South Korean shipyards may be in big trouble, but they still lead the global market in terms of order backlog, industry data showed Wednesday, possibly suggesting their guaranteed survival at least for a few years to come.
According to the data from global research firm Clarkson Research Services, the country’s three largest shipbuilders – Daewoo Shipbuilding & Marine Engineering Co., Hyundai Heavy Industries Co., and Samsung Heavy Industries Co. – are also ranked as the world’s three largest in terms of order backlog.
As of end-March, local industry leader Daewoo had orders for 118 ships, totaling 7.82 million compensated gross tons (CTG) to be filled, by far the world’s largest order backlog, the data showed.
An order backlog refers to orders, or ships in this case, that need to be filled in the future.
No. 2 Hyundai Heavy had an order backlog of 95 ships or 4.5 million CGT, followed by Samsung Heavy Industries with 81 ship orders worth 4.39 million CGT.
They were also followed by South Korean shipyard Hyundai Samho Heavy Industries Co., which had an order backlog of 84 ships weighing 3.41 million CGT as of the end of last month. China’s Shanghai Waigaoqiao Shipbuilding Co. is ranked as the world’s fifth-largest shipbuilder in terms of order backlog.
In 2015, local shipbuilders faced one of their most turbulent years. The top three shipbuilders here racked up a combined loss of 7.7 trillion won (US$6.73 billion) last year while they failed to clench any new significant orders amid what many have called a worldwide slump prompted by low global oil prices.
Eight local shipyards laid off a combined total of 15,000 workers or over 7 percent of their total workforce last year, apparently indicating the seriousness of the difficulties they faced and their struggle to stay afloat.
Many, including the three largest shipbuilders, are again expected to cut thousands of jobs this year as the global market shows no signs of a quick recovery.
The government had named the shipbuilding industry as one of five sectors to face a massive overhaul. Apparently recognizing the urgency of difficulties facing local shipbuilders, the government announced support measures for restructuring in the shipbuilding industry before any other troubled sectors on Tuesday.
Despite painstaking measures the shipbuilders were asked to take, including voluntary wage cuts, the government clearly stated that it was not currently considering a merger between the top three shipbuilders.
Many say the reason is because the three shipbuilders are well fitted to survive on their own for years to come as the data on their order backlog suggests.
“Even at the current level, we have enough work for the next two and a half years that makes us the strongest and most stable shipyard in the world,” a Daewoo Shipbuilding official said.
A market observer noted the problems facing local shipyards were not unique to the country.
“There is a big wave of changes sweeping throughout the world that is causing shipbuilders to shut down their businesses not only here but in other countries as well, including China,” he said, asking not to be identified. “Such a change may well create a huge new opportunity for those, including the big three, who survive.”