Shipbuilders struggle to stay afloat
A 40-meter (131-foot) iron gate leading to a ship factory at the industrial complex yesterday was shut. On the top left of the gate was a sign reading “Foreclosed.” The factory was not in operation.
At one time, over 200 employees worked at the factory, but all was silent beyond the closed iron gates.
A guard at the entrance said, “It was a fairly large company within the Daebul Industrial Complex, but due to deterioration in management it went bankrupt last month.”
The president of a neighboring shipping company stated regarding the closed factory, “They were very economically active in the Daebul Industrial Complex, but because they could not pay back some hundreds of millions of won, I heard they went bankrupt. We have our gates open, but because we do not have any orders, we have not been able to operate for five months.”
And other factories nearby also have their gates chained shut, with no people or vehicles passing through.
Just three years ago, courtyards and storage yards in the area were stacked with ship materials and components, but now they are empty.
The 1.14-million-square-meter industrial complex, home to Hyundai Samho Heavy Industries and other shipbuilders, was opened after eight years of construction in 1997 with the aim of boosting development and investment in the Mokpo region.
But as the global shipbuilding market has contracted gradually over the past five years, Korean ship orders are down due to weak demand worldwide. Of the 294 companies represented at the industrial complex, some 30 are temporarily or permanently closed down. Three out of four companies, or 218, are shipbuilding-related, but around half are operating normally.
And more and more companies resort to private loans to stay in operation only to close down because they were not able to pay them back.
This month, some 40 enterprises at the complex were not able to pay for insurance fees and had their assets seized. Some 20 percent of the companies at the complex were not able to pay the insurance fees between 1 and 3 million won ($2,789) for four consecutive months.
Companies still in operation are considering changing tactics. Over the past two years, some 50 shipbuilding companies have been forced to change production. Some shipbuilding companies have switched gears to wind or solar power.
Polarization in the industry is extreme, as the large corporate shipbuilders win the most bids for ship orders, and Hyundai Samho or Daehan Shipbuilding set up their own factories.
But even the number of contracts earned by the top companies has decreased. Hyundai Samho Heavy Industries in the second half of 2011 went from 1.78 million compensated gross tonnage, a measure of shipyard activity, to 0.88 million compensated gross tonnage last year.
“As depression spreads to more companies, small- and medium-sized enterprises face a more serious level of problems regarding bankruptcy or unstable employment for laborers,” said Oh Byeong-ki, a researcher at the Jeonnam Research Institute.
By Choi Kyung-ho [firstname.lastname@example.org]