HHI set to close Gunsan shipyard

Hyundai HI

Hyundai Heavy Industries (HHI) is set to close a shipyard in Gunsan, North Jeolla Province, after it completes the construction of a last remaining crude carrier.

But the provincial government and residents are protesting the shipbuilder’s decision, demanding it bring work from its main plant in Ulsan to keep its subcontractors, which employ hundreds of people in Gunsan and nearby municipalities, from going under.

The residents are also calling on President Moon Jae-in to fulfill his campaign promises to prevent HHI from closing the dock.

The country’s largest shipbuilder said Monday that it set a very large crude oil carrier (VLCC) afloat a day earlier, which was the last order for the Gunsan shipyard.

The company plans to close the dock sometime next month after testing the ship in the water and handing it over to its owner. For months, HHI has said it will suspend the operations of the Gunsan dock on July 1, citing falling new orders.

The shipbuilder, which has a total of 11 docks here, has already closed two amid the global shipbuilding industry slump. The Gunsan dock will be the third.

“As we have said numerous times, we have no other choice but to shut the Gunsan shipyard because we haven’t secured enough new orders over the past few years,” an HHI official said. “It is not that we will permanently close the facility. When we have enough work, we will resume operations.”

The company needs to win contracts for at least 140 ships annually to keep all of its docks open, according to the official.

But from 2015 to 2016, it only secured deals for 60. In the first five months of this year, HHI and its two affiliates have secured contracts for 18 new ships worth $1.6 billion. In 2017, it seeks to secure orders, including offshore oil rigs, worth $6.4 billion.

HHI invested nearly 1.2 trillion won ($1.01 billion) to construct the Gunsan shipyard on a 1.81 square-kilometer site, which went into operation in early 2010.

Given the unfavorable global market outlook for the foreseeable future, the shipbuilder is unlikely to reopen the shipyard soon.

In addition, it would cost substantial amounts of money and take quite a long period of time to reactivate the dock because HHI needs to hire new workers and restore partnerships with dozens of subcontractors.

However, Gunsan residents and politicians are calling on the shipbuilder to keep the facility alive, stressing that it accounts for 24 percent of Gunsan’s economic output and is responsible for the livelihoods of 6,000 workers.

On Monday, the North Jeolla Provincial Council issued a statement, urging President Moon to step in to prevent HHI from closing the Gunsan shipyard.

“The facility is the backbone of the provincial economy, which accounts for 9 percent of the province’s exports. Many depend on it for a living,” council member Park Jae-man said. “The president must take necessary steps to normalize the operations of the Gunsan dock as he promised to. The government should issue new orders to the shipyard or offer financial support to HHI in exchange for running it.”

Source: Korea Times

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