The Korean government plans to spend KRW 11 trillion or USD 9.6 billion by 2020 to support the nation's shipbuilding industry, which is struggling to stay afloat amid plummeting orders. The fund will be used to order more than 250 vessels over the next four years. Initially, by 2018, the government will order at least 63 vessels including warships and police patrol ships.
The government is also pushing the industry to carry out restructuring and downsize its workforces. In the first half of this year, shipbuilders in Korea eliminated about 20,000 jobs to cope with increasing losses from excess capacity and sluggish global trade. On November 15, Hyundai Heavy Industries announced its restructuring plan to spin off its non-shipbuilding businesses such as utilities, construction equipment manufacturing and robotics. Daewoo Shipbuilding & Marine Engineering also plans to lay off 20% of its workers by 2020.
In the first nine months of 2016, the world's ship orders plunged 72% compared to the same period a year before, and the Korean shipbuilders saw new orders fall by as much as 87%, according to a press release by the Ministry of Industry, Trade and Energy. The slump in the shipbuilding market is expected to continue into 2017 due to sluggish global trade and low oil prices.
Korean Reinsurance Company published this content on 12 January 2017 and is solely responsible for the information contained herein.
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