PAS was originally a small company focusing on plastic parts like dashboards and interior materials for automobiles. During its rapid growth, it expanded by acquiring various domestic and foreign parts manufacturers, including TKT Precision, which had begun developing its own airbags.
Founded by Tak Kwon-taek, TKT Precision was recognized as a strong small enterprise among domestic auto parts manufacturers. At the time, its scale, sales, and operating profit were insignificant compared to PAS, yet unexpectedly, TKT was acquired by PAS.
To put it metaphorically, it was like a shrimp swallowing a whale. This process had several unclear aspects.
“How did the acquisition happen?”
“It’s a familiar pattern.”
After years of investment, TKT Precision, a seatbelt manufacturer, developed a new type of airbag that passed the safety inspection by the Ministry of Land, Infrastructure, and Transport. However, due to the critical nature of airbags, automobile manufacturers were reluctant to easily change their suppliers. Frustrated by the inability to secure supply contracts, TKT received an offer from Eunsung Motors to supply airbags.
President Tak Kwon-taek, having been in business for a long time, did not make mistakes. He carefully negotiated the supply contract, secured an advance payment from Eunsung Motors, expanded production facilities, and hired staff to commence serious production. He delivered the products on the agreed date.
The issue arose at this point.
The airbags failed to pass Eunsung Motors’ internal safety inspection. In this case, the responsibility obviously lay with TKT Precision. While it was easy to point out problems, proving that there were none was not straightforward. If this continued, they would not only fail to receive payment but also be obligated to refund the advance and cover damages for breach of contract.
Inquiries to the Ministry of Land, Infrastructure, and Transport yielded only responses about settling disputes between companies. Attempts to find other customers to supply the airbags, which had also failed Eunsung Motors’ safety inspection, were futile.
Debts and expansion costs returned like a boomerang. Eunsung Motors faced delays of over two weeks in new vehicle releases. While seeking other suppliers, Eunsung Motors threatened to claim damages from TKT Precision, putting TKT, a once-healthy mid-sized company, on the brink of bankruptcy.
At this point, PAS proposed the acquisition, with the condition that it would inherit all debts and employment obligations. President Tak had no choice but to sell TKT Precision to PAS at a bargain price. Even at a low price, the sale amount reached 30 billion won.
At that time, PAS lacked the ability to pay that much money. However, this issue was resolved very easily.
Eunsung Automotive directly loaned money to PAS and guaranteed payment to the bank. The bank provided acquisition funds at a low interest rate, and ultimately, PAS succeeded in acquiring TKT Precision.
“What happened next?”
“It’s an obvious story.”
Instead of filing a compensation claim, Eunsung Automotive gave PAS another chance. PAS improved the airbags (though I’m not sure what exactly was improved) and delivered them, passing the safety inspection easily this time.
From then on, PAS became the exclusive supplier of airbags and seatbelts to Eunsung Automotive, rising to the status of a crucial partner. Even now, airbags constitute the largest share of PAS’s sales.
Taek-gyu crossed his arms and said, “Looking at this series of events, one might reasonably suspect that Eunsung Automotive and PAS colluded to defraud by acquiring TKT Precision.”
“That’s why CEO Tak Kwon-taek, who lost his company, tipped off the media and filed a lawsuit with the prosecution.”
“What happened?”
“As always, the media remained silent, and the prosecution dismissed the case, closing the matter.”
For reference, TKT Precision wasn’t the only company acquired like this by PAS. There have been companies forced into a corner through supply blockades and acquired for free.
In any case, what’s important now is that there might be a recall due to the airbag issue.
What kind of defect could it possibly have?
When unsure, it’s best to ask someone who knows, right?
“Where?”
“At CarOS.”
I called Daryl. He answered my call cheerfully.
[It’s been a while, CEO.]
“How have you been?”
[Of course, I’m doing well.]
“How’s the research lab?”
[No problems at all. Vehicle sales are also recovering, inventory is nearly depleted, and factory utilization is rising.]
Originally, CarOS had its headquarters in Silicon Valley. However, following its merger with Chrysler, the headquarters moved to Detroit, leaving the research facility behind. Due to the Big One, the research facility was also relocated to Detroit.
During this process, some key personnel who didn’t want to leave Silicon Valley absconded, but now most of them have returned.
This is because Silicon Valley has essentially disappeared.
The relocation of the research facility and chaos within the U.S., along with the exodus of key personnel, temporarily halted research, but it has now returned to normal. A few months’ delay in new car launch schedules is unavoidable, though.
[When will you be coming to Detroit? All the staff hope to see you.]
“I want to see everyone too. Please send my regards.”
Once the greetings concluded, I got to the main point.
“Please send me the data on Eunsung Motor’s airbags.”
[What is the reason for this request?]
“I’ve seen a few news articles and need to verify some information.”
[Understood. I will organize and send it right away.]
***
The next day.
While Taek-gyu was out, I skimmed through the materials sent by Karos. Among them, one paper stood out.
The paper published in a British journal pointed out potential defects in Eunsung Motors’ airbags. The author was Professor Park Pil-hyun from the Department of Automotive Engineering at Korea University.
He was recognized as one of the leading automotive experts both domestically and internationally, having even received the title of Korea’s first automotive master from the government.
The reason it’s in the past tense is that the master designation system was abolished after President Park Si-hyeong took office.
Since the domestic automotive market is monopolized by Eunsung Motors, related experts are generally favorable towards them. However, Professor Park actively raised issues regarding defects regardless of the company involved.
At one point, he pointed out a leaking defect in the engine room of a new car released by Eunsung Motors. In response, rather than recalling the vehicle, Eunsung Motors sued Professor Park for “obstruction of business” and “defamation by spreading false facts.”
Everyone was speechless at the absurd situation where a large corporation sued an expert for pointing out product issues.
Although the prosecution ended with no charges, since then, domestic experts have remained silent about defects in Eunsung Motors’ products.
Leaning back in my chair, I slowly read about the structure and principles of airbags.
Typically, the inflator uses a substance called Tetrazol. However, the airbags produced by PAS use ammonium nitrate.
“Tetrazol and ammonium nitrate…”
But what exactly is an inflator?
Naturally, we don’t learn about these things in the humanities.
After studying NCM and LFP due to batteries, now I have to learn about airbag inflators. More specialized terms followed in the text. I read it several times, but still didn’t understand well.
Is this the limit of the humanities?
In such cases, it’s best to ask the author of the paper directly. I have no acquaintance with Professor Park, but surely I could get an introduction.
I picked up the phone and called the head of the Business Administration department after a long time.
“Hello, Professor Kim Myoung-jun.”
A familiar voice came through the phone.
[Who is this? My student and America’s hero, Kang Jin-hoo?]
Is the embarrassment mine to bear?
“No, no. I’m no hero.”
[Thanks to you, the kids in the Business Department are walking around with their heads held high. If you see anyone on campus with a stiff neck, they’re from the Business Department. What’s the reason for your call?]
I cautiously brought up the topic.
“I have a question for Professor Park Pil-hyun from the Automotive Department. Can you connect me, please?”
[What? I thought it was a check-in call, and it’s for that? I’m a bit hurt.]
“Oh, I’m sorry.”
I feel bad that I only reach out when I need something.
Professor Kim Myoung-jun said with a smile.
[Just kidding. By the way, you aren’t asking for a free introduction, right? This time I’ll need a referral fee.]
“……”
I can’t tell if he’s joking or serious.
“Uh, how much…?”
[Let’s say that we’ll arrange a guest lecture at school later. The kids in the Business Department want to see you.]
“What?”
[If you don’t want to, that’s fine. I’ll hang up now.]
“Oh, no. I’ll do it.”
[Haha, good choice. I don’t know the professor well, but I’ll talk to him and let you know.]
“Yes. Thank you.”
After the call ended, I waited for a moment.
Was it about 15 minutes later?
Professor Kim Myoung-jun texted me.
[You can call now, as I arranged it. Don’t forget the introduction fee.]
I replied with a thank you and immediately called the provided number. It connected right away, as if they had been waiting.
[Hello.]
I said politely.
“Hello, Professor Park Pil-hyun. This is Kang Jin-hoo from the Department of Business Administration. I’m contacting you via Professor Kim Myoung-jun’s introduction. Is it a good time to talk?”
Professor Park Pil-hyun laughed heartily.
[Oh! Is this really Kang Jin-hoo? This is an honor. Can I brag about this to my kids at home?]
“It’s my honor, really. I’ve heard your name frequently.”
[Haha, so what can I help you with?]
“I was reviewing a paper you wrote and have a few questions.”
[Which paper?]
“The one about the Eunsung airbag published in a British journal three years ago.”
[Ah, that one. What are you curious about?]
“You pointed out some issues in the paper, and I’d like to know more details.”
[It’s all in the paper. You should understand if you read it.]
“Ah… Since I’m in business, I’m not very familiar with this area.”
[Haha, that makes sense. I also don’t understand what other professors in different departments are talking about. To briefly explain, the airbag is crucial for protecting the driver’s life and safety during an accident, so it must deploy immediately upon collision. The propellant is what initiates this process. It’s compressed inside a metallic case called an inflator and bursts within 15 milliseconds once it receives an electrical signal. The gas produced causes the airbag to inflate.]
“I see.”
I had no idea such scientific principles were involved in airbags.
[The key to the airbag is the propellant. They used sodium azide in the past, but nowadays, they usually use tetrazole. However, PAS uniquely uses ammonium nitrate.]
“What’s the reason?”
[Because it can reduce costs. The proportion of the cost that the propellant accounts for is quite large, but the price of ammonium nitrate is only one-tenth of tetrazole. Plus, we can reduce the size, making it even more effective.]
So it was indeed aimed at cost reduction?
This airbag was developed not by PAS but by TKT Precision. As a latecomer, they couldn’t afford to overlook price competitiveness.
“Why don’t other companies switch to ammonium nitrate?”
[Because it’s less safe. The airbag propellant needs to create just enough explosion to inflate the airbag. However, compared to tetrazole, ammonium nitrate is very unstable. It’s mainly used in commercial explosives. Additionally, when it contacts water or in humid conditions, its explosiveness can increase rapidly.]
“What happens then?”
[If it causes more explosions than necessary, there’s a risk of debris injuring passengers. There have actually been similar accidents in the past.]
That made my eyes widen.
“Then shouldn’t there be a recall?”
[I think so too, but it passed the safety inspection after all. In practice, if the humidity is low, there usually isn’t a problem. To trigger a recall, we need to prove the danger.]
“How can we prove that?”
Professor Park Pil-hyun replied simply.
[We can conduct direct crash tests. I actually wanted to do it while writing my paper, but it costs a lot. Unfortunately, I had to settle for substitute experiments.]
Automobile crash tests are conducted using dummies in the car, simulating various accident scenarios. The car and dummies used in a test must be scrapped afterward.
However, the cost of a car is one thing, but the price of the dummies is also significant. Each dummy starts at 100 million won, with expensive ones exceeding 1 billion won.
To carry out a proper experiment, at least several billion won are needed.
I suggested to Professor Park.
“Then how about trying it this time? I’ll cover the costs.”
***
The employees of CarOS purchased dozens of vehicles from Eunsung Motors while visiting their dealerships.
Coincidentally, retail sales had dropped due to Big One, resulting in an overflow of inventory vehicles, and immediate shipments took place. Additionally, they bought Eunsung vehicles in the used car market based on age and model.
Surprisingly, these cars were headed to the CarOS Research Institute in Detroit, where researchers began conducting crash tests on Eunsung vehicles.
This news quickly spread through the related industry.
Park Si-hyeong, who received the report, was taken aback.
“What is he trying to pull this time?”
Having faced so many setbacks lately, he was now stressed just thinking about what Kang Jin-hoo might do next.
What could be the reason for purchasing competitor vehicles and conducting crash tests? This is even against business ethics.
Park Si-hyeong immediately contacted Han Min-goo, the chairman of Eunsung Motors.
“Have you heard the news?”
In response to Park Si-hyeong’s question, Han Min-goo replied in a serious voice.
[I have heard, Mr. President.]
“What is Kang Jin-hoo scheming? Do you have any idea?”
[Upon checking, it seems they are investigating airbag issues. Professor Park Pil-hyun from Korea is overseeing the tests in Detroit.]
Park Si-hyeong was shocked and almost dropped his phone.
“Is that really true?”
