Japan is attempting to block the combination between Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering.
The Japanese government’s WTO litigation against a business combination between Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering is to keep South Korea’s shipbuilding industry in check.
Hana Financial Investment said in its recent report that Japan Marine United (JMU), which was launched in 2012 in order to do so, announced early this year that it would give up its shipbuilding business. “In addition, Mitsubishi Heavy Industries and Imabari Shipbuilding attempted to put pressure on the industry by forming a partnership related to very large container ships, but they recently decided to give up a part of their shipbuilding business in seven years,” it said, adding, “In short, Japanese shipbuilders failed to catch up with South Korean shipbuilders.”
Restructuring continued for a while in the Japanese shipbuilding industry as in the case of the partnership as well as the establishment of JMU. As a result, in 2015, Japanese shipbuilders succeeded in surpassing their South Korean counterparts in terms of received orders in 16 years.
Still, the former failed to stay ahead of the latter. This is because a large number of engineers were let go. During Japan’s second shipbuilding industry restructuring process in 1988, a number of designers and researchers had to leave the industry with Japanese shipbuilders anticipating no significant change in the merchant vessel market. The companies introduced the concept of standard ship, that is, shipbuilding similar to the production of ready-made articles and Japanese colleges closed their related departments.
The shipbuilding market continued to evolve unlike their predictions. For example, ship fuels and engines became different and new environmental regulations required smart technologies and techniques. The Japanese shipbuilding industry failed to adapt in the absence of designers. When it comes to LNG carriers, Japanese shipbuilders dominated the market with moss-type vessels in the 1980s, but South Korean shipbuilders overtook them soon with membrane-type vessels. With shipowners preferring the latter for their capacity equivalent to 140 percent of the former’s, South Korean LNG carrier builders have dominated the market since the late 1990s.
In 2014, Mitsubishi Heavy Industries announced that it would develop new moss-type LNG carriers equipped with ultra steam turbines and the performance of the turbines would be 120 percent of existing steam turbines’. The plan, however, failed in the end due to designer-related limitations.
“Japanese shipbuilders have failed to respond to changing market trends such as vessel enlargement and environmental regulations, and they have failed to catch up with South Korean shipbuilders all the way since 2000,” said the Overseas Economic Research Institute of the Export-Import Bank of Korea, adding, “Japan’s attempt to block the combination between Hyundai and Daewoo is futile and meaningless.”
Source: Business Korea