HHI’s offshore yard closed after 35 years

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HHI’s offshore yard closed after 35 years

Hyundai Heavy Industries (HHI), Korea’s top shipbuilder, is suspending the operation of its offshore yard for the first time in 35 years.

In a letter to employees on Friday, Kang Hwan-goo, President and CEO of HHI, said the company decided to shut down its offshore yard, located about 5 kilometers (3.1 miles) away from the main shipyard that produces offshore plants and platforms.

The company has had no orders for its offshore yard, first built in April 1983, for the past 43 months.

“With the last module of the Nasr project set to sail out at the end of July, the offshore yard will have no more work to do,” Kang wrote in the letter. “All it has left will be providing after-sales service for projects already shipped out.”

The Nasr project is an order HHI landed in November, 2015 from Abu Dhabi Marine Operating Company to build a crude oil production facility for Nasr in the United Arab Emirates.

Kang explained that despite the company’s effort to land additional orders for the yard, it was unable to overcome competition from China and Singapore, more cost-effective sources from the perspective of customers.

“It will be difficult for us to land an order even if there are any available at our current expense structure,” Kang said, adding that HHI’s labor union’s “irresponsible resistance” will not resolve the problem.

The yard, which has about 5,600 workers including some 3,000 workers from HHI contractors, will be suspended starting in August. The company’s offshore division will also undergo restructuring and only a handful of workers will stay in the division to provide after-sales services.

Still, HHI says that the shutdown would only be temporary.

“We are poised to operate our yard when orders come back,” said Yune Sung-il, head of HHI’s offshore marketing division. “At this time, we will streamline our organizational resources and create a strategic team to win new orders from a more competitive position, which will eventually enable us to offer better services to our clients.”

BY CHOI HYUNG-JO [choi.hyungjo@joongang.co.kr]
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