New orders boost Korean productivity
THANKS to the sizeable new orders received last year, South Korean shipyards built vessels valued at US$4.2 billion this year, up 23 per cent on last year.
The substantial increase can be ascribed to shipbuilders' consistent efforts to boost productivity through investment in better facilities.
The productivity boost became possible when a two-year backlog of orders forced Korean yards to shorten building times.
However, new shipbuilding orders this year amounted to about 4.6 million gross tonnes, about half the tonnage built last year.
Some analysts predict that final statistics will put the new orders this year at around five million gross tonnes.
The main reason for the drop in new orders this year was the low-price offensive by Japanese shipbuilders after they suffered a sharp decline in orders due to the rising yen, which eroded price competitiveness.
Korean shipbuilders tried to abstain from recklessly booking orders this year and signed deals for new buildings with appropriate margins.
However, Korean builders are expected to respond more aggressively to the Japanese offensive next year.
As many forecast, the global shipbuilding industry will enjoy a boom next year.
Korean shipbuilders are expected to increase sales promotion efforts to make up for thin orders this year.
However, their profit margins will not dwindle as few will be willing to build vessels at low prices due to a two-year backlog in Korean shipyards.
The situation is expected to be bad for Japanese yards because the stronger yen makes it more difficult to offer lower prices.
Therefore, Korean shipbuilders, whose prices are about 15 per cent lower, are expected to compete with the Japanese for new orders.
Korean ship exports are expected to reach 5.57 million gt for 125 vessels valued at a record $4.77 billion next year, industry sources said.
The figures will be up 16 per cent in volume and 13.7 per cent in value from 4.8 million gt for 101 vessels (worth a record $4.19 billion) predicted for this year.
Hyundai Heavy Industries will top next year's list with 2.3 million gt (for 42 vessels worth $1.83 billion).
It will be followed by Daewoo Heavy Industries with 1.51 million gt (19 ships worth $1.17 billion).
In third place will be Samsung Heavy Industries with 1.1 million gt (18 ships worth $847 million).
Hanjin Heavy Industries is expected to export 12 vessels aggregating 349,000 gt (worth $508 million) and Halla Engineering & Heavy Industries five ships totalling 140,000 gt (worth $143 million).
Among the smaller shipyards, Daedong Shipbuilding will head the list by exporting 10 ships aggregating 47,000 gt (worth $110 million), followed by Shin-A Shipbuilding with seven ships totalling 40,000 gt (worth $62 million).