• BIST 117.651
  • Altın 166,893
  • Dolar 3,9258
  • Euro 4,8136
  • İstanbul 15 °C
  • Ankara 10 °C

Seoul Frets Over Shipyards

Seoul Frets Over Shipyards
Policy makers proposed steps to address a plunge in ship orders this year in South Korea, home to seven of the world's 10 largest shipbuilders.

Seoul Frets Over Shipyards

Policy makers proposed steps to address a plunge in ship orders this year in South Korea, home to seven of the world's 10 largest shipbuilders. But there is little chance the industry here will avoid steep job losses and financial difficulties in coming years.

Even after the global downturn began last year, global shipbuilders continued at full throttle, banging out and welding hundreds of vessels ordered from 2005 to 2007, the biggest years for ship orders ever. But ship orders through last month were well off last year's pace, meaning that activity in shipyards will start declining next year and slide sharply in 2011 and 2012.

This delayed effect will hit shipbuilding particularly hard in South Korea, where the industry is responsible for about 10% of the country's exports by value.

Shipbuilders have responded in part by building offshore platforms for energy companies. And on Monday, South Korea's commerce ministry presented President Lee Myung-bak with a blueprint for dealing with the potential crisis.

The early-stage plan includes restructuring the most troubled small and midsize companies and providing subsidies to encourage shipbuilders to enter new businesses, such as building offshore power-generating wind farms.

It could be months before the government moves forward on any proposals, however. And industry executives and consultants say only a stunningly large rebound in orders next year can prevent a steep drop in activity at shipyards in the years that follow.

Such a rebound is unlikely because shipping companies are suffering from a 12% drop in global trade from last year. Some have been forced to transport goods below cost. They have also parked ships in ports world-wide.
Analysts say it will take years for shipping companies to absorb the orders for new vessels that were made a few years ago and are being completed at shipyards.

All through this year, shipowners have been struggling because of the economic situation and shortage of trade," says Ki Won-kang, senior executive vice president of Daewoo Shipbuilding & Marine Engineering Co., in Geoje, South Korea.

"As a consequence, the shipbuilding industry is suffering. I don't know when this market will pick up."

Through November this year, world-wide orders for new ships amounted to 6.5 million compensated gross tonnage, a measure of vessel size, according to Clarksons PLC, a London-based shipping brokerage and consulting firm. That is sharply below the 46.9 million CGT in vessels ordered for all of last year and 89.7 million CGT in vessels ordered in 2007, the biggest year for ship orders in history.

Amid the plunge, China's shipbuilders surged ahead of South Korea's in new orders, though figures from both countries are far below last year's levels. In the past few weeks, Korean shipbuilders announced a handful of big deals and its manufacturers may yet finish the year with the lead.

Daewoo Shipbuilding, the world's third-largest shipbuilder by revenue and tonnage, after Hyundai Heavy Industries Co. and Samsung Heavy Industries Co., on Friday said it had received an order valued at $1.1 billion to build two oil-drilling ships in 2012. Earlier this month, Samsung announced an order to build a $1.1 billion cruise ship designed to be a floating luxury residence. It was Samsung's first ship order of the year. A year ago, Samsung and Daewoo Shipbuilding executives said they would aim for $10 billion in orders this year.

But shipbuilders are scoring far more deals to build offshore oil and gas platforms than contracts for vessels. The platform business typically had provided only about 20% of revenue for shipbuilding companies but could grow to 40%?50% in coming years, analysts say.

"The big scramble right now is for these offshore projects," says Peter Bartholomew, a broker and long-time industry consultant in Seoul who is working on deals for five platforms.

Some investors and shipbuilders also are looking at building offshore platforms that hold windmills that would generate electricity, a potential new business. Several shipbuilders in recent months announced small projects to build wind turbines on land.

Even so, big job losses are nearly certain over the next few years in shipyards world-wide. Hanjin Heavy Industries and Construction Co., a South Korean company that employs 2,500 people at big shipyards in South Korea and the Philippines, this month announced it was starting an early-retirement program.

Larger companies that rely heavily on subcontractors for a portion of their work force are likely to whittle down those contracts next year. "Slowly we will reduce our dependence on outside contractors," says Daewoo Shipbuilding's Mr. Ki. "That's the only thing we can do for the time being."

Source: Wall Street Journal


This news is a total 2398 time has been read
  • Comments 0
    UYARI: Küfür, hakaret, rencide edici cümleler veya imalar, inançlara saldırı içeren, imla kuralları ile yazılmamış,
    Türkçe karakter kullanılmayan ve büyük harflerle yazılmış yorumlar onaylanmamaktadır.
    Bu habere henüz yorum eklenmemiştir.
Other News
  • Havyard buyer nails10 March 2016 Thursday 15:02
  • Rolls-royce to supply LNG propulsion for fish food carrier09 March 2016 Wednesday 14:41
  • Step taken to build skilled workforce in shipbuilding19 January 2016 Tuesday 10:26
  • Canadian Shipyards May Lose Out on Navy Orders19 January 2016 Tuesday 10:21
  • Saga Cruises Confirms Cruise Ship Order at Meyer13 January 2016 Wednesday 10:22
  • Two more Sanmar tugs for Svitzer12 January 2016 Tuesday 11:14
  • ‘Living Stone’ keel laid12 January 2016 Tuesday 09:16
  • China builds second 'monster' ship11 January 2016 Monday 12:11
  • December defense contracts bring bounty to Ingalls Shipbuilding05 January 2016 Tuesday 11:37
  • Hyundai Heavy Sets USD 19.5bn Order Target in 201604 January 2016 Monday 11:24
  • All Rights Reserved © 2006 TURKISH MARITIME | İzinsiz ve kaynak gösterilmeden yayınlanamaz.
    Phone : 0090 212 293 75 48 | Fax : 0090 212 293 75 49 |