Navel gazing in South Korean shipbuilding circles has become a common sight this year as the nation’s yard twiddle their thumbs waiting for orders. Once the undisputed leader of global shipbuilding, South Korea has suffered its worst year for new orders in a generation and now faces the real threat of not just losing out to China, but also to the nation it overtook for top spot at the start of the century, Japan.
South Korean and Japanese shipbuilders recorded a backlog of 20.46m cgt and 20.06m cgt by the start of this month, respectively, according to Clarksons Research, a gap that has closed dramatically over the past 12 months.
Now, the head of South Korea’s shipbuilding national body has urged his members to slash prices or risk going out of business.
Yoo Byeong-Se, executive director of the Korea Offshore & Shipbuilding Association (KOSHIPA), was reported by Korean shipbuilding newswire Asiasis as saying, “Amid the current slump in the global shipbuilding industry, the first thing we should do is downsizing our business scale which got bigger during the boom period.”
Yoo maintained: “The newbuilding price Chinese shipbuilders are offering now is 10% lower than the price Korean yards are suggesting. There is no future in Korean yards if they fail to win new orders at a price which is higher than the Chinese. To entice shipowners, price is important, as well as technology.”
South Korean shipbuilders have laid off thousands of workers this year – as well as being pumped with emergency state aid, to the chagrin of the local population.