Korean Shipbuilders Maintain Top Ranks, Despite Troubles
Korea's 'Big Three' shipbuilders are still the world's three biggest by order backlog, despite their troubled management, according to data from UK-based Clarkson Research Services.
The country’s three largest shipbuilders – Daewoo Shipbuilding & Marine Engineering Co., Hyundai Heavy Industries Co., and Samsung Heavy Industries Co. – are also ranked as the world’s three largest in terms of order backlog.
Daewoo Shipbuilding & Marine Engineering had orders for 118 ships, totaling 7.82 million compensated gross tons (CTG) as of end-March, far exceeding those of other shippers.
No. 2 Hyundai Heavy had an order backlog of 95 ships or 4.5 million CGT, followed by Samsung Heavy Industries with 81 ship orders worth 4.39 million CGT.
From the beginning of 2016, only 77 new vessel orders have been reported, Clarkson Research said.
The "Big Three" firms dominated the world's shipbuilding market during the 1990s and 2000s and although they had combined sales of more than 68 trillion won ($59 billion) last year, an extended export slump, regional rivalry and overcapacity have taken their toll.
Shipbuilders have suffered huge losses in recent years since the 2008 financial crisis, but Korea's Financial Services Commission said it was too early to discuss the merger among the shipbuilders.
Meanwhile, South Korean Financial Services Commission published a sweeping three-part restructuring plan for the nation's most troubled industries.
The proposal also includes new government funding for Korea Development Bank (KDB) and Korea Eximbank (Exim), which have incurred heavy losses on loans to shipbuilders and shipping firms. Overall, the "big three" shipbuilders, plus Hyundai Merchant Marine and Hanjin Shipping, owe a combined $10 billion to state-owned banks.
As shipbuilding and shipping firms seek government aid or extensions on their debts, Seoul's regulatory body said it would press them to sell more assets, shed jobs, slash worker pay and streamline their business plans.
"The focus of the restructuring is to deal with overcapacity and loss of competitiveness for companies involved," said Yim Jong-Yong, chairman of the Financial Services Commission (FSC).
"Companies and creditor banks can't do this alone. We all need to work together and fast to make this happen," Yim said.