NEWS / December 29, 2008

Support & Restructuring for shipbuilders

The Blue House, the Presidential Residence of the Republic of Korea South Korean government has established a plan to revive viable smaller shipbuilders and restructure the non-viable. First of all, export insurance increases 54% next year against 2008 for shipbuilding companies facing worsening liquidity problem. But the government decided to induce restructuring of some shipbuilders resolutely. Ministry of Knowledge Economy (MKE) on December 26 released this kind of both support and restructuring plan in a 2009 business report held at the Blue House. ‘Supporting the viable’ and ‘weeding out the non-viable’ will be put forward by a task force, co-organized by MKE and Financial Services Commission. Surplus work force at smaller shipbuilders, resulted by shortage of demand, will not be dismissed and will receive business training such as attaining certificates of technology, backed up by policy. MKE said it will introduce this sort of ‘employment preservation and retraining model’ and provide part of wage and training expense together with Ministry of Labor. For the resuscitation of troubled shipbuilders, export insurance will be expanded to KRW 19.5trn (USD 14.9bn) in 2009, which is larger by KRW 6.9trn against 2008. However, non-viable shipbuilders will be restructured promptly by work-out or M&A, etc. An official at MKE said, “The work place of liquidated companies will be incited to be used as ship-block assembly factory or ship-repair yard and we will help workers at those companies to be employed by other shipbuilders.” Aside from top six to seven large shipbuilders, the government plans to induce swift restructuring for smaller shipbuilders which are non-viable by a general assessment including facility, management and technology ratings.




3 measures for advanced Chinese shipbuilding

Ministry of Industry and Information Technology (MIIT) of the People’s Republic China said on December 24, Chinese marine industry has been affected by the international financial crisis and China strives to maintain stable development of shipbuilding industry by threemeasures such as protecting order-receipts and market, encouraging the development through reshuffling, and technology improvement in order to overcome the current production and management difficulties. The official said, shipbuilding industry requires strong makeshifts as well as the long term development strategies. Firstly, major shipbuilders’ shipbuilding tasks have to be completed and delivered as scheduled and long term development of shipbuilding industry will have to be supported by the increase of newbuilding demands. Secondly, through this market adjustment period, the allocation of resources has to be optimized and distributed rationally by eliminating the outdated production capacity. Also, shipbuilders should be encouraged for alliances or M&A in order to increase industrial concentration and the efficiency of resource use. In addition, Chinese major shipbuilding bases and major shipbuilders’ specialized production and assembly of the half-finished products for industrial clustering effect. At the same time, to improve quality, we should optimize the production structure and develop main vessel model’s brand power as well as high-tech vessel research. Also, the new economy growth point should be found by developing marine equipment manufacturing. In addition, the establishment of modernized shipbuilding module has to be accelerated by effectively addressing the problems in developing vessel equipment, such as focusing on industrial structural problems, speed up the technical innovation of the major shipbuilding equipment manufacturers, and increasing the production capability of major assembly equipment and components such as vessel engine, deck machinery, etc.