South Korean shipbuilding major Hyundai Heavy Industries (HHI) has announced that it will suspend work at its offshore facility in August due to a lack of new orders.
“We cannot afford to run the offshore facility until we secure new orders,” HHI said in a statement today.
HHI has not been able to secure any offshore orders in the past three years and it will have no offshore orders on hand after it delivers its last offshore module for the NASR oilfield in the United Arab Emirates from its Ulsan yard in late July.
The shipbuilding group said it would be difficult for the company to secure new orders at current production costs.
HHI currently has about 5,600 workers at its offshore facility including 2,600 regular employees and 3,000 from contractors, who all face being laid off.
“At this time, we will streamline our organizational resources and create a strategic team to win new orders, which will eventually enable us to offer better services to our clients,” said Yune Sung-il, head of the offshore marketing division at HHI.
HHI has shuttered a number of its drydocks in the past two years amid a severely slashed orderbook, including an entire yard at Gunsan. Its offshore yard was opened at the start of the decade at considerable expense. It features a 490 m long H-shaped dock, specifically designed to build mega-sized offshore facilities and the two 1,600 ton gantry cranes.
South Korean yards have been facing fierce competition from rival yards in China in securing new orders in recent years. Chinese shipyard officials are set to sit down with OECD executives today to discuss the issue of state aid, something that has vexed rivals Japan and Germany for a long time.