrial y de Servicios (CETIS) en Hidalgo)
Vocational training school (Capacitación para el (5) Training Centers for Industrial Work (Centros de Capacitación para el Trabajo Industrial (CECATI) en Hidalgo) Trabajo en Hidalgo)
Source: Office of the Vice Minister of Upper Middle Education, Ministry of Public Education, Mexico
The state government has three education plans. First, provide education and language classes for natives of ethnic minorities and multilingual classes. Many natives in minority groups do not know Spanish, the official language of Mexico. Therefore it is necessary to open Span- ish classes to create a multicultural society that embraces them. And the government aims to achieve globalization through various language classes other than Spanish. Second, open education courses that connect to local industries and nurture core talents. By nurturing the workforce to lead the local industry, the state government will promote sustainable economic growth. Third, establish the foundation for local economic development through innovations in science and technology. This also connects to nurturing core talents from enhanced educa- tion level.
1.2.3. Current state and problems of CONALEP and CBTis
1) CONALEP
CONALEP schools were founded in 1978 by a Presidential decree in agreement with indus- trial sectors to nurture technical manpower, and they are financed by the federal government. CONALEP schools in two Mexican states fall under the federal jurisdiction, but the rest of CO- NALEP schools are managed by the state governments. Currently there are 301 such schools throughout the country, and seven of them are in Hidalgo. They offer 42 types of basic curricu-
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 109 lums, nine vocational courses and specialized curriculums in which students develop capacities to work at industrial sites.
As CONALEP aims to nurture professional technicians ready for the world of vocation, its main objective is to gain competitive edge in college enrollment and employment through enhanced knowledge, technical education and practical courses. Approximately 75 percent of students benefit from scholarship.
Diagram of CONALEP program
Industrial Construction and Food Maintenance Processing Electro- of Electronic mechanical Systems
Industrial Industrial electricity productivity
Quality Control Industrial Metal- mechanics
Search for Needs in the Labor Market Educational Validity Government Liaison
Committee Industry for Federal government
SAEH Liaison Traning program Hidalgo CONALEP Committee for corporations Linking Model for Schools of Hidalgo
Corporation Group Educational Institutes Regional communit y Liaison between Interest of the vocational training Community and labor
Content of the Program and Research Plans - Characteristics of the workshop, laboratory, and equipment - Training skilled laborers - Technique in vocational training - Scientific technology and training - Strategic agreements for social services and work internships - Mechanism for producing a constant stream of graduates and employment
Source: Presentation by Secretariat of Public Education of Hidalgo
The curriculums of CONALEP are modified according to the labor market’s demand for busi- nesses, in ties with the state government-affiliated committees, school-affiliated committees, and learning systems of companies in Hidalgo. They offer courses similar to other technical high schools, but they have two to three more technical programs which provide the students with more specialized techniques and upper middle education focused on techniques. Compared to other types of high schools such as CBTis, CONALEP has a more supportive system that connects the students to industrial sites. For example, they offer internship programs arranged between industries and schools to satisfy the business sector’s demand for technical manpower. In the
110 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico fifth and sixth school terms, students are required to participate in production process or tasks under the supervision of a mentor from school or company for three to six hours every day. Also, in-company committees require the government for the manpower they need, and the government gives guidelines to each school in this regard. Then, schools adjust their curricu- lums to the demand of companies. As a result, most students find employment within four school terms. Within three months after graduation, 80 percent of the students find jobs and the rest of 20 percent are enrolled in schools such as polytechnic colleges. Graduate employees receive a salary around 5,000 pesos.
Despite various advantages of CONALEP, students prefer CBTis with their focus on proceed- ing to college. The reason is that high school graduates receive lower salaries than college graduates. But companies prefer CONALEP graduates who take more technical courses.
2) CBTis (Centros de Bachillerato Tecnológico Industrial y de Servicios)
CBTis schools were founded in 1974, and they offer professional courses to nurture techni- cal labor forces for human resources management, biochemistry, mechatronics, electronics, accounting, and chemical labs. The curriculum is mostly old-fashioned, therefore not enough to entice many students. Curriculum improvement is needed to include practical education for real life, vocational education, and creative education. Their technical education courses are not closely related to industrial sites, and most of the training equipment and facilities are aged and decrepit to be practically used on the sites.
Among the graduates, only about 20 percent are employed in nearby companies such as DINA and Bombardier. Majority of students proceed to college to gain advantage in having a job at a foreign-affiliated firm, a managerial position, and receiving a high salary. The average salary for high school graduates is 5,000 pesos while college graduates receive an average of 8,000 pesos, which is one of the reasons students hope to enter college. Many graduates of CBTis are likely to find jobs when they intend to.
3) Obstacles for Technical High Schools in Nurturing Manpower
First, the overall profile is insufficient of clear and specific techniques, qualifications, and characters of technical high school graduates entering the industrial world. Therefore, there is no consensus on how schools must prepare them. Also, there is no sufficient information on the innovation methods that need to be arranged between the industrial and academic sectors.
Second, technical high schools have not set up specific goals or visions. In the case of CBTis, most graduates aim to enter college rather than find employment, and this threatens the pur- pose and existence of technical high schools. Therefore, the schools must revisit employment as the terminal goal of vocational education and build a link system for college enrollment after employment.
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 111 Third, the articulation is weak between the qualifications, which are required by technical high schools and industrial field, and systems such as polytechnic colleges. As a result, school’s curriculum becomes obsolete and inconsistent with the industrial world’s demand, therefore unable to fulfill students’ interest or desire for new occupation and education. Also, students enrolled in polytechnic colleges are likely to lose interest in repeated curriculum, and in many cases, credits earned in technical high schools are not recognized in colleges.
Fourth, many facilities and equipment owned by technical schools are either decrepit or not currently used in the industrial sectors. This results in ineffective practical training, and even if the students find a job, they lack the ability to use the latest equipment or facilities.
Fifth, technical high schools lack a system that connects to local industries and research complexes, therefore schools and companies are provided with little incentives to set the same objective and promote industry-academy cooperation. Thus, the schools have limits in develop- ing customized curriculums in accordance with the industry’s demand or producing graduates to satisfy the local demand.
Sixth, Mexico consists of multicultural communities and it has a huge gap in terms of income and infrastructure levels. The wealthy class has access to various infrastructures and high-tech IT, but the poor, the majority of the Mexican population, cannot afford to complete basic and vocational education. Therefore, it is difficult to accumulate human capital through develop- ment of technical manpower.
Seventh, a considerable number of students have inadequate skills in basic communication such as speaking and writing. And they lack the ability of creative thinking and leadership. For this reason, students find it difficult to independently work on a project or work as a team in the field.
Eighth, according to the OECD statistics, the midway dropout rate of high school students in Mexico, including Hidalgo, reaches up to 45 percent. This is not just a problem of an individual or a family but of the society. With the lack of basic quality education and core competency, the dropouts end up remaining in the poorest population. This continues through generations as a vicious cycle and, in the long term, disrupts the process of nurturing and utilizing technical labor force for the Mexican industrial development.
112 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico 2. Korea’s Similar Experiences and Implications 2.1. Cases of technical manpower development in high school
Hidalgo’s main focus of technical manpower development is fixated on the upper middle technical education, which targets students at high school level. Key to success is to improve the connection between employment and vocational programs through strengthened industry- academy cooperation.
Korea has fostered from high school level education the manpower demanded by the in- dustrial circles, and one of its recent experience includes institutions such as specialized high schools, which started in 1997, and Meister high schools, which began in 2008. The purpose of these schools is to enhance the image of vocational high schools and offer practical education that can nurture manpower needed in the industrial sectors. They are regarded as successful considering the employment rate and satisfaction level of the graduates. All these taken, Korea’s case has implications to Hidalgo’s vocational education system, in consideration of Mexico’s industrial, economic, and cultural conditions.
2.2. Industries and vocational education and training in the 1960s to 2000s
In Korea, the characters (functions) and policies of vocational training at secondary level have gradually changed along with the transformation of industrial structure. Since the beginning of the Korean Economic Development Strategy in the 1960s, the focus was on development of export industries and promotion of vocational education system for fostering manpower in light industries. For this purpose, an aggressive effort was primarily made to create foundation and environment for establishing vocational high schools and to secure technical labor force for light industries in order to keep up with the government’s industrial modernization and export-oriented policies.
The early 1970s to 80s was the time when GNP per capita reached about 1,500 dollars and vocational education was promoted to nurture industrial labor force. In the 1970s, superior tech- nical manpower was fostered through vocational high schools in order to nurture efficiency- oriented technicians. In the 1980s, the policies were focused on making advanced technical experts to prepare for industrial advancement.
In the 1980s to mid-1990s, particularly in 1995, GNP per capita amounted up to 10,000 dollars. During this period, policies were implemented to expand vocational education. And demand for manpower heightened in the labor-intensive manufacturing sector, which led to
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 113 an increased number of target students for vocational education.
In the late 1980s, as an increasing number of students failed to enter college and manufac- turing businesses experienced a manpower shortage, the government adjusted the propor- tion of students in vocational high schools to drastically expand the targets and significance of vocational education. In the 1990s, the government set up an original goal of alleviation of the bottleneck phenomenon in college entrance and expansion of technical workers with high school diploma. Under this goal, it implemented specific policies: establishment of course edu- cation system; 50:50 ratio of general school students to vocational school students; 20 percent of technical high school students among the entire high school students; and technical high school’s 2+1 system in accordance with the 5 year New Economic Strategy. But these policies were not effective enough because they tried to solve the manpower shortage through mere expansion of quantitative supply, and such policies are bound to have limits (Park, 2011).
Before the mid-1990s, vocational education at secondary level functioned as terminal educa- tion and served as the pivot for training professional technical manpower in the industrial world. But in 1996, as the Korean Education Reform Commission laid out plans for establishment of new vocational education system, the function changed from terminal education to continuing education.
In other words, the function of continuing education was emphasized as opportunities for college entrance were expanded since the mid-1990s. With a growing emphasis on lifelong vocational education, policies were implemented to provide students with more opportunities for achieving core competency and continuing education (Song Chang-yong et al., 2009). As a result, the employment rate of professional high schools marked a sharp decline from 51.4 percent in 2000 to 19.2 percent in 2010, and college entrance rate soared from 42 percent in 2000 to 71 percent in 2010.
As professional high schools recorded poor employment rate3 , which was its terminal goal, and furthermore, job opportunities for college graduates dwindled, professional high schools no longer functioned properly. So the Ministry of Education proposed Plans to Modernize High School Vocational Education to foster technical labor force4 , with secondary vocational educa- tion as the center, and implemented policies for intensive promotion of the newly organized Meister and specialized high schools.
For this goal, the ministry designated the years from 2010 to 2015 as the period of intensive promotion. Currently, the ministry has designated 30 secondary vocational education institu-
3 Students enrolled in professional high schools were offered various career paths. 4 There is an opinion about its motivation that it was aimed to advance professional high schools already well in progress.
114 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico tions as Meister high schools (by 2012) and 350 institutions as industry-academy cooperative specialized high schools (by 2015), thereby restructuring them into vocational training institu- tions specializing in different fields.
Course of vocational education policies from 1960 to present
Late 90s- 1960 70s-80s 80s-90s current GNI per capital $100 $1,500 $10,000 (1995) $7,700 (1998) $23,000 (2012)
- Fostered a system for - Vocational Education vocational education Policy for fostering - Shift to continuous - Active effort put into ndustrial labor force education - Policy for expansion of establishing the bases - 1970s: Focused efficiency in - Key role of vocation vocational education and environment for the fostering of skilled education moved from - Demand for labor in labor technical high schools laborers, producing highly high school to college intensive manufacturing - Contributed to skillful labor - Transition from terminal sector increases → procuring technical force through technical education to continuous Vocational education labor force in light high schools education: Focus on target numbers are industry that would - 1980s: Fostering advanced professional vocation increased dramatically meet the government’s technical experts in education to focus on industrial modernization & preparation for industrial basic and general export directed policy sophistication vocational skills
Problems
- Responding quickly to the ● ‘Plan to Enhance High School Vocational Education’- changes in industry demand and 2010 Meister High Schools and Specialized High Schools industry and academy cooperation ● - Developing faculty that fits Meister Reorganized as vocational education institutes and Specialized high schools specializing in different categories - Achieving employment first and ‘ entering school later’
● ‘Plan for Establishment of New Vocational Education System’- - Disparity in societal demand and ‘Terminal Education’ to ‘Continuous Education’ change was made high school and college student 1996 ● Technical high school 2+1 system was implemented: two years of numbers - Tendency for vocational education theoretical education, 1 year of field education to move towards being focused at ● Policy to expand student numbers at technical high school vocational colleges
- Skills worsened among graduates from technical high school ● Expansion in numbers of schools and classes - Decline in level of quality of 1979 ● Cultivation of teaching faculty students from technical high ● Enhancement of Cooperation between schools and industry school - Bottleneck phenomenon in entering college
- Socio-culturally still focused centrally around humanities ● Vocational Education System Fostered education in the early stages of 1962 ● Policy for priority awarding of scholarships to technical high school students the vocational education system - Education material was similar to normal high schools and thus had no distinct features
Source: Presentation by Secretariat of Public Education of Hidalgo
Progress of employment and college entrance rate in technical high schools
Source: e-National Indicators, Korean Educational Development Institute Education Statistics *Employment Rate (%)= Employed persons/(Graduates-Enrolled students - # in military service)*100 **Entrance Rate(%)= Enrolled students/Graduates*100 ***Due to revision of elementary and middle school education regulation changes made in June 2010, high school types have been changed to general high school, autonomous high school, specialized high school, special-purpose high school and therefore the relevant indicator is no longer produced.
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 115 2.3. Comparison of different types of Korean VET high Schools
Comparison of VET high schools of Korea
School Meister Specialized Professional Comprehensive Category high school high school high school high school Integration of general and special- Cultivation of Specialized educa- ized pro- grams in technical talents tion Cultivation of tech- Purpose fishing customized to based on students’ nical talents and agricultural industry talent and aptitude regions of a small number of students 1899- (renamed to History 2008-present 1998-present professional high 1956-present school in 2006) 483 schools includ- 38 schools includ- ing a robotics high 275 schools ing 188 schools school, including Current Ulsan Meister High (names not distinct an animation high agricultural high state School, Dongah from general high school, Internet schools, commerce Meister schools) high high schools High School school 5.5 billion won for infrastructure (dor- mitories included), Financial 600 million won for 200 million won None None Support 3-year operating for 3-year expenses expenses for edu- cating customized talents
Autonomous Autonomous (up to 50% (up to 30%of No additional Limited autonomy Curriculum alteration of alteration of autonomy permitted National Common National Common permitted Basic Curriculum) Basic Curriculum
Source: Constructed in reference to Song (2009)
116 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Professional schools in Korea are classified into professional high schools, specialized high schools, Meister high schools, and comprehensive high schools. Professional high schools, called vocational high schools until 2006, include 275 schools nationwide such as agricultural high schools, commerce high schools, and technical high schools. Professional high schools, both public and private, receive government support5 for their operations, and students are selected from the region, with little autonomy permitted6 . Since 1998, 483 high schools, such as robotics high schools, animation high schools, and Internet high schools, were approved as specialized high schools for the purpose of offering specialized education based on students’ aptitude and talent. They receive 200 million wons for three years’ operating expenses from the government7 and students are selected from across the country. They are also permitted to alter up to 35 percent of National Common Basic Curriculum.
As for Meister high schools, as of March, 2013, 38 specialized high schools have been desig- nated as Meister high schools with the aim of fostering technical talents customized to industry, such as Ulsan Meister High School and Dongah Meister High School. They have usually received 5.5 billion won in government subsidies for infrastructure such as dormitories and about 6 mil- lion won of operating funds for three years with variations in amount by cities and schools. They can select students nationwide and are allowed to alter up to 50 percent of National Common Basic Curriculum.
2.4. Activities, problems, and results of Specialized High Schools
Traditional professional high schools were renamed as specialized high school when Plans to Modernize High School Vocational Education began to take effect on June 29th, 2010 and eliminated the name of professional high school. At that time, Meister high schools, which had fallen under the category of professional high schools, were incorporated into special-purpose high schools. As a result, specialized high schools refer to all existing professional high schools except the ones designated as Meister high school.
As of 2011, the number of specialized high schools in Korea stood at 483, accounting for 21.4 percent of the total high schools. They are classified into agricultural, technical, commerce, fish- eries/marine transport, and vocational home economics high schools. Technical high schools (195) dominate specialized high schools, followed by commerce high schools (190), vocational home economics high schools (61), agricultural high schools (30), and fisheries/marine transport high schools (7).
5 Government provided professional high schools with financial aids and supported their facility maintenances. 6 Though more autonomy had been given with the 7th Education Procedures since December, 1997, some of Provincial Offices of Education and schools were not aware of the change. 7 This was a case for selected specialized high schools during last two governments; aids for other schools ranged from 30 to 200 million won.
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 117 Problems and solutions of specialized high schools are as follows. (Hyung-keun Kang et al., 2004)
1) Student selection
Most specialized high schools select students based on their grades, making it hard to select students who have aptitude and talent for related areas. Grade-based student selection poses a problem because specialized high schools were originally established to avoid a grade-oriented, college entrance-centered education.
2) Curriculum
In order to foster manpower with professionalism, creativity, and expertise, specialized high schools need to offer professional education for related areas along with general education cur- riculum. To achieve this end, they must provide curriculum that strengthens field adaptability to professional areas. However, the curriculum has been focused on popular or cutting-edge sub- jects, which tarnished the original purpose of the schools. In the meantime, practical difficulties have been pointed out of incorporating cutting-edge subjects in the curriculum. This problem derives from the difficulties in procuring text books and revising the curriculum frequently in response to rapid changes in related industries.
3) Faculty
Specialized high schools fail to offer a continuous, systematic education. Teachers of public schools are required to change schools on a regular basis, and there is a lack of long-term, sys- tematic faculty training for relevant professional areas.
4) Career advising
Specialized high schools focus on cutting-edge subjects rather than taking into account characteristics of local industries, which in the end poses challenges to graduates finding em- ployment. This highlights the problem of opening departments without prior analysis of rel- evant industries or consideration of demand of local communities.
5) Problems in financial support
In general, specialized high schools may face financial issues without significant support from the government because the nature of their operations requires a high amount of initial investments and they are managed in a small-scale school or classroom.
118 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico 6) Problems with industry-academy cooperation
Field experience and field internship programs in specialized high schools are designed to foster manpower with great expertise by establishing their curriculums centered on employ- ment and boosting an employment rate of graduates through industry-academy cooperation. However, field internship programs shrunk as Methods to Normalize the Operation of Field Internship Programs among Vocational High Schools were introduced in 2006, due to contro- versial problems such as labor exploitation and human rights infringement. In 2008, a plan called Three Steps to Promote School Autonomy allowed head teachers in cities and provinces the autonomy to operate field internship programs. But Metropolitan and Provincial Offices of Education have not yet enacted related guidelines or regulations. As a result, many cases of co- operation between schools and industry are reported as perfunctory, except a few specialized high schools with a high employment rate.
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 119
Activities and Problems of Specialized High Schools
School Activities Problems
· Difficulties in selecting students with aptitude and talent adequate for a specialized high school’s · Selection of students with aptitude and talent establishment purpose (career advising focused (simplicity of student selection) on grades rather than aptitudes and talent) Student Raised application rates with an increasing Necessity of R&D improvement for selecting Selection · · number of appli-cants. Enhanced grades of students with relevant vocational capabilities appli-cants. · Challenges in attracting excellent students (student selection periods coinciding with that of technical high schools)
· Problems in establishing cutting-edge subjects amid a high demand for them · Difficulties in procuring and revising textbooks in response to rapid changes in relevant industries · Curriculum that can enhance field adaptability Curriculum · Opening and managing classes focused on · Professional and essential curri-culum cutting-edge and popular subjects · Difficulties in revising a curriculum due to the 7th Education Procedures mandating national common basic subjects
· Teachers’ low motivation due to required certifica tions · Appointment of Teachers with plentiful field · Problems in faculty trainings experiences · Teachers’ low passion and understanding because · More teachers in related fields dispatched than of the school rotation system Faculty before restructuring 5.5 billion won for infrastruc · Teachers reluctant to be sent to specialized high ture (dormitories included), 600 million won for schools due to regional environment factors such 3-year operating expenses for educating custom as transportation ized talents · More teachers than available needed due to separate classes
· An increasing number of students’ unconditional preference for college entrance · Enterprises’ low trust in high school-level expertise · Difficulties in building career after graduation (due to restructuring focused on establishing Career · Intensified curriculum satisfying students, cutting-edge subjects rather than considering Advising parents, industry, and employed graduates characteristics of local communities) · Necessity of career advising that can satisfy both students looking for employment at companies and ones looking for self-employment ·No colleges with intensive educational programs
Source: Kang (2004), Issues and Their Improvement of Specialized High Schools.
120 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Exemplary Case 1: Gangseo Technical High School
Gangseo Technical High School operates various programs to foster technical talents cus- tomized to industry-academy cooperation: vocational capability development training and edu- cation for basic competency; incentives for training; employment after getting field experiences; and workplace adaptation training. These programs were designed to help students to adjust to rapidly changing paradigms in society and education, and to address problems of small and medium companies suffering manpower shortage while graduates undergo an unemployment crisis.
For the past six years, 170 participants and 74 enterprises have been involved in the man- power cultivation programs suited to industry-academy cooperation which were introduced in 2007. The number of participants is on a steady increase. As of 2012, 48 students are expected to be employed through established ties with 15 partner enterprises which moved in the industrial complexes located around Gangseo Technical High School, such as Seoul Digital Complex, Digi- tal Media Center in Sangam-dong, Namdong Industrial Complex, Shiwha Industrial Complex, Paju Industrial Complex, and Gimpo Industrial Complex. The schedule for the program is as follows. During January-March, the school sets up opera- tion plans, selects students and a partner company. The school and the partner company sign an agreement on commissioned school-company education, along with an employment agree- ment with students. During April-June, the school offers trainings on job and process analysis through technology exchange. It also analyzes jobs at each process and confirms the results. During July-August, the school offers training for faculty technology and workplace adaptation as education training programs customized to companies. During September-February, stu- dents are dispatched for field internship programs with the aim of employment.
- Manpower cultivation programs suited to industry-academy cooperation · Customized programs for specialized high school students (signing agreements) · Employment at partner companies immediately after graduation
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 121 School Sign an agreement among :
· Specialized High Customized Employment at partner · Specialized High School Education companies Students · Small and Medium Companies
Program Curriculum Operation&follow-up preparation development management
· Designation of vocational · Application/Selection · Job analysis · Implementation of · Company-school · Curriculm customized education · Curriculum set-up development · Workplace adaptation · Faculty training · Textbook training developmnet · Employment & follow- up managemnet
School Customized training application & selection (Small and Medium BuSINESS Administration)
Partner company Partner school selection selection
Customized Training Agreement Training on job analysis & process Development Job Analysis Job Analysis Results Confirmation (by enterprises, specialized agencies) Customized Training Process Development - TrainingPlan TrainingPlans & Textbook - Textbook Development Confirmation (by enterprises, specialized agencies) Implementation - In-house Training - External Training
Customized training completion and employment
122 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico - Introduction of customized curriculum: Manpower cultivation programs suited to industry- academy cooperation designated by the Small and Medium Business Administration and Seoul Metropolitan Office of Education ·2007-2008: programs design ·2009-2010: program design completion ·2011-2012: program implementation ·Major tasks: curriculum development, teaching materials development, program development ·Common basic programs: general education for core competency, workplace adaptation training ·Programs tailored to companies: in-house training, on-site education
- Industrial complexes located near the school ·Seoul Digital Complex (Guro-gu, Seoul), Digital Media Center in Sangam-dong (Mapo-gu, Seoul) ·Namdong Industrial Complex (Namdong-gu, Incheon), Shiwha Industrial Complex (Siheung, Gyeonggi-do) ·Paju Industrial Complex (Paju, Gyeonggi-do), Gimpo Industrial Complex (Gimpo, Gyeonggi-do)
- Current state of linkage between schools and partner enterprises ·Partner companies in 2012 (15 partner enterprises, 48 graduates to be employed) ·Number of participants by department: Construction and Interior (2), Environment and Chemical Industries (5), Information and Communications (4), Web Design (4) ·2007-2012: 170 people, 74 companies participated
2.5. Current state, results, and future development of Meister High Schools
2.5.1. Introduction of Meister High Schools and their organization
Meister high schools were first established in 1997 when policies of nurturing specialized high schools were implemented in order to improve negative perceptions and distrust about vocational education in high schools. In 1995, cooperation between school and industry was so unsystematic and unorganized that companies preferred graduates with college diplomas, while high school graduates underwent prejudice and unfair treatment within companies.
Meister high schools refer to high schools tailored to demands of the industrial sector. In specific,
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 123 they are defined under Article 91-2 of Enforcement Decree of Elementary and Secondary Educa- tion Act as high schools designed to run programs tailored to the demands of the industrial sector in order to develop professional vocational education. Fields of their programs include electronics and communication, biological technology, new media content, medical device, power generation, horse industry, automotive industry, aerospace and shipbuilding, as well as the existing programs related to agriculture, industry, commerce, and fisheries.
According to Plans of Promoting Korean Meister High Schools, professional high schools which enable graduates to build career through employment and to earn a diploma while at work, are selected as Meister high schools. In addition, they would be used as a leading role model for the development of professional high school education. On the basis of specific talent model and dif- ferentiate curriculum, the schools aim to explore the fields of manpower cultivation that have in- dustrial needs, growth potential, and decent job conditions. They also aim to build a career course of Employment first, Entrance later through education tailored to industrial needs.
Meister high schools are organized by a dual system consisting of an implementation body and Vocational Education Policy Forum (V-Forum). The implementation body is made up of officers from vocational education departments, researchers from Korea Research Institute for Vocational Educa- tion & Training, and professors and faculty from academy. V-Forum, a non-standing advisory body, consists of less than 30 members from related departments (including Ministry of Labor, Ministry of Defense, Small & Medium Business Administration), enterprises, academy, and field experts.
Organization of Meister High Schools A dual system of implementation body-Vocational Education Policy Forum (V-Forum): Ministry of Education, Schools Industries ·Implementation body: made up of officials Ministry of Education, from vocational education departments, Science and Technology researchers from Korea Research Institute for Vocational Education & Training, professors and academy faculty Meister High V- Froum school TF ·V-Forum: A non-standing advisory body made
Universities, up of related departments (Ministry of Labor, research Related institutes agencies Ministry of Defense, Small & Medium Business Administration, etc.), enterprises, academy, and field experts.
At their initial stage, the creation of Meister high schools caused concern from across society. However, they began to draw attention as a successful case as they displayed great performance in terms of close partnership with the industry, selection of outstanding students with aptitude and talent, curriculum revision tailored to industrial needs, and appointment of teachers with plentiful field experiences.
124 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico 2.5.2. Industry-academy cooperation model for fostering Meister High Schools
Meister high schools have proceeded in building networks of human resources, infrastruc- ture, and support systems along with the initiation of its operating systems. Curriculums of Meister high schools are developed according to the following ways: 1) analyzing the adequacy of curriculum revision and planning; 2) taking into account results from National Competency Standards (NCS); 3) analyzing current states and manpower demands in related industries; and 4) accommodating job analysis by field experts. In addition, Korea Research Institute for Voca- tional Education & Training (KRIVET) is responsible for designing career path and organizing trainings on how to develop programs. In terms of promotion, various ways are implemented involving each school, Metropolitan and Provincial Offices of Education, Ministry of Education, Science and Technology, and other support centers.
Meister high schools established a partnership model which involved the central govern- ment, local governments, enterprises, related agencies, and schools. In terms of policy making, a task force was established to make policy decisions and draw up guidelines, which is led by the Ministry of Education, Science and Technology with other participants such as vocational education research institutes and researchers, officials from Metropolitan and Provincial Offices of Education, school officials, economic organizations, and industry experts. Policy promotion organizations are led by KRIVET and they keep a close cooperation among them. Their roles include conducting related studies, consulting, monitoring improvements, and giving feedback. When it comes to monitoring how Meister high schools are operated, KRIVET is responsible for the job. Monitoring is made by category and the results are informed to each school and Met- ropolitan and Provincial Offices of Education, encouraging them to take follow-up measures.
Industry-academy cooperation model of Meister High Schools
Central Regulation, administrative/Financial support and supervise/assess Local Govt Govt
Regulation, Regulation, Regulation, administrative/Financial support administrative/Financial support Regulation, administrative/Financial and supervise/assess Enterprise and Information sharing administrative/Financial support support and Information and Information sharing sharing Exchange and Cooperation Exchange and Cooperation of S/W, Ha/W, and Hu/W of S/W, Ha/W, and Hu/W
Exchange and Cooperation of S/W, Ha/W, and Hu/W Korean Related Agency Meister School
S/W(Software): education training program, skill development and guidance, information etc. Ha/W(Hardware): facilities and equipment, materials, finances etc. Hu/W(Humanware):Human resources, leadership, propelling organization
- Policymaking task force: Led by Ministry of Education, Science and Technology, with vocational education research institutes and researchers, Metropolitan and Provincial Offices of Education, schools, economic organizations, and industry experts. - Policy implementing organizations: Closely related, led by Korea Research Institute for Vocational Education & Training.
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 125 The characteristics of Meister high schools are as follows: 1) developing procedures and methods of graduation certification; 2) incorporating industrial needs and demand into cur- riculum; and 3) developing and operating programs for practical business skills such as practical language courses, industry-school cooperation practical training, and internship with the aim of fostering skilled manpower with professionalism, basic competency, and global competence.
2.5.3. Overview of policy of fostering Meister High Schools and their results
The Plan to Foster Meister High Schools (2008) was made as part of High School Education Diversification 300 Project. The purpose of introducing the schools is to help vocational high school students to become experts in areas they have interest in and pursue their vision and build career. In other words, Meister high schools are chosen to be outstanding specialized high schools which enable their students to develop expertise through stable employment. The out- line of the plans is as follows: 1) establishment of Meister career path; 2) reform of regulations over Meister high school education; and 3) involvement of the government in supporting and promoting them. In terms of career path of Meister high school graduates, the plans allow them to earn a college diploma after getting a job. More details are presented in Figure 2-6.
Career path of Meister High School graduates
Korean Meister Meister Military Return - Chief Technological High Employment Service to work Officer(CTO) School - Skill master - Entrepreneur(CEO)
- 4years deferred - Recruited to specialty forces - e-Military University - 3-year employment with SME replaces military service
Professional skill, Eam Diploma after gaining Employment foreign language education lnternship. Overseas experience ᰍḢᯱ Meister High Company Free tuition School College dormitory ✚ᄥᱥ⩶
Source: Choi (2011), Monitoring and consultation for Meister school operations, p 10.
As presented above, Meister high school students receive on-site education programs and are given a chance to experience internship and overseas trainings, with free tuition fees and dormitory offered. They find employment after graduation, equipped with college-level profes- sional skills. They are also given a chance to earn a diploma through special admission systems for specialized high school graduates, departments of contract, or corporate universities. In terms of military service, male graduates are allowed four-year deferral to the service. In addi- tion, a three-year employment at small and medium businesses can earn them military service exemption. Through the career path, Korean Meister high school programs aim to nurture Chief Technological Officers, skill masters, or CEOs.
In 2008, nine high schools were selected as Meister high schools and 12 additional schools joined them in 2009. A total of 21 Meister high schools opened in March 2010. As of March 2013, a total of 38 Meister high schools were authorized. The number of classes across all Meister schools reaches 600 and the average size of classes is 20 students.
126 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico Selected Meister High Schools
Metropolitan/ School name Strategic promising sector Province New media contents
Seoul Seoul Robot High School Robot
Sudo Electric Technical High School Energy
Incheon National Maritime High School Maritime
Incheon/ Incheon Electronic Meister High School Electronics, communications
Gyeonggi-do Suwon Hi-tech High School Mechatronics
Pyeongtak Mechanical and Technical High School Automobile machinery, mechanics
Chungbuk Energy High School Next-generation battery techno-logy
Chungcheong Korea Bio Meister High School Biological industry buk-do (renamed to Jincheon Bio Technology High School)
Chungbuk Semiconductor High School Semiconductor equipment
Yeonmudae Technicla High School Automobile machinery Daejeon/ Dongah Meister High School Electronics, mechanics Chungcheong Hapduk Steel High School Steel industry nam-do Gongju Meister High School Electronics, SMI equipment
Gunsan Mechanical and Technical High School Shipbuilding, mechanics
Jeollabuk-do Jeonbuk Mechanical and Technical High School Mechanics
Korea Horseman High School Horse industry
Kwangju Automatic Equipment Technical High School Automatic equipment
Korea Port Logistics High School Port logistics Gwangju/ Jeonnam Life Science High School Green agriculture, stockbreeding Jeollanam-do Yeosu Petrochemistry Meister High School Petrochemistry
Wando Fisheries High School Fisheries and processing of marine products
Wonju Medical High School Medical equipment Gangwon-do Samcheok Electronic and Technical High School Electronics
Gumi Electronic Technical High School Electronics
Kumoh Technical High Schooll Mobile technology
Kyeongbuk Mechanical Technical High School Mechanics, mechatronics Daegu/ Ulsan/ Ulsan Meister High School Mechanics, automatic equipment Gyeongsang- Ulsan Energy High School Energy buk-do Pyunghae Technicla High School Energy
POSCO Technical High School Steel
Deajung Technical High School Precise machining
Geoje Technical High School Shipbuilding
Busan Mechanical Technical High School Mechanics Busan Busan Automotive High School Automobile machinery /Gyeongsang- Samchunpo Technical High School Aviation, shipbuilding nam-do Busan National Maritime High School Maritime industry
Air Force Aviation Science High School Aviation
Source: www.mesiter.go.kr
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 127 The results of the Plan to Foster Meister High Schools are as follows.
1) Curriculum revision customized to demands of the industrial sector
Curriculum and operation guidelines for 28 Meister high schools, which had been selected from the first to fourth round, are developed according to the following methods: 1) analyzing the adequacy of curriculum revision and planning; 2) reviewing the results from National Skill Standards; 3) analyzing current states of and manpower demands from related industries; and 4) accommodating job analysis by field experts. In particular, almost every Meister high schools reflect demands from the industrial sector by inviting field experts as a panel for job analysis in cur- riculum development. Another way to establish a curriculum is to set up objectives in manpower nurturing by department based on a job model.
2) Attraction of outstanding freshman with aptitude and talent
The most remarkable result since the foundation of Meister high schools is that they were able to attract students with aptitude and talent who chose path career offered by the vocational schools. In terms of student selection, they carried out in-depth interviews by field experts and aptitude tests, other than reflecting grades. While minimizing the percentage of grades valued in admissions (less than 50%), they fully accommodate characters (attendance rates and volunteer work records), in-depth interviews (growth potential, vocational aptitudes, etc.), and other require- ments (credentials and cover letters). As a result, an increasing number of new students are willing to be employed after graduation before earning a diploma.
Bae (2011) conducted a survey during 2010-2011 between Meister high school students and their general high school counterparts over a sense of belonging, satisfaction, and perceptions over adequacy and effectiveness of curriculum and career advising. The findings suggest that Meister high school students displayed higher levels of a sense of belonging and satisfaction than their counterparts. They also regarded school curriculum and career advising as helpful. The survey results show that Meister high schools have grown to be a successful education institute where students willing to gain employment first are given quality vocational education.
3) Appointment of principals from the industry and expansion of a faculty pool
In an effort to activate on-site educational programs, Meister high schools appointed head teachers with industry backgrounds and expanded a pool of teachers. In addition, they attracted industry-educational adjunct teachers. They have continued to attract qualified Meister teachers by signing MOUs with the Korean Quality of Master Association and the Korea Technology Master Association. Gumi Electronic Technical High School, for example, recruited as its principal a former executive at a conglomerate.
128 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico 4) Enhancement of expertise and capabilities among teachers
In the process of implementing the Plan to Foster Meister High Schools, teachers are given a chance to boost their understanding of industrial sites, enhance expertise, and recognize the importance of industry-academy cooperation. In particular, during the process of establishing and running Meister high schools, various faculty trainings were offered with an opportunity to improve expertise and capabilities of faculty. Exemplary cases, a few ones though, include a faculty training program at a partner company for more than three months. Later, this training program became the foundation for enhancing faculty field training of mid- and long-term, aimed for strengthening employment competency of specialized high schools.
5) Enhancement of cooperation system between schools and excellent industries
The foundation of Meister high school education is systematical industry-academy coopera- tion with sound quality, which results from the establishment of various cooperation systems such as articulation between the school and multitude of superb enterprises, and support from industry in terms of technology and recruitment.
Especially, companies affiliated with Meister high school get engaged in not only educational tasks such as curriculum and textbook development, field internship programs and teacher train- ing support, but also substantive tasks like priority employment arrangements.
The high schools are also running separate classes for intensive education on the trades of affiliated companies.
6) Vitalization of related agencies’ participation in fostering Meister High Schools
The Ministry of Education, Science and Technology has tried to grow out of the previous model of fostering Meister High Schools, that is, Education Office and its related agencies actively partici- pate in the process, and tried to establish a new model in which the participation of an industry in cultivation of labor forces needed to the field and its related agencies is emphasized. Thanks to this, support for promoting Meister High Schools is diversified, laying foundation for related agencies to have a keen interest in fostering necessary labor forces and strengthen linkage with labor force demand.
7) Boost in recognition of and confidence in Meister High Schools
Meister high school promotion policy should overcome the limits of conventional secondary vocational education and take root as a career development track, which holds the same mean- ing as general education to students who seek employment as a goal. In this sense, Meister high
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 129 schools have constantly made efforts to meet the demand of industry and education consumers. Thanks to these efforts, there has been a boost in confidence and expectations toward Meister High Schools in enterprises, as well as in recognition among parents and students.
Achievements of Meister High School promotion policy
· Revision of curriculum to be customized to industry demand - National Competency Standards’ (NCS) development results are reviewed, actual conditions and labor demand of related industries and job duties are analyzed by indus try experts. - All school curriculums are developed with industry personnel present as job duty analy sis panel member.
· Procurement of outstanding students with talent and aptitude (top 70% in 2011 to top 50% in 2012) - In regards to student selection, besides academic grades, students also went through in-depth interview with an interview panel that includes an industry personnel and an aptitude test is also conducted.
· Expansion of appointment of professionals with industry background as principals and faculty members - Expanding appointment of professional with industry background as principals and industry-educational adjunct teachers in order to realize industrial setting focused education - Actively utilizing industry personnel as faculty members in order to provide field educa tion and employment connection opportunities
· Enhancement of teachers’ field expertise and competencies - Running various training programs - On some occasions, mid-long term industry training programs are conducted, which run over 3 months at affiliated enterprises in order to foster expertise of teachers in the specialized area by school.
· Enhancement of industry-academy cooperation system with outstanding industries - Establishing various cooperative systems with several outstanding industries such as industry-academy linked education, skill and employment support - Cooperating with affiliated enterprises in terms of curriculum and textbook development, field internship programs and teacher training support, priority employment arrangement
2.5.4. Problems with Meister High Schools and developmental direction
The Problems currently facing Meister High Schools and solutions for them are as follows. (Jang, 2012)
1) Establishment of swift response system for changes in technologies and labor force demand in enterprises
130 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico The essence of Meister high school is provision of education linked with specialized industry demand of promising fields. As the pace of changes in enterprises’ technology and labor force demand is increasing, swift response and innovation is needed on the school site. However, given the fact that it takes at least three years to revise the departments and curriculum by reflecting enterprises’ demand, the gap between enterprises and schools is likely to become wider as time passes. Therefore, the schools need to establish more flexible operation system such as course programs or major-intensive classes, growing out of department-oriented operation system.
2) Establishment of communication channel and cooperation system among faculty members
A successful operation of Meister high school takes not only strong determination of principals but also determination and participation of faculty members for both special curriculum and general curriculum. Especially, cooperation between principals and teachers and among teachers is essential to transition into new vocational education, which is different from existing inflexible one, and its operation.
3) Improvement in treatment of teachers and Meister teachers
Procurement of outstanding teachers and Meister teachers with field experience and expertise requires urgent improvements in wages and incentives. Realistic remuneration is pressing in order for attraction and utilization of more industry-academy adjunct teachers with field experience and expertise. However, in such places as small cities and regions with weak industrial foundation, expansion of industry-academy adjunct teachers is practically difficult due to poor accessibility.
4) Resolving the problem of career interruption caused by military service
Military service is the biggest obstacle in encouraging employment of high school graduates. Even though this issue is not easy to resolve due to complexity of its nature, which involves many interested parties, the central government needs to aggressively come up with solutions.
5) Establishment of foundation to encourage youth to manage both work and study
Many students at Meister high schools have desire to proceed their education after employ- ment. Giving them opportunity to further education is even more important in that lifelong learning for continuing acquisition of knowledge and technology is prerequisite for career devel- opment to be a Meister. A close cooperation between the government, enterprises and higher education institutions must be preceded to lay foundation for an environment which helps youth manage both work and study.
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 131 6) Expansion of incentives to boost industry-academy cooperation
Success of Meister high schools depends on the quality and quantity of industry-school co- operation. However, some schools are seen poor at managing quality of affiliated enterprises and performance of cooperation. Regarding this, there is a growing consensus in school field that ad- ditional incentives are needed to make superb enterprises feel more attracted to industry-school cooperation.
7) Securement of credibility of Meister High School graduates’ competence through reform in qualification system
The purpose of Meister high schools is to foster skilled labor force that has the same level of skills and technical abilities as those of junior college graduates. This goal is set based on enter- prises’ demand, that is, the fostering of talents of the level of a junior college graduate is required to differentiate Meister high schools from other specialized schools. Therefore, treatment of Meister high school graduates should be different from that of other specialized schools in terms of level of job duties, wages and developmental potential.
8) Establishment of win-win strategy by utilizing local communities’ resources
A glance at the current budgets of Meister high schools shows that financial support from local governments and enterprises is insufficient. Therefore, an effective utilization of local resources is needed in order for Meister high schools to boost its financial independency on its own. For this, the schools should figure out the resources of local communities in advance and improve the efficiency of budget execution by utilizing the data.
Exemplary case 2: Gumi Electronic Meister High School Gumi Electronic Meister high school is running five departments including electronic circuit design, automation system, and robot control in order to foster meisters in the field of electron- ics industry. The curriculums, under the goal of effective school operation, are focused on four elements: changes in mind-set; improvement in school environment; enhancement in students’ competency; and boost in students’ employment capability.
① Changes in mind-set
When teachers change, everyone becomes happy - Don’t find reasons for failure, but find ways to get things done - Those who fail find reasons for failure, but those who succeed find ways how to get things done - Put students first. If a task is done for the sake of students, who does the task doesn’t matter, what matters is the task is for students
132 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico - When teachers change, students change - When students change, the school develops - When school develops, students, parents and teachers become happy
② Improvements in school environment
- Clarifications of roles and responsibilities
· Redundancy in duties and respon · Minimization of redundancy in sibilities by rank duties and responsibilities · Insufficient organizational compe · Improvement in organizational tency competency-Able to inject resources · Inefficiency in proceeding tasks into new tasks
ㅍㅍㅍ
Vice principal, head of administrative office Grade head teacher · Best strategy planner · Strategy planner & decision maker · Experts in educational administration · Core members in proceeding business · Coordinators for multi-departmental task control · Manager of various councils
Teachers Administrative staff · Experts in teaching and learning · Supporters of the educational activities of · Direct implementer of school businesses both teachers and students · Persons in charge of students’ character · Managers of school facilities building education and guidance work · Mangers of school budgets
- Improvements of staff meeting method · Change grade head teachers’ · Focused on delivery meeting into management of issues strategy meeting · Notify pressing tasks to each · Give prior notice on items on department the agenda · Unable to come up with · Conduct a discussion–based optimal methods or meeting measures · Take proceedings and share · No feedback about the them with all staff results of meeting · Share feedback on how the matters decided proceed
- Sharing school development strategy with all Staff
Assign Write Present/Share Tasks by Conduct Modification Roadmap Roadmap at Department Regular & For School Workshop for All and Proceed Checkup Execution Development Staff Them
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 133 ③ Enhancement of students’ competency
-Major objectives of cultivation of young meister (graduation qualification system) by grade
Perform- Basic ance Above compe- assess- average tency ment
Certificate 1 1 1 Major Specialty Mandatory Mandatory Voluntary participation compe- club participation participation tency Accumulated manage- Accumulated Accumulated Portfolio ment management management Foreign lan- guage TOEIC 350 380 410 450 500 profi- ciency certificate 2 Voluntary 15 hours 15hours service Reading 10 books 10 books Informa- Hobby & tion Voluntary after school/weekend activities literacy sports Job skill Book review on work life & Job skill education education Green None None None mileage
134 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico - Curriculum management master plan
- Regular curriculum - 2weeks during - Regular curriculum - 3 weeks during 34 credits vacation (6 credits) 34 credits vacation (8 credits) - Specialized: basic - Specialized: prereq - Specialized: basic - Specialized: major, computer uisite learning of major, computer intensive major - General: basic basic courses 1st - General: basic course academic skills, - General: TOEIC, Grade academic skills - General: TOEIC basic job skills additional course (Basic) , basic math, for students with additional course out basic certifi Computer skills, Computer skills, for students without cates TOEIC TOEIC (conversation) certificates-Field - Field internship internship program program
- Regular curriculum 34 credits - Regular curriculum - 2weeks during - 3 weeks during - Specialized: 34 credits vacation (6 credits) vacation (8 credits) intensive major - Specialized: basic - Specialized: pre - Specialized: course, project major, computer requisite learning prerequisite learning - General: basic 2nd of intensive major learning of intensive - General: basic job academic skills Grade course major course skills (Inten- - General: TOEIC , - General: TOEIC , sive) additional course additional course for students with for students - Industry-academy - Industry-academy out certificates without certificates class class - Field internship - Field internship - TOEIC - TOEIC program program
- Regular curriculum 34 credits - Intensive major & 3rd application course, Manufacturing major-related work, Industry- Grade enterprise course academy cooperative project internship 100% employment (Applica- program, enterprise course, field internship tion) - Class customized for employment, TOEIC
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 135 - Cultivation of basic job skills ∙ Definition: Basic skills required to perform tasks at workplace ∙ Educational activities: Getting the highest grade on The National Assessment of Evalu ation Achievement (taken by 2nd graders), basic major course and normal course (Korean, English, Math, Social Studies and Science etc.), additional courses for foster ing job skills needed after employment ∙ Details by Grade
- Korean, math, social studies, - Korean, math, social studies, Normal course Job skills science, foreign language science, foreign language
- Cultivation of expertise
- 1st Grade : Mandatory basic major course - 2nd Grade : Intensive major course, project learning, project work Regular curriculum contest - 3rd Grade: Major application course, project learning, field in ternship (linked with employment)
- 1st Grade: computer skills, supplementary basic major course, prerequisite learning of intensive major course, additional course for students without certificates After-school/ Vacation - 2nd Grade: industry-academy class, prerequisite learning of major curriculum application course, making project work and project work contest, additional course for students without certificates - 3rd Grade: Class customized for employment, field internship program, acquisition of certificates
- Extra courses for low achievers - Intensive courses for acquisition of certificates 1st/ 3rd Saturdays -Support hobby/sport club activities when there’s request from students meeting goals
136 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico - Well-rounded competency • Program a. Voluntary service – outside institution (weekends) b. Etiquette Lessons – conducted in every class c. Theme Camping - Etiquette/Voluntary Service (Chunghak-dong etiquette school, Eumsung social welfare institution) • Self-management a. Green Mileage System (reward &penalty point system) b. Those who accumulate certain level of penalty points are brought to student disciplinary committee c. Mandatory participation of all teachers and staff in Green Mileage System • Preventing school violence, suicide and bullying • Applying enterprises’ employment rules (employee handbook) to the rules of school/ residence hall • Use of pension: Providing opportunity for students and parents to have conversations • Open School Management (Promoting principal /vice principal visit and consultation) • Green Mileage Points: Minimizing student who get minus points • Smokers have disadvantage in employment, should be admitted in smoking cessation school and instantly discharged from dormitory • Love, affection and attention from home and school are needed to help students build sound character and personality
④ Enhancement of employment capability
- Run classes customized for employment • Selection criteria a. Academic performance b. Young Meister (graduation) Certificate System – evaluation of scores by department c. Successful candidates chosen thorough prior interview- Choosing principal nominee, head guidance teacher and housemaster must participate in the interview
• Completion Criteria a. Academic performance (absolute evaluation): Above certain average score b. Young Meister (graduation) Certificate System: Above B grade in all subjects c. Reward &penalty point system (Exclude those who accumulate certain level of penalty points) d. Evaluation of classes customized for employment e. Passage of evaluation criteria set by enterprise
• Selection Time a. Selecting students at the end of 2nd grade year (February) and running the class during the first semester of the 3rd grade year
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 137 b. Preventing slackness caused by early employment c. Focusing on Young Meister Certification to foster superb technicians
- Current state of employment (as of December, 2012)
3rd Grade 2nd Grade
Type # Employed Employer Type # Employed Employer
LG Innotek, LS Cagle & Parts, Material, 138 System, LG Group 53 LG Innotek Display Samsung Display, Samsung Samsung Electronics, LG Electron- 35 Electronics 71 ics, Samsung Group Samsung Electronics Display Hyundai 12 Hyundai Public Enter- Motors Motors prise, other conglomerate Public enter- Korea Hydro prise, Nuclear Power, 25 Other con- Hanhwa, glomerate Canon
14 companies Public enter- Korea Hydro including prise, Nuclear Power, Powerful small 25 Keyang Preci- Other con- Hanhwa, company, 46 sion, Daeho glomerate Canon start-up Technology, UBCell 14 companies Powerful small including company, 24 Daeho Tech- start-up nology, TKS
100% em- Total 266 Total 149 55% employed ployed
Exemplary case 3: Busan Mechanical Meister High School Busan National Mechanical Technical High School, first founded as a special-purpose tech- nical high school, was designated as Meister high school in March 2010 and as ‘Curriculum Autonomous School’ by Busan Metropolitan City Office of Education, and since then, the school has been running customized curriculums. Students of the school have been developing prob- lem-solving ability, major expertise and business foreign language skills in order to realize their dreams to become young meisters with creative flexibility and expertise that future society wants. For this, the school adopted Young Meister Certificate System for machinery sector. In
138 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico order to be certified, a student should meet the following criteria:
- Acquire his/her major-related communication skills - Acquire basic job skill certification by outside organizations - Acquire at least three national technical qualifications - Submit project work - Win at least one prize on national/local skill contests - Improve English communication skills - Acquire word processor 1st/2nd grade certificate - Acquire computer application ability 1st/2nd certificate - Acquire ITQ level 2 or higher - Write at least 20 book reviews - Do at least 30 hours of voluntary service outside school - Complete work ethics course
Young Meister graduates go through Employment First, Entrance Later System and later, they will contribute to the global technology industry by playing a role as a Meister.
Busan National Mechanical Technical High School, transferred to the Small and Medium Busi- ness Administration as a part of National Meister high school Promotion Program, has fostered young meisters by making adjustments for system improvements, for example, employment cooperation with superb companies and expansion of hiring of industry educational adjunct teachers. In terms of school management, the school has secured teachers and staff on par with science high schools and adopted master teacher system. In addition, it has made an annual investment of 2billion won for 3 years since 2011, and along the way, robot department with 2 classes was created and it performed well on various robot contests. Also, the school has made cooperation agreements with 100 superb companies, supported industry educational teachers, and run Meister career development center.
The school’s interest is not only in students’ learning but also in their development of char- acter, creativity and community spirit which the school focuses on when implementing project courses, learning motivation semester system, community life education, creation design center and after-school courses.
① 2013 educational activity management objectives: Foster proactive skilled workers with problem-solving abilities
- Department management led by centers - Enhancing math education to boost creativity - Running learning motivation semester system - Running weekly special lecture conducted by a guest speaker (1 hour) - Running employment/career development center
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 139 - Enhancing convergence education courses mixed with character education - Running credit completion first, entrance later system
② Learning motivation semester system
- School-initiated: Foster patriotism and school spirit, special lecture for vision, open mind, motivation contest, athletic competition, cultural performance, leadership camp, family building - Department-initiated: Major patrol, immersion education, visit to future work place, CEO lecture, parent lecture, write road map, finding life-long family motto - Self-initiated: 8 hours of voluntary service, Who am I? My loving family, Making a girl friend, How to manage my savings, How to make happy weekend
③ Establishment of entrance later system through prior completion of college credits
- Purpose a. Open employment for high school graduates b. Running Employment First, Entrance Later System to meet students’ needs for learning c. Recognizing college credits earned during high school years after college entrance - Implementation plan a. Linking Hub college program with special admission for the employed (targeting those who want later entrance) b. Allowing students to complete college credits (9 credits a year) during high school years c. Prior completion of credits through virtual lectures, Saturday lectures for 3 years d. Allowing graduates to balance work and study after graduation - Expected effects a. Settling a successful Employment first, Entrance Later System for Meister high school students b. Linking college education with industry field, enhancing synergy effect in cultivating expertise c. Seeking convergence development of high schools, enterprises and university
④ Employment & Career Development Center
- Purpose a. Supporting student’s employment and career building by gathering resources from all teachers and staff b. Discovering powerful small businesses in cooperation with Small and Medium Business Corporation c. Providing employment support customized to individual needs - Implementation plan a. All teachers and staff provide customized support as a career adviser
140 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico b. Running employment clinic providing customized support c. Building company database in cooperation with organizations like Small and Medium Business Corporation d. Running mock interview program to help students’ employment - Expected effects a. Discovering students with talents which enterprises want b. Providing systemic information on career building, expand employment by superb powerful small businesses c. Seeking convergence development of school and industry
⑤ Specialized program for character education
- Delightful greeting on the way to school - Character building camp with parents: father-student camp, mother-student camp - Character building through cultural experience events: municipal symphony orchestra concert, Korean classical music concert, invitation performance of play - Various character building programs
⑥ Education on democratic values (human rights, autonomy, responsibility)
- Allowing students to participate in the enactment of school regulations and observe the regulations by themselves - Enacting/revising school regulation to respect human rights ∙ Setting up school regulation revision subcommittee with the panel of teachers, students and parents - Guiding students to autonomously observe regulations ∙ Fostering autonomous environment through the establishment of good life style ∙ Continuously waging anti- absence, anti-smoking, and anti-violence movement - Fostering responsible democratic citizens ∙ Running student courts based on reward & penalty point system ∙ From resolving trivial conflicts among students to discovering model students ∙ When setting up student disciplinary committee, participation of 2 outside members (parents) is required
⑦ Community life education
- Safe and delightful school without violence ∙ Early detection of and swift/strict response to school violence - Strengthening Wee classes and student counseling programs ∙ Providing customized counseling service to maladjusted students in cooperation with their parents - Pleasant and comfortable residence hall
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 141 ∙ Enhancing guidance by increasing residence hall teachers ( 5->8) - Improving students’ eating habits by providing safe and sanitary school meals ∙ Improving quality and satisfaction by running school meal committee - Seeking green growth education and voluntary service ∙ Running voluntary service programs planned by school such as National Cleaning Movement
⑧ Training to improve expertise of faculty in specialized curriculums
- Purpose of trainings and implementation plans ∙ Improve the expertise of teaching faculty so that they can adapt to industrial changes ∙ Prepare for classes in response to the organization of curriculum that fit the demands of industry ∙ Expand the opportunity of faculty training through industry-academy cooperation ∙ Implementation plans (Implement trainings by department during summer vacation)
⑨ Project practices
- Goal of practicing projects: Making Things Move ∙ Establish one’s own creating environment by learning how to select and buy materials, handle parts, measure the size, in addition to producing and controlling the movement beyond the understanding of machines and mechanism. ∙ Drawing → Moving → Creating → Combining → Promoting (Blog) “The Secret of Moving Objects” (Dustin Robert)
⑩ Creative Design Centers
- Run a center for creation (The Dream Square - GOD)
Time Detail - Provide eight-hour project practice per week for senior During work students - A basic level class for different kinds of qualifications for first and second grade students After school class - Make public operating programs (until 11pm on weekdays) (10 types, hours for completion, etc.) - Receive applicants, confirm the number of students, and provide education - Operate a Make: Projects club - Receive application forms, permit, and guide Weekend/Holiday - Give those who completed a basic level class a chance to use equipment The Dream Square: a place that provides an environment in which anyone can create works anytime
142 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico 2.5.5. Policy Implications of Mexican vocational education
Various examples of Korea’s specialized high schools and Meister high schools give the following policy implications for the fostering of Mexican technical labor force.
Foster talent based on changing demands of industry - Choose Meister high schools in order to provide education related to the demands of promising industries - Take into account industrial demands and field requests
Run curriculum customized to the demands for technical labor force - Provide education closely linking curriculum with industrial world - Classic example: run a separate class for an enterprise that enters into an employment agreement
Policy measures to boost employment - Reform curriculum to meet the demands of industry - Sign an MOU with the industrial world - Expand cooperation with industry associations by each area in order to set up a national employment network - Stable employment outlook and customized education for the field thanks to the establishment of the Meister high school employment portal system
Run Employment First, Entrance Later System - Implement and expand special admission program for employed applicants - Promote corporate university and departments of contract - Acknowledge work experiences and job training records as academic credits - Strengthen the role of cyber universities
1) Cultivation of talents based on changing demands of industry
It is important to educate technical talents specialized in promising industrial fields. Indus- trial demands must be a priority consideration in designating a VET school and in constructing curriculum.
2) Customized curriculum for technical labor demands
Closely knitted industry-school education must be expanded as in Meister high schools. For example, special classes can be run for a company in employment agreement. Such classes have the advantage that students can learn special knowledge and skills that the formal curriculum
● 143 cannot contain but are demanded by the industry through programs that provided after school or during vacation.
In particular, it is essential to introduce a customized program to ensure students as profes- sionals are offered desirable jobs and stable career paths upon graduation. Cooperation be- tween field experts and teachers is needed to develop education program, in order to meet properly what industry expects for new recruits in knowledge, skills and attitude.
3) Policy measures to boost employment
The Ministry of Education, Science and Technology opened 21 Meister high schools and provided education closely related to the industrial world in order to establish a model for em- ployment-leading through Meister high schools. To do that, it revised the curriculum to meet the demands of the industry, and appointed corporate executives as principal of schools. It also signed an MOU with partner corporate and encouraged the industry to expand its sup- port for schools, such as donation of equipment, faculty training, and recruitment. It expanded cooperative agreements with industry associations by each area in order to set up a national employment network, and by establishing Meister high school employment portal system, it provided stable employment outlook and customized education for the field, receiving enthu- siastic responses from students and their parents.
4) Employment First, Entrance Later Systems
Korean Meister high schools and specialized high schools’ recent vocational education poli- cies are focused on Employment First, Entrance Later System in order to discourage uncondi- tional preference for college entrance and encourage high school graduates’ employment. To this end, the government implements and expands special admission programs for employed applicants; promotes corporate university and a joint program with nearby colleges; acknowl- edge work experiences and job training records as academic credits; strengthen the role of Ko- rean National Open University and cyber universities; strengthen the role of Leaders in Industry- University Cooperation (LINC) and world class community colleges’ role as Leaders in entrance later. Special admission programs for employed applicants who graduated a specialized high school is running a separate class for those with more than three years of work experiences at an enterprise, enabling a flexible operation of specialized programs that meet the demands of both enterprises and workers.
3. Policy Recommendations for Vocational Education of Hidalgo
The program of fostering technical labor force that Hidalgo has interest in is a technical education for high school students, and the key of the program is to make employment and
144 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico vocational training closely tied each other through industry-academy cooperation.
In Korea, similarly, specialized high schools since 1997 and Meister high schools since 2008 were established to nurture labor force demanded by the industrial world through high school education programs. The goal of this policy is to enhance vocational high schools’ image and provide practical education that can nurture workforce demanded by industrial sites. Consider- ing employment rates or levels of satisfaction of graduates, it can be regarded successful. There- fore, by benchmarking these examples after taking into account Hidalgo’s industrial, economic, and cultural conditions, we suggest several policies for Mexico’s vocational education, which are divided into short term and mid-long term policies.
3.1. Re-establishment of goals of technical high schools (short term policy)
• Ministry of Education: re-establish goals of post-graduate employment to enhance ‘employment first entrance later.’ • Need to develop a supplementary policy for this end. • Establish basic rules and implementation plans of technical education such as specialization, systemization, refinement, etc.
The main purpose of technical high schools is to nurture professional labor force in certain industrial areas and to provide this labor force to enterprises. If many of technical high school graduates enter university, the purpose of such schools will not be fulfilled. In Korea, 80 percent of technical high school graduates went to university, and therefore the original purpose of vocational education was distorted, which led to a massive unemployment of college gradu- ates, including those from technical high schools. Against this background, the government implemented policies to boost employment rates by operating specialized high schools and Meister high schools. Given the fact that this effort is bringing positive effects, technical high schools of Mexico also need to reestablish post-graduate employment systems restoring its aim to generate employment while developing various forms of subsidiary policies to achieve this goal at the same time. To this end, Ministry of Public Education and Secretariat of Public Education of Hidalgo need to closely cooperate to strengthen students’ will to develop career, and their basic occupational skills and global capabilities.
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 145 3.2. Development of Education Programs Customized to Industry-Academy Cooperation (short term policy)
• Develop curriculum that fits the needs and demand of industries. • Nurture technical labor force through employment agreements between schools and industries. • Vitalize contract departments that guarantee employment in cooperation with enterprises. • Fully reflect industrial demands from by hiring teachers from the industry. • State governments’ support is needed for the organization of industry-academy cooperation system and operation costs.
An internal school system needs to be changed in order to facilitate the employment of tech- nical high schools graduates. Every step, from developing curriculum to promoting employment, should factor in all industrial demands and needs. In order to help students cultivate at schools skills, knowledge, and attitude demanded by enterprises, teachers and researchers should coop- erate with industry experts to develop curriculum. In addition, vocational schools need to nurture technical labor force through employment agreements between schools and corporations while developing education systems that can actively respond to industrial demands by helping stu- dents finding a job at partner companies after graduation. The State of Hidalgo needs to initiate forming an industry-academy forum and sponsor operating expenses.
3.3. Establishment of a system that prevents midway dropout (mid-long term policy)
• Develop education programs that fit the demand of industries. • Employ a certain ration of teachers with an industry background. • Set up high school programs that the industry demands and co-run the programs with teachers. • Create exchange programs and training programs with Korea’s specialized high schools and Meister high schools with federal and state governments support.
It is no exaggeration to say that the quality of education depends on teachers’ ability. Teachers themselves should understand industrial trends and what industries want in order to develop and teach curriculum that accommodates demand of industries. To do that, the system that employs a certain ration of teachers with an industry background should be established, while faculty trainings need to be reinforced at the same time. With support from the State of Hidalgo and the federal government, enterprises need to set up high school programs that industries demand and co-run the programs with teachers, in cooperation with Korea’s specialized high schools/Meister high schools, and teachers and students in running training programs and ex- change programs.
146 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico 3.4 Establishment of a system that prevents midway dropout (mid-long term policy)
• Provide a social safety net for the most impoverished class such as support for living expenses, tuition fees, job placement, etc. • Set up a character education system for students who experience problems such as parental violence, migration to a foreign country, etc. • Develop a parental participation program so that parents can gain interest in education programs. • Develop a program that can give students dream and hope with cooperation with schools, state government, civic groups (NGO, etc), and parent associations.
The midway dropout rate of technical high school students in Hidalgo is an alarming level of 40-plus percent. This dropout continues to prevail for the following reasons: poverty and domestic violence; drug or alcohol addiction; and illegal immigration to the U.S. due to financial hardship. To solve these problems, a social safety net for the most impoverished class should be established first, including minimum living expenses and tuition fees support. As for students who suffer from family issues, such as alcohol, drug, and domestic violence, character building programs and counseling and treatment programs should be provided for their family members in cooperation with schools, NGOs, and community. In addition, parental participation programs are needed for parents be able to gain interest in education programs. Midway dropout rate will decline when school, state governments, civic groups and parent associations join together to establish a system to prevent midway dropout, and continue to develop a program that can give students dream and hope.
3.5. Re-establishment and promotion of a system to link enrollment after employment (mid- to long-term policy)
• Foster an industry that is based on the needs of the local community to connect employment for graduates. • Offer preferential treatment to those who enter college in the region through the local network
Polytechnic universities Technical high schools Enterprises in the region
- Organize an education - Hire students willing to - Organize an education program that fits the continue tertiary educa program that fits the demands of enterprises. tion to teach them skills demands of enterprises - Teach the aim of enroll demanded by enterprises. - Organize a program that ment after employment. targets students who enter college after employment.
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 147 In Mexico whose GNP per capital stands at $10,000, like Korea in the late 1990s when the nation’s economic growth recorded a similar level, parents are highly likely to support their children for tertiary education if they are financially capable. Considering the fact that many technical high school students want to go to college after getting a job, establishing a system to link enrollment after employment is important. To achieve this, it is primarily required to strengthen industry-academy cooperation and foster an industry based on the needs of the region because that will lead to the employment of graduates In addition, industry-academy cooperation involving local universities and corporations, and the local government should be established to figure out current states of companies related to local industrial characteristic by setting up local networks. Companies should continue to provide education to students who are willing to continue tertiary education at corporate universities, and organize an education program that fits the demands of enterprises in cooperation with polytechnic universities in the region while providing scholarships to college freshmen.
3.6. Establishment of a think tank for vocational education training and labor development (mid- to long-term policy)
• It is needed to set up a federal government-supported think tank that proposes overall strategies on vocational education trainings, industry-academy connection, research on job-related themes, development of education programs, assessment of education trainings, information on enrollment and employment, job creation, etc., and takes charge of monitoring them.
• The think tank should lead a consultative group that gathers opinions of various agents such as officials from industries and schools, and state governments, and assume the role of presenting the strategy for job training and fostering the labor force within the region.
• Foundation of such think tank is supported by federal and state governments.
• The federal Ministry of Education and the Korea Research Institute for Vocational Education & Training has signed a letter of intent with regard to the above mentioned.
In Korea, Korea Research Institute for Vocational Education & Training (KRIVET), as a govern- ment-funded research institute, has played the role of a think tank since 1997 which proposes overall strategies on vocational education trainings, industry-academy connection, research on job related themes, development of education programs, assessment of education trainings, and job creation, and monitors related policies. Mexico has various tasks, such as vocational education trainings and job creation, so it also needs to establish this kind of think tank that pro- poses overall strategies and monitors related policies. The think tank should lead a consultative group that gathers opinions of various agents such as officials from industries and schools, and state governments, and assume the role of presenting the strategy for job training and fostering the labor force within the region. Foundation of such think tank is supported by federal and state governments. The federal Ministry of Education and the Korea Research Institute for Vocational Education & Training has signed a letter of intent with regard to the above mentioned.
148 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico 3.7. Establishment of first Mexican Meister High School with government support (mid- to long-term policy)
• Federal government: industry-academy cooperation, facilitate employment, support education materials, and expand facilities • Local government: encourage connection with local industries, provide operation funds for local technical high school • Support MOU signing between enterprises and schools so that processes such as student selection, education, and hiring can be done in cooperation with enterprises
As for Hidalgo in Mexico, it is recommended to establish a Mexican Meister high school or implement a pilot project in which existing technical high schools are reformed into Meister high Schools. Federal government-level policy support is required in order to provide industry- academy cooperation, facilitate employment, support education materials and expand facili- ties. In the meantime, local governments’ roles are also important, such as connecting to local industry and providing operation funds for local technical high schools. Technical high schools need to sign a MOU regarding industry-academy cooperation with partner enterprises so that processes such as student selection, education, and hiring can be done in cooperation with the partners. The government’s administrative and financial support is also essential for the techni- cal high schools’ cooperation with industries under the large goal of fostering local industries and creating jobs.
Collaboration model for a Mexican Meister High School
Tax relief subsidies etc. State of Hidalgo Industry
Various support Scholarship, employment assurance etc. Regulation, Mexican ‘Meister administrative/Financial support Agreement & Support High School’ and Information sharing
Various support Provide policy Provide Management Direction
Central Government Job education Think Tank Management support
Source: Choi (2011), Monitoring and consultation for Meister school operations, p 10.
Chapter 2 _ Technical Manpower Development & Promotion of Industry-Academy Cooperation in Hidalgo ● 149
Summary of recommended programs of Hidalgo’s technical manpower development
Responsible gov- Program Priority ernment
Re-establishment of goals of technical high schools Hidalgo High
Development of Education Programs Customized to Hidalgo High Industry-Academy Cooperation Enhancement of teachers’ industry experience and Federal, Hidalgo Mid-long- term qualifications Establishment of a system that prevents midway Federal, Hidalgo Mid-long- term dropout Re-establishment and promotion of a system to Hidalgo Mid-long- term link enrollment after employment Establishment of a think tank for vocational education Federal, Hidalgo Mid-long- term training and labor development Establishment of first Mexican Meister High School Federal, Hidalgo Mid-long- term with government support
150 ● Policy Consultation on Promotion of Mechanical Parts Industry, and Technical Manpower Development and Promotion of Industry-Academy Cooperation in Hidalgo of Mexico References
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