PART III: Interview with Peter Underwood, Senior Partner, IRC Limited and Managing Director, Georgia Global for South Korea
This "case study" series will be covered in five parts, listed below:
- Part I: State of Georgia Profile
- Part II: Georgia Department of Economic Development (GDEcD)
- Part III: Interview with Peter Underwood, Senior Partner, IRC Limited and Managing Director, State of Georgia Korea Office
- Part IV: City of West Point, Saddling LaGrange and Troup Counties
- Part V: Conclusion
You can read my introduction here.
I haven't tried to fashion myself as a reporter for this site, but I felt it was important and valuable to readers that I provide some exclusive material for this case study series. Since I was in Korea at the time I conceived of this series, the first country director of Georgia Global I contacted was Mr. Peter Underwood, Managing Director for the South Korea office. Mr. Underwood's picture and profile are below:
"Peter Underwood serves as the director of the state’s Korea office focused on attracting Korean investment into Georgia as well as promoting Georgia exports and Korean tourism to the state. Established in 1985, the Korea office has assisted Korean investors such as Kia Motors, SKC, and LG Chem as well as a host of small and mid-sized companies to establish operations in Georgia.
"Peter is a senior partner in IRC Limited, a business development consultancy specialized in supporting Western companies to be successful in Korea. Prior to joining IRC, Peter implemented executive language development programs at major companies first in Korea and later in Japan. He has traveled extensively, mostly in Asia, and enjoys sports and is fluent in English and Korean."
Mr. Underwood gladly replied to questions I asked via email, with follow-up questions asked by phone and focusing on Kia. I have split the two (all answered during the first two weeks of October), with the email questions first:
Email Questions (10/8):
Q. Why did you decide to join the Georgia Department of Economic Development in Korea? Peter Underwood:I am not an employee of the DEcD. I work for IRC Limited. Our company contracted with the DEcD in 1985. I took responsibility for this important client in 1989.
Q. Describe your experience in the office in terms of the greatest reward(s) and greatest struggle(s)? Peter Underwood:Our greatest rewards are when we attract investors to Georgia. The high profile investors like Kia are great but we also take great satisfaction on watching small and medium sized companies become established and succeed in Georgia. Struggles are more numerous:
- There is a huge culture gap between potential investors and our communities. The expectations of the investors and the behaviors of the communities are often quite different.
- Facilitating understanding across two cultures keeps us busy.
- The demands on our resources are growing due to the increased investment activity in Georgia. At the same time, resources available to service this demand are declining (due to the global downturn). Managing this is challenging.
- We are primarily focused on developments here in Korea. Sometimes, we forget or are unaware of changes back in Georgia. Keeping abreast of developments in the state can be quite challenging.
Q. What is the hottest topic on your desk at the moment? Peter Underwood:The "KORUS FTA" is the subject of much debate both in the US and in Korea. Furthermore, the global downturn and the slide of the value of the Korean won is challenging Korean investors in Georgia.
Q. How often and in what manner do you coordinate with the US Embassy commercial programs and American Chamber of Commerce? Peter Underwood:We engage with the embassy except primarily for protocol issues during visits of our state leadership. The embassy is also very helpful for addressing regulatory issues with the Korean government. We also work with the DOC in support of potential importers. We have been members of AmCham for a long time. AmCham is an important networking forum where we meet individuals with whom we can work to address the needs of Georgia companies."
Q. My home state of Michigan does not have this kind of trade office framework for promoting the state. How do you position Georgia against other US states, and do you find there is a consistent Top 3 or 4 priorities businesses in Korea have when evaluating Georgia for investment? Peter Underwood: Location, proximity to markets, and logistics are differentiating factors for Georgia. When evaluating Georgia for investment, Korean firms generally focus on availability of labor, wages, unionization rate as well as the availability of land and suitable facilities. Of course, everyone is interested in available incentives.
Q. In what way do you feel the Korea FTA would have a positive and/or negative impact on the investment by Korean businesses in the Georgia economy? Peter Underwood:Very positive. It will bring down barriers to US exporters, improve IPR protection, open businesses to foreign companies. It will make it easier for Korean companies to ship inputs to manufacturing in the US. Korea needs to improve its competitiveness in the service sector but many of these sectors are closed to foreign investment. The FTA should begin to open the service sector to foreign investment bringing skills badly needed to make Korea more competitive. Equally important will be implementation of the visa waiver system which is to be implemented from 2009. The US has lost many opportunities to other Western countries as a result of tight border controls following 9/11. The visa waiver program will greatly improve Korea’s access to the US.
Q. What industry from Korea is having the largest impact on the State of Georgia and/or what industry is seeing the highest growth in investment in Georgia? Why is it having this impact? Peter Underwood:Automotive due to the Kia Motors investment. Kia suppliers and 2nd tier vendors are following the Kia investment. Prior to that, textiles and construction materials dominated.
Follow-Up Phone Questions (10/13):
Q. Did Kia consider any other states besides Georgia in the site-selection process, such as Alabama where Hyundai has built a plant? Peter Underwood:Alabama was never really under consideration. Kia wanted to be near Alabama but in a different state. They first looked at Mississippi but the key concern with Mississippi was the availability of a quality workforce, in addition to the population/size of the workforce. Georgia has a significant advantage in this regard.
Q. To what degree does the Korea office get involved in the details of the process once it is kicked off? Peter Underwood: We consider ourselves the "wide end of the funnel," where we develop contacts, approach potential investors and identify projects for the state. We do provide ongoing advice to both state and local developers.
Q. How did the meetings between Georgia and Kia get kicked off? Peter Underwood:Well, Governor Sonny Perdue first met the Vice-Chairman of Kia Motors in 2003. Of course, we met regularly with the project team but it was just a matter of time until Kia Motors hit the 500k sales mark in the US, which in the automotive industry is considered the primary trigger for foreign automakers deciding to invest in a U.S.-based manufacturing presence. The Department of Economic Development put together a special team to go after and win the project in competition with Mississippi and other states in the Southeast.
Q. Have you visited West Point during this process? What were your impressions? Peter Underwood:I have visited a couple times and the reception has been tremendous. The people are very warm and friendly and genuinely excited about the investment Kia is making in their community.
Q. Was there a Korean presence in West Point up until this time? Peter Underwood:No, although a significant number of Koreans live in the Atlanta metropolitan area, there are some in Columbus, where Fort Benning is based and where a number of Korean wives of American nationals who serve in the military live.
Q. Were there any concerns with the potential impact of unions? Peter Underwood: No, not really. There is generally a low rate of unionization across the South, in addition to cultural barriers that make the region less hospitable to union efforts.
Q. I noticed in my research that the Georgia Quick Start program is ranked the #1 workforce training program in the nation. How did this facilitate Kia's successful start in Georgia? Peter Underwood:Via Quick Start, the first completely online recruiting system for the automotive industry was introduced, expanding the reach of recruiting efforts. To help potential employees not entirely comfortable with the internet and online navigation, kiosks were set-up at technical colleges around the state where potential employees could apply online with the help of on-site staff. Quick Start’s award winning differentiator is that it develops highly customized training programs. They are based on the actual manufacturing process used by the client. The programs are developed and implemented by personnel with practical experience in the industry. Training materials become the property of the client at the end of the process. Quick Start is credited with rapid ramp up of production frequently leading to record setting start up speeds.
Q. With the U.S. in a presidential election year, the Korean-U.S. FTA has become politicized and put on hold by the U.S. Congress. How do you view the current status of Korean support for the FTA? Peter Underwood:There is an effort right now by the Korean government to officially pass the FTA over the next few weeks. The overall process in developing the FTA was very well done; there is no sense here that it was rammed down their throats (by the U.S.). If passed, there would be a prestige factor involved as Korea would become the first country in East Asia to have an FTA with the U.S.; specifically, the pride in beating Japan cannot be underestimated.
What I took from my conversations with Mr. Underwood were the following lessons:
By following the lessons above, a state intent on competing for FDI will increase its likelihood of success in achieving its goals.