South Korea’s top three shipbuilders, Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries, won zero newbuilding orders in April, opening up a possibility of significant restructuring measures, Yonhap News Agency reports.
South Korean shipyards won only five construction deals during the first four months of 2016, which is around five percent of the average amount posted in previous years, Yonhap said.
The slide in orders was attributed, among other factors, to increased competition from Chinese and Japanese shipyards.
As a response to the global slowdown, South Korean government recently launched a corporate restructuring plan, targeting its financial troubled industries, including its shipping and shipbuilding sectors.
In a three-track plan revealed by the country’s financial regulator, the Financial Services Commission, the shipyards will need to implement self-restructuring measures including massive layoffs and sales of non-core assets.
As the first step within the framework of its massive job-cutting plan that is expected to include up to 3,000 jobs, Hyundai Heavy Industries recently laid off 25 percent of its executives.
In 2015, the combined loss of the three largest shipbuilders added up to 7.7 trillion won (approximately USD 6.7 billion). The crisis has spilled over to 2016 and there are no signs of recovery during this year, Yonhap wrote citing an industry source.
However, despite the historically low level of newbuilding orders seen in 2015, and a continued trend in 2016, the South Korea’s three largest shipbuilders still hold the largest orderbooks, taking into account their order backlogs.
The shipbuilding contracts won prior to this crisis may see the shipyards through this year; however, the real crisis is expected to hit the South Korean shipbuilding industry in 2017 if the situation does not improve.
World Maritime News Staff