Serim TTC is a geographically diverse Korean foam maker, Simon Robinson visited Sung Tek Lim, executive managing director, who explained the firm’s plans for the future.
The performance of our company in 2014 was “not bad with a help of a stable raw prices,” said Sung Tek Lim, executive managing director of Serim TTC.
Lim said turnover and pre-tax profit of Serim TTC, Serim group’s parent company, is expected to be about $52.3m in 2014 and pre-tax profit $2.6m. These numbers are likely to remain unchanged in 2015, Lim added.
Serim group has two companies in South Korea for which make and sell slab-stock. Serim TTC is located in Yangsan and the other, Alfome, is located in Umsung.
Serim has several overseas plants, Lim said. “We have two frothing and converting companies, PT. Serim and PT Sky Foam, and one converting company, PT Serim Medan in Indonesia.
“We have two frothing and converting companies in China: Serim China Qingdao and Serim China Guangzhou,” he said. Lim added that Serim has a converting company Serim China Beijing, which is also located in China.
Serim’s Indonesian companies are performing well, Lim said, but added that “the Chinese companies are not performing so well due to higher labour expenses and severe competition” which drives down sales prices.
Serim group’s biggest foam sales from its Chinese and Indonesian operations are shoe soling and brassiere applications, Lim said.
He added that his firm has “already secured an additional site in Indonesia for a foaming and converting facility. This will be next to an existing batch foaming factory in Medan.” He continued: “This foaming facility will be built in 2015 if everything goes well.”
In addition, Serim TTC has set up “a new additional long loop splitting machine in our Yangsan plant.”
Serim has also investigated operating further from its home in South Korea.
Lim explained: “About six years ago, we tried to invest the foaming business into Chennai, India, but we could not reach a conclusion because we could not find business conditions that fitted our needs and were acceptable to us.”
Serim is considering opening businesses in a number of potential overseas locations including North and South America, Vietnam, Thailand, Burma and Sri Lanka. “We have a plan but it’s not been decided yet” Lim said.
The biggest volume market for polyurethane foam in South Korea is bedding and furniture application. This market is catered for by Alfome, said Lim.
The other South Korean company, Serim TTC is focused on the automotive sector where the largest volume of sales goes. These are for “flame retardant grades of foams which are combined with cloth by flame lamination,” he explained.
Lim said “Recently, we developed reticulated polyurethane foams which can be used in automotive interiors, seat covers, and brassiere cup pads. We have supplied these foams to Hyundai Motor and Kia Motor since 2013.”
The post-treated reticulation polyurethane foam has “excellent air flow and reduces the amount of sweat that passengers generate in summer.
Lim is also excited about a long-term research project Serim is carrying out with KRRI, the Korea Railroad Research Institute.
“The project is designed to try and develop a foam that can be safely used as seat cushioning material in railway carriages,” Lim explained. This is challenging, he said adding “these foams require very strict performance such as high limiting oxygen index, low limiting smoke density and toxic index.”
In a separate area, Serim has recently developed its own MDI based slab-stock polyurethane foam to replace of TDI, Lim said. He added that Serim is “commercialising polyurethane foam containing halogen free flame retardants and impregnated polyurethane foam with super hydrolysis resistance.
“The foams containing halogen free flame retardant are applicable for automotive, children’s toy and mattresses, Lim said.
Cosmetic sponges are another area that Serim is exploring said Lim. These are foams, containing cosmetic ingredients are applicable for cosmetic puffs.
“It is very difficult to impregnate the cosmetic substance to the inside of the PU foam,” he said. “Not only must the cosmetic ingredients get into the foam, it must stay there permanently during in use, it must come out evenly and comfortably and finally the foam must not shrink as the cosmetic is used” he explained
The Korean situation
Most of the raw materials can be purchased from local suppliers, but some small amounts of specialty raw materials come from overseas along with most of the additives.
In Lim’s experience “material cost has a decisive effect on profitability of foam. When the material cost is rising, creation of profit is impossible. It is very difficult to reflect the elevated raw material costs to the sales prices paid by customers. If the prices of is rising we can’t make a money. We expect the price of raw materials in Korea to stabilise in 2015,” he said.
The Korean market for flexible slabstock foam is very competitive, Lim said. “The price of foams in domestic market, especially in a low density foam, is very severe. This is because there is very little differentiation between suppliers in terms of technology. We have eight or nine foam suppliers operating in Korea, so competition is inevitable,” he said.
Serim TTC is developing “a new market and application by supplying both of ether and ester foams having high performance, reticulated foams to the domestic or overseas market,” said Lim.
“We always develop products in with our customer, when they ask us to improve the quality of foam products, we modify the formulation,” he added.
Serim is now exporting some specialty products, such as diaper foam overseas. However, even in speciality areas such as this, it is hard to compete with Japanese foam makers because the Won is stronger than the Yen, Lim said.