Now it’s Geoje’s turn for some reinvention

GEOJE, South Gyeongsang - It’s a desperate time for Korea’s shipbuilding industry, and nowhere is the gloom thicker than here at the home of Samsung Heavy Industries’ (SHI) main shipyard.

Outside the shipyard gates, rank and file workers shout slogans and hoist signs blaming the company’s senior officials for running the company onto a reef. Less militant workers head inside with blank expressions, avoiding the protestors’ gazes.

A JoongAng Ilbo reporter went up to the roof of a building next to the dockyard and found many ships still stored in the yard awaiting completion or delivery.

“That supply will only last for two year at the most,” an SHI employee tells the reporter. “The company has failed to sign any new orders and there will be no work to do from 2018.”

No work and a lot fewer workers on the payroll if SHI’s restructuring plan goes through. The union is fighting it.

Geoje’s total population is about 260,000 and 80,000 of them have jobs related to the shipbuilding industry. The industry accounts for 70 percent of the city’s overall economy.

Restructuring by SHI and Daewoo Shipbuilding & Marine Engineering, which also has a shipyard in the area, is bound to affect the local economy.

“Consumer sentiment has already fallen, and sales at retail stores like clothing shops and restaurants have already dropped 10 to 20 percent,” said an official at the Geoje City Government.

Many foreign workers employed to do interior work on the ships plan to go back to their own countries starting next year.

A significant number of small and midsize shipbuilding companies collapsed after the global financial meltdown in 2008. Many analysts warned the big companies like SHI and suggested they start restructuring programs years ago. They were ignored and the big companies put all their chips on offshore plant projects in the Middle East. Over-competition led to razor-thin margins and losses, and then that market imploded.

Restructuring is considered a lot harder now than it would have been a few years ago.

“We plan to announce some of the rescue plans such as deducting business property tax up to 50 percent if labor and management come in to agreements,” said Kwon Min-ho, mayor of Geoje. “While problems are being solved, there needs to be some kind of work sharing program.”

Geoje is asking the central government to designate the city a special district for employment to receive further support. It’s also asking the owners of the shipbuilding companies to chip in their own money to stabilize the companies. Geoje is also seeking ways to make the city a tourist destination to prop up the local economy.

BY KIM YOO-KYUNG [kim.youngnam@joongang.co.kr]