South Korea to fund struggling shipbuilding areas

The South Korean government will designate five key shipbuilding centres on the country’s south coast as “industry crisis” zones eligible for economic support, according to the finance minister, Kim Dong-yeon. These areas are home to shipbuilding companies that have struggled with high unemployment in recent years.

Namely, the areas include Dong-gu in Ulsan, Geoje-si of Kyong-nam province and Jinhae-gu of Changwon, as well as Tongyeong and Mokpo in the southwest coast.

Under the plan, the government would provide financial and tax incentives for suppliers of shipbuilding companies in the above-mentioned regions. The government will also provide job training to people made unemployed through recent restructuring to boost their re-hiring or full-time employment prospects, Reuters reported.

An oversupply of vessels combined with low oil prices and a decrease in new orders, as a result from global economic downturn in 2008 and Chinese competition, have poisoned the South Korean shipbuilding industry over the last years, cutting tens of thousands of jobs and hurting local economy.

Yonhap news agency has earlier reported that, in 2015 alone, the country’s top three shipyards, Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering, suffered a combined operating loss of 8.5 trillion won.

However, the industry has started to show signs of recovery with a steady rise in orders, said in an official statement Yoo Kwang-yeol, first senior deputy governor of the Financial Supervisory Service (FSS).

In early 2018, the three companies, comprising HHI, SHI and DSME, have set higher order goals for 2018, in line with expectations for an overall improvement in the shipbuilding sector.