The South Korean Government unveiled a $9.5bn fund for two state-run banks to aid the country’s struggling shipbuilding and shipping industries on June 8.
The banks are Korea Development Bank (KDB) and the Export-Import Bank of Korea (KEXIM), which have been hit the most by unprofitable loans to shipbuilding and shipping companies.
The country’s three main shipbuilders, Hyundai Heavy Industries (HHI), Daewoo Shipbuilding and Marine Engineering (DSME) and Samsung Heavy Industries (SHI), have all launched selfrescue plans that include massive asset sales and workforce cuts.
As a result, the government expects a 30 per cent workforce drop in the shipbuilding industry by 2018 from 2015 once the restructuring process is completed. In addition, it is anticipated that the country’s shipbuilding capacity will be reduced by 20 per cent.
“Our key industries like shipping and shipbuilding are being aggressively caught up by countries like China and conditions have worsened due to weak global trade,” said Finance Minister Yoo Il-ho.
The fund is expected to be operational by end of 2017. Under its self-rescue plan, HHI intends to implement a $3.02bn management improvement plan by 2018. The plan includes the sale of its shares of the Hyundai Motor company and salary cuts and work-sharing for employees.
In June, HHI announced that it had won an order for two 158,000dwt tankers, priced at $70mn each, from the Arab Maritime Petroleum Transport Co.
The ships are to be built at Hyundai’s Ulsan yard and are due for delivery in 2017 and 2018 respectively.
Also in June, DSME announced that it had won an order from the Angelicoussis Shipping Group, of Greece, for two 173,400cu m LNG carriers for its subsidiary, the gas shipping company Maran Gas Maritime, and two 318,000dwt VLCCs for its oil tanker company Maran Tankers Management. The order includes options for up to four more ships.