Blog Archives

Job losses from restructuring hit shipyard cities

Shipyard cities and surrounding areas suffered steep job losses over a one-year period from ongoing restructuring efforts, state data indicated. Employment and job sector figures from Statistics Korea showed the number of workers in Geoje, a city in the southeastern South Gyeongsang Province that is home to major shipbuilding facilities, dropped 12,900 to 123,400 as of October 2017 from a year before. The number of workers in mining and manufacturing sectors was down 6,900 to 58,000. Areas nearby that had relied on the shipyards for local business also suffered, according to the data. In Tongyeong, the number of people employed fell 4,400 to 61,800 over the period, 1,900 of them in mining and manufacturing. In the case of southwestern North Jeolla Province city of Gunsan, where Hyundai Heavy Industries Co. closed its shipyard in July 2017, the number of workers was trimmed by 6,400, 3,700 of them in mining and manufacturing. The city is bracing for even harder times after US-based automaker General Motors shuts down its plant in May. Job losses were also stark in Jeju, an island at South Korea’s southern tip popular especially with Chinese tourists. A diplomatic row over South Korea’s deployment of a US anti-missile system on its soil led to retaliations by China. Beijing had discouraged its travel agencies from offering group tours to the neighboring country. Data showed that Jeju had 2,600 fewer workers in the retail, wholesale and accommodations industries vis-a-vis the year before. Source: Yonhap

Hyundai Mipo bags 179 bln won deal to build 4 carriers

Hyundai Mipo Dockyard Co., a local shipbuilder, said Wednesday that it has received a 179 billion won (US$165 million) order to build four carriers of petrochemical products for an unidentified company in the Middle East.

In a regulatory filing, the South Korean shipyard said it will deliver the vessels by May 2020. The shipbuilder did not identify the buyer.

Hyundai Mipo is an affiliate of Hyundai Heavy Industries Co., the world’s largest shipbuilder by sales.
Source: Yonhap

DSME to cut 12,000 Jobs

South Korea’s Daewoo Shipbuilding & Marine Engineering will cut 12,000 jobs from its workforce by 2019 as it tries to revive its business following a crash in oil prices and severe downturn in the offshore oil and gas sector.

“We are planning to reduce the number of employees to a similar level to 2009 and 2010 when management efficiency was the highest,” DSME CEO Jung Sung-leep said in a press conference at the firm’s headquarters in Seoul, the Korean Herald reports.

DSME’s current workforce is about 42,000.

The shipbuilder said the job cuts will occur gradually over the next few years, versus a radical slash in headcount, the Herald reported.

Earlier this week DSME, the world’s second-biggest shipbuilder, posted a record loss totaling $4.3 billion in 2015 as it wrote down more charges from offshore projects under construction.

A crash in oil prices over the past 18 months has caused DSME customers particularly within the offshore oil and gas sector to cancel or postpone orders.

SHI close to winning 1.6 billion LNG ship order from GAIL

Samsung Heavy Industries Co. is close to winning a $1.6 billion liquefied natural gas (LNG) carrier order in India as it will sign a memorandum of understanding with India’s state-owned Cochin Shipyard Ltd. to form technology partnership on Thursday.

Under the MOU term, once Samsung Heavy Industries wins the order from India’s state-owned Gas Authority of India Limited (GAIL) to build nine LNG carriers, it should construct one third of ships at Cochin’s shipyard in southern India and the rest in its dockyards in Korea.

If Samsung Heavy Industries constructs three carriers at Cochin’s shipyard, the Korean shipbuilder would receive $400 million from the Indian shipyard company. And the company would gain additional $1.2 billion if it builds the remaining six tankers at its Geoje dockyard in Korea, mounting up the total revenue from the deal to $1.6 billion.

GAIL announced in 2014 that it will construct nine LNG tank ships to transport gas from the Unites States between the years from 2017 until 2036.

But Samsung Heavy Industries remains cautious about winning the order although it is the sole bidder. GAIL has not determined the total order volume yet, said an unnamed official at Samsung Heavy Industries.

Korean shipyards’ order backlog hits 12-year low in March

SEOUL, April 6 (Yonhap) — The order backlog held by South Korean shipbuilders has dropped to the lowest level in 12 years amid the slumping global economy, industry data showed Thursday.

According to the data by global researcher Clarkson Research Services, South Korean shipbuilders had an order backlog totaling 27.59 million compensated gross tons (CGTs) as of end-March, the lowest since March 2004, when the comparable figure was 27.52 million CGTs.

Experts say that the order backlog held by shipyards here will keep them busy for just one or two years.

China came in first with 37.56 million CGTs with Japan ranking third with 21.44 CGTs.

South Korea secured shipbuilding orders to build eight vessels, or 171,000 CGTs, in the first quarter, also marking the lowest since the fourth quarter of 2001, when the comparable figure was 165,000 CGTs.

Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. have failed to clinch any deals in the January-March period. Hyundai Heavy Industries Co. clinched just one order to build petrochemicals-carrying vessels.

Major South Korean shipbuilders have been pushing for restructuring since last year to get over unfavorable business conditions caused by falling demand and ship prices in line with the slowing world economy.

Hit by a protracted slump in oil prices and increased costs, the three shipbuilders racked up a combined loss of 7.7 trillion won (US$6.65 billion) last year, marking the first time for all three of the nation’s largest industry players to register losses.

Market watchers expect their business slump to continue this year as the global shipbuilding industry is unlikely to turn around any time soon.