McKinsey urges Korea’s top yards to halve production capacity by 2020

Consultant McKinsey says there is no need for any mergers between South Korea’s top three shipyards – Hyundai Heavy Industries (HHI), Samsung Heavy Industries (SHI) and Daewoo Shipbuilding & Marine Engineering (DSME). All three are going through major restructuring and McKinsey has been tapped to deliver an assessment report on the best way ahead for the trio.

Among suggestions contained in the report is for all three to halve production capacity by 2020 as there is unlikely to be any pick up in demand, something that would trigger even more redundancies and likely militant action among workers. The report will be sent to the CEOs of the three yards later this month.

Clarksons Research president Dr Martin Stopford told Splash last month that current global shipbuilding capacity is at least 30% in excess of what is needed.

“Cutting capacity makes sense,” Stopford said, “but with the market split 37% China, 35% South Korea and 19% Japan it’s a game of chicken for who cuts first and most.”


Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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