The domestic defense industry is actively researching and developing key parts such as engines and transmissions in order to escape the influence of the U.S. and Europe’s export control. It is a stepping stone to develop its own export capabilities.

If you rely on the United States and Europe for key components mounted on weapons systems, you must obtain approval from the relevant country each time you export them. In particular, the defense industry is also aiming to expand exports to the defense market in the Middle East, where arms exports are frequently blocked due to geopolitical issues and human rights issues.

According to the “2023 Statistical Yearbook” of the Defense Acquisition Program Administration on the 25th, the localization rate of defense finished equipment in Korea rose from 74.2% in 2017 to 77.2% in 2021. Since 2022, the localization rate has not yet been compiled, but the defense industry estimates that it has now exceeded 80%. The localization rate of finished equipment is an indicator of the level of localization of major components such as finished products or parts of equipment designated as defense materials.

Currently, the domestic defense industry is focusing all of its efforts on localizing key parts focusing on the “ground weapon system,” which is a profitable export item. Hyundai Rotem’s K2 tank, which succeeded in exporting 1,000 units to Poland alone, and Hanwha Aerospace’s K9 self-propelled artillery, which was introduced in nine countries around the world, stand out in the global defense market, but since it relies on German MTU for engines or transmissions, which are the heart of self-propelled guns and tanks, it had to be approved by the German government when it pushed for exports. It is even subject to approval to display the real objects of self-propelled guns and tanks at overseas defense exhibitions. Without the complete localization of engines and transmissions, independent export capacity cannot be secured.

“Germany is reluctant to export weapons to Middle Eastern countries hostile to Israel, especially because of its relationship with Jews in the past,” a defense industry official said. “Although not as direct as in the past U.S., it is indirectly affected by Germany’s exports of domestic weapons to the Middle East.”

K9 self-propelled guns are considered as the front-runner to shed such export restrictions. When the K9 self-propelled artillery export negotiations with the United Arab Emirates in 2020 fell through due to Germany’s arms embargo against the Middle East, the government invested 75 billion won with industry-academic ties such as STX Engine, Hanwha Aerospace, and the Korea Automobile Research Institute, and succeeded in localizing the K9 engine last year.

When Hyundai Rotem started developing K2 tanks in the 2000s, it aimed to “90% localization,” which actually means complete localization. The K2 tank, which was developed in 2008, surpassed K1A1 by recording a localization rate of 76.8% between 2010 and 2015, during the first mass production period. During the second mass production in 2014, the localization rate jumped to 83.6 percent as the engine, which is a key component, was changed from a German MTU product to a HD Hyundai Infracore product and localized it. In the third mass production in 2020, it achieved a localization rate of 84.3% including sight thermal imaging detectors.

One step left for full export is the localization of transmissions. Currently, the K2 tank is equipped with a transmission from Lenk, Germany. Only half of the power packs (engine and transmission), the heart of the tram, were localized. Currently, SNT Dynamics, a domestic company, is attempting to mount a transmission in the fourth mass production of K2 tanks in Korea and is conducting durability tests. This is to solve the problem of restricting free export activities by installing German transmissions. When the transmission localization is completed, it is expected that the export route of K2 tanks will be further expanded than the current one. In particular, expectations are growing for exports to the Middle East.

An industry official said, “The export of K-bangsan weapons to Middle Eastern countries is on the rise, but without localization of key components, export routes can be blocked depending on the international situation,” adding, “We need to solve the problem of dependence on foreign parts to facilitate our entry into the Middle East defense market.”

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[Reporter Choi Hyunjae / Reporter Park Je Wan]
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