[THE INVESTOR] Korea’s ailing shipbuilders were urged by the trade minister on June 29 to utilize their current crisis as an opportunity to strengthen the industry and make “a new leap forward.”

The nation’s three major shipyards -- Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering andSamsung Heavy Industries -- are in the midst of a sweeping restructuring, following a prolonged slump in their business.

“The local shipbuilding industry should take the current crisis as an opportunity to boost their competitiveness and make another leap,” Minister of Trade, Industry and Energy Joo Hyung-hwan said in a meeting with CEOs of shipbuilders and experts. 

“We need to make a cool-headed analysis of the competitiveness of the local shipbuilding industry.”

The meeting was held to hear the industry’s difficulties and seek ways to tide over the crisis.

According to the ministry, participants exchanged views on bolstering the industry’s competitiveness by focusing on high value-added divisions such as eco-friendly vessels and localizing key parts and components.

They called on the government to step up efforts to create demand in the short term and come up with measures to prevent a brain drain in the course of restructuring.

The ministry said it will put forward a package of steps to support the local shipbuilding industry, based on the opinions and the outcome of a private study due in August.

South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis, which sent new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals.

The top three shipyards suffered a combined operating loss of 8.5 trillion won (US$7.3 billion) last year due largely to increased costs stemming from a delay in the construction of offshore facilities and an industry-wide slump, with DSME alone posting a 5.5 trillion won loss.

The shipbuilders have recently drawn up sweeping self-rescue programs worth 10.35 trillion won in their desperate bid to overcome a protracted slump and mounting losses.


(theinvestor@heraldcorp.com)