Shipbuilders to set sail for unexplored waters

Korea has long boasted of building gas tankers and large container ships, but it cannot say much about cruise ships equipped with outdoor swimming pools, bars and even jogging tracks. Yesterday the Korean government and shipbuilders joined hands to change that. They plan to foster cruise ships as the next growth engine for Korean shipbuilding.
Kim Young-joo, minister of commerce, industry and energy, met with the chief executives of six Korean shipbuilders including Hyundai Heavy Industries Co., Samsung Heavy Industries Co., Daewoo Shipbuilding and Marine Engineering Co., and STX Shipbuilding Co. to discuss cooperation measures to launch the country’s first locally- made cruise ship within three years.
Those at the meeting said in a statement that they are “in dire need of a competitive edge in high-margin cruise vessels and marine plants against Chinese rivals that are growing at a breakneck pace and are feared to catch up in the near future.” They asked for the government’s financial support in research and development efforts, and Kim said the ministry, together with shipbuilders, will launch studies into cruise vessel development and will offer aid beginning in the latter half of next year.
Cruise ships have bigger added value compared with the large-sized vessels that Korean builders construct, according to industry data. The price of a cruise ship hovers around $1 billion. While the per gross-tonnage price for a large-sized oil tanker is $800, a cruise ship’s comparable figure is $5,500.
The world’s cruise ship market now accounts for almost one-fifth of global shipbuilding, showing signs of recovery from the aftermath of the Sept. 11 terrorist attack in the United States in 2001. However, many challenges await Korean builders in that Europe has been the world leader in building cruise ships and ferries. Four European shipbuilders ― Italy’s Fincantieri, Norway’s Kvaerner ASA, Germany’s Meyer Werft and France’s Atlantic Container Line ― accounted for over 90 percent of the global cruise ship market last year. Long-time experience and expertise is needed especially for interior work, which requires sophisticated technologies and high-end materials that are only available through import, experts say.
Korea has dominated global shipbuilding over the past decade. As of late last year, the world’s top six shipbuilders in terms of order volume were Korean, and another was ranked ninth. However, China, previously the world’s third-ranking shipbuilder, outstripped Japan last year to take the second spot and its government has set an ambitious goal of tripling last year’s shipmaking capacity by 2010.
Later, the shipbuilding leaders and the Korea Gas Corp. signed a memorandum of understanding for cooperation in technology development and trial operation of liquefied natural gas tankers. Although Korea constructs the majority of high-margin LNG carriers around the world, the core technology belongs to Gaztransport et Technigaz of France. Korean shipbuilders have to pay over $10 million per vessel in royalties.

By Seo Ji-eun Staff Writer [spring@joongang.co.kr]