Korean shipbuilders go overseas

Although Korea’s shipbuilding industry is still outpacing its foreign rivals in technology, skill and orders, it is looking for cheaper land and labour overseas. The shipbuilding industry is enormously important to the Korean economy, supplying hundreds of thousands of jobs and the business generates tremendous foreign currency income. If Korean shipbuilders move their operations abroad, then local workers will be out of jobs, affiliate companies will be badly impacted and the country will feel a hard economic blow.

Yet that process is already underway. Korean shipyards have built or are currently building ship block assembly plants overseas, and even constructing entire shipyards in the Philippines and China. Hanjin Heavy Industries & Construction, the world’s seventh largest shipbuilder, has invested $721 million in a new shipyard at Subic Bay, the Philippines. When Hanjin was unable to expand its shipyard in Busan, Korea, it looked elsewhere for a new building site. With the Philippines offering low land prices and cheap manpower, a 50-year lease was signed. The construction site is working overtime to finish by March.

Korea’s STX Shipbuilding, the sixth largest ship builder in the world, plans to build a 1.518 million sq. m ship block assembly plant near Dalian in China by the end of next year. The company wants to increase its annual production capacity from 250,000 tonnes to 500,000 tonnes and, despite denials from STX, news reports in China say that STX will build a full shipyard there.