Hanjin Heavy switches tankers for bulkers.
SOUTH Korea"s Hanjin Heavy has confirmed that it has agreed to switch a three-ship tanker order to bulk carriers.
Hanjin Heavy added that the bulkers would be built at its Subic Bay facility in the Philippines.
Hanjin Heavy said that while the new contract price for the bulkers was considerably lower, in actual dollar terms the bulk carrier contract was worth around $10m more as a result of the won-US dollar exchange rate fluctuations since last March.
A Seoul-based analyst said: ?Although parent company revenue and operating profit will shrink going forward as a result of not building these vessels in South Korea, the end profitability accounted for through equity method gains may be larger as Subic's lower labour cost advantage should enable higher margins on these projects.?
He also indicated that the loss of the tanker order at Hanjin"s Youngdo shipyard could help the management push forward plans to make further job cuts.
He said that as a result of the shift of the deal to Subic Bay, management might receive permission more easily from the local authority in South Korea"s Youngdo region ?to reduce its workforce by another 400 employees?.
He added: ?A decision is expected to be made by the local government body for labour issues on March 5.?