Gov’t will order vessels to buck up shipbuilders

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Gov’t will order vessels to buck up shipbuilders

The government announced Wednesday it will order 1.5 trillion won ($1.29 billion) worth of vessels for military use in the first half of the year to help the troubled shipbuilding industry.

The government will create a fund to help domestic shippers order more than 10 ships this year and also give more financial and job training support to people laid off from shipbuilding jobs.

“There are signs of recovery in the shipbuilding industry but it appears that it will face hardships this year,” said Deputy Prime Minister for the economy Yoo Il-ho at a meeting at the Central Government Complex in central Seoul on Wednesday.

“The government will order 1.5 trillion won worth of military-use vessels in the first half,” he continued, “and will proceed with creating a fund to allow shipbuilders to obtain orders for more than 10 ships by this year.”

The government said the shipbuilding industry is likely to remain weak as global orders are slow.

The Finance Ministry said orders in 2017 are likely to grow 84 percent year on year to 20.5 million compensated gross tonnage (CGT). But 20.5 million CGT is still only 49 percent of 42 million CGT, the average annual figure from 2011 to 2015.

“The situation for Korea will be far worse this year when compared to the past [such as 2011 to 2015] as local shipbuilders tend to depend on the overseas market, which means that they are more easily affected by the global market situation,” said an official at the Finance Ministry. “It appears that the shipbuilding industry will be pressured to push forward with management turnaround plans since many of dockyards and workers are idle due to the fall in the number of orders received.”

The Finance Ministry said three major shipbuilders - Daewoo Shipbuilding and Marine Engineering, Samsung Heavy Industries and Hyundai Heavy Industries - will reduce the number of operating dockyards by three and reduce their workers by 14,000 this year.

According to the Ministry of Strategy and Finance, the government plans to offer job training and educational programs to about 3,000 laid off shipbuilding workers. The government said it tried to help 2,128 people find new jobs last year and 461 found new jobs.

The Finance Ministry plans to spend 131.3 billion won this year in regions that affected by restructuring of the shipbuilding industry, which is 32.8 percent higher than 98.9 billion won the government spent last year.

“We will invest 180 billion won in research and development projects to find a new growth engine for the shipbuilding industry,” said the finance ministry official.

The government said it is considering various ideas such as having shipbuilding companies use ICT technologies.

The government also announced plans to help other industries that are in a slump such as shipping and steel.

For the shipping industry, the government said it will offer 6.5 trillion won worth of financial support to help companies become more competitive and expand research and development budgets for new industries.

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