NEWS / January 6, 2009

“Innovation & Challenge”

While newbuilding order drought is expected to continue in 2009, chief executives of South Korean major shipbuilders selected “Innovation and Challenge” as the management key words of this year.

Although the market is showing a severe slump, CEOs plan to convert this crisis into an opportunity with the spirit of challenge peculiar to Korean enterprises, business process innovation, cost reduction and new technology development such as ice-class ships.

Hyundai Heavy Industries President Choi Kil-seon stressed that management innovation is what should be done first. He laid emphasis on three things: improvement of ‘high cost’ structure / preparing countermeasures against fluctuations in foreign exchange rates and raw material prices / refrainment from unnecessary investment and preoccupation of new business opportunity.

HHI Vice Chairman Min Keh-sik demanded inefficient business routines be innovated and said radical reform is required as profitability in all business sectors is expected to sharply deteriorate in 2009.

Samsung Heavy Industries, the only shipbuilder which over-achieved the self-set order target last year among major shipbuilders, advocates “Creative Innovation and Challenge” as its 2009 management slogan. It plans to focus on three tasks: cost reduction / new technology development such as ice-class ship and wind power generating equipment / client satisfaction through security and quality improvement.

SHI President Kim Jing-wan said cost reduction is the utmost priority and SHI needs to preserve the market share in offshore sector such as drillship and LNG-FPSO while making inroads into ‘future’ businesses.

Daewoo Shipbuilding & Marine Engineering, although the negotiations are having a hard going regarding the sale of a 50.4% stake in it to Hanwha Group, it plans to achieve KRW13trn (USD9.8bn) of revenue this year and set its 2009 order target at more than $10bn for the fourth consecutive year.

DSME also aims to gain a dominant position in drillship and FPSO sectors after it has already attained superiority in LNG carrier and VLCC markets and plans to develop new technology such as ice-class ships.

STX Group placed emphasis on ‘aggressive foreign market exploitation’ and ‘strengthening the growth potential’, advocating “Challenge” as its 2009 management key word.

STX Chairman Kang Duk-soo particularly highlighted four sectors: offshore plant business such as drillship and FPSO / LNG carrier construction and LNG shipment / industrial plants such as power plant and oil refinery / development of energy resources.

South Korean shipbuilders are now leading the world shipbuilding industry but in order to change the current crisis into an opportunity, they need to face the newbuilding order slump with daring strategies.

Meanwhile, shipbuilders have usually announced their order target at the beginning of a new year but no shipbuilder has revealed its aim yet except DSME this year. Despite “Innovation and Challenge”, shipbuilding industry is forecast to face rough going in 2009.





QBSHI started construction for cruiseship building base
Junuary 2, 2009, according to municipal government of Yinghai town in Jiaozhou city, the construction of cruiseship building base of Qingdao Beihai Shipbuilding Heavy Industry will begin officially in Yinghai town industrial park with a total investment of CNY 50m (about USD 6.25m).

It is reported that the construction of the base will be completed by August 2010, the 1st construction cite will be about 4,000 square meters.

It will mainly produce cruiseships and shipbuilding equipments, the annual output value will amount to CNY 100m (about USD12.5m).

The 2nd construction is scheduled to be completed by the 2010 year-end, the annual output value will total CNY 300m (about USD 37.5m).

When entering into operation after the completion of the construction of shipbuilding base, it will resolve the employment problem for about 400 people in the local area and the imaginable income and tax revenue will aggregate CNY 30m (about USD 3.75m).




Qingdao delivered three vessels in 5 days
Qingdao Shipyard delivered a vessel each to China Communications Construction Company, China Petroleum Ocean Enineering, and China Oilfield Services Limited within 5 days of 2008 year-end.

Qingdao Shipyard has been approaching harmonious development of old and new plant areas, production, construction, and relocation while carrying out its development strategy, ‘relocation, reshuffling, and collaboration’.

It will try to open up international market by mainly developing large and medium military vessels, marine engineering vessels, and special liquefied gas carriers with constructing a shipbuilding base for special ships.