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Production begins at Hyundai-Cummins earthmover engine factory

A 78,000 square metre engine factory for earthmovers has been completed in the city of Daegu, South Korea, by Hyundai Cummins Engine Company (HCEC), a joint venture between Hyundai Heavy Industries (HHI), the world’s largest shipbuilder, and Cummins, the world’s largest construction equipment engine maker.

The factory, which has begun production and is expected to make 50,000 diesel engines each year, was initiated just two years ago with an investment of 100 billion won — about $100 million — and fast-tracked by the city of Daegu and the Daegu-Gyeongbuk Free Economic Zone (DGFEZ) agency.

By 2020 Hyundai Cummins Engine Company aims to reach annual sales of around $500 million, and is expected to create about 3,700 direct and indirect jobs in the south-eastern Korean region.

“The establishment of the joint engine factory will give Hyundai Heavy Industries’ Construction Equipment Division a stable supply of high-quality engines that are essential for improving the performance and quality of its construction equipment,” the company said in a statement.

The MidRange engines manufactured by HCEC are derived from Cummins B, C and L base engine platforms and include a mechanically controlled 5.9-litre and 8.3-litre series and an electronically controlled 6.7-litre and 8.9-litre series. The company says they are configured to provide “optimised integration and enhanced performance in earth-moving equipment and industrial applications”.

The factory is said to set new standards for energy efficiency and eco-friendly operation through the use of state-of-the-art technology throughout the engine manufacturing, painting and testing processes.

For example, a regenerative system is used to capture waste energy during engine hot testing, enabling a potential 700,000 kilowatt-hours per year to be saved when the plant is operating at full capacity. In addition, the factory uses an environmentally friendly water-based engine painting system.

Besides fast-tracking the development, the DGFEZ has also given the joint venture some major tax breaks: the company is completely exempt from corporate tax for five years following the start of operations, and then only needs to pay half the tax for the following two years. Its acquisition and property taxes will also be waived or reduced for the next 15 years.

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