Meddling with shipbuilders a mistake

The 92 workers of Hanjin Heavy Industries and Construction who were laid off have now returned to work at Yeongdo Shipyard in Busan after nearly two years. In the wake of their yearlong protest that included supporters on a train of buses and a sit-in atop a crane, they won political support and were assured of jobs by the shipbuilder’s chief executive during a legislative hearing.

But when the workers went back to work, they found there was little to do. Hanjin Heavy Industries has not been able to win any new vessel orders since 2008 and there is only one warship being constructed in its dockyard. About 500 of the 700 workers at its production lines have been taking turns to use up their leave as part of cost-cutting efforts.

The global shipbuilding industry is in its worst-ever slump. Economies are depressed worldwide and European shipping companies are cancelling their orders due to the liquidity crisis in Europe. The dockyards along the nation’s southern coast have been idle for a long time. Most are barely staying afloat, with the exception of Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding and Marine, which have diversified their operations to include offshore plants and carriers of liquefied natural gas. Even industry leader Hyundai Heavy has for the first time encouraged its staff to take early voluntary retirement as a part of restructuring measures.

After recently touring the shipyards in Korea and Dalian, China, former Finance Minister Yoon Jeung-hyun sighed with concern about the viability of the Korean shipbuilding industry. Meanwhile, STX Shipbuilding is facing protests from environmentalists about its plan to enlarge its dockyard in Changwon, South Gyeongsang. It built a boatyard five times larger in Dalian, a coastal city in northeast China, in 2007, and about 30,000 workers are now building the same-scale tanker there that Hanjin Heavy Industries is working on, but for lower wages and with a higher rate of productivity. In the first half of 2012, STX won four orders for 50,000 deadweight oil tankers from Tanker Pacific of Singapore.

In retrospect, Hanjin Heavy Industries made the right decision to cut back its workforce in December 2010. It was also right to shift its manufacturing base to Subic Bay in the Philippines, as STX had done. But the shipbuilder was still unable to recover due to protests from labor activists and politicians. Its reinstated workers in Busan can hardly be happier today, equally insecure of their jobs and income while management now has to worry about extra labor costs.