Korea battling to maintain top ranking

South Korea, the world?s top shipbuilding nation, must find measures to keep leading the global shipbuilding industry in the next decade, including developing high-value vessels, a domestic institute said.

In a report titled ?Check of the competitiveness of South Korea?s shipbuilding industry?, Samsung Economic Research Institute (SERI) said that proactive development of high value-added ships, diversification of business model and raising ship finance and developing human resources are required for South Korea to maintain the leadership in shipbuilding industry.

The report said, “At present, South Korean shipbuilding industry?s competitive edge comes from large-scale construction on the basis of large docks, high-quality human resources and excellent technical expertise, rather than technology innovation. If the shipbuilders in rival countries make grand-scale investment in facilities with the active support of government and accumulate a variety of shipbuilding experience, South Korean shipbuilders? No. 1 spot might be at stake.”

It stressed that South Korean shipyards should take the current recession as an opportunity to ?strengthen their core capacity?. Especially, they, the report said, must develop high-end ships proactively to widen the gap with Chinese competitors which are trailing them closely in terms of technology and human resources.

“They must develop high-end vessels with differentiated high technologies and strengthen the market share. Global mergers and acquisitions are also strongly recommended, if necessary in order to enhance key capabilities.”

It also said business model diversification is needed to increase competitiveness. “South Korean shipbuilders? profit rates are relatively low compared to their size and reputation as their business structure is mainly based on the construction of ships. They must expand their business sphere into on-land plant business where offshore facility technology can be applied or ship-related businesses”, the report said.

It said, “Ultimately, a dramatic change in the way to do business is needed by expanding the concept of shipbuilding from ?Ship Builder? to ?Ocean Developer?, citing Samsung Heavy Industries? export of ship design.

Further, it pointed out that government support for the expansion of shipbuilding infrastructure helps the industry enhance the competitive power. “Ship finance sector, which is comparatively ill-established in comparison with advanced countries, needs to be fostered systematically in the long term along with aiding shipbuilders in securing refund guarantees from financial institutions on the down-payment made by shipowners,” the report said. “Human resource development systems also need to be upgraded to be fitted into the future shipbuilding environment in order for the quality work force to continue to be the source of competitiveness.”