SOUTH Korea's largest shipbuilder, Hyundai Heavy Industries (HHI), has asked 5,000 of its 17,000 workers to take unpaid leave beginning in September because it does not have enough ships to build until June 2018.
HHI said it cannot force employees to take leave, but if the number does not reach 5,000, management plans to suspend some production lines and subject workers to training, American Shipper reported citing the Korea Times.
The move follows the decision by French ocean carrier CMA CGM to build nine 22,000-TEU containerships in China rather than in South Korea.
CMA CGM inked a letter of intent with two Chinese shipyards - Shanghai Waigaoqiao Shipbuilding Co and Hudong Zhonghua Shipbuilding (Group) Co - to collectively build the nine vessels, Shanghai Waigaoqiao Shipbuilding confirmed recently, as reported by China Daily.
The final order still requires board approval from both sides.
While HHI offered to build CMA CGM's 22,000-TEU containerships for US$175 million each, the Chinese shipbuilders came in cheaper with an offer of $160 million each, according to the Korea Times.
As of June, HHI's backlog of orders stood at 85, down from 110 a year prior. HHI has about 30 ships to work on in the second half of 2017, a company official said, but normally, it works on over 40 ships over the six-month period.
During the first half of 2017, shipbuilders in China received orders for new vessels with a collective capacity of 8.14 million dead weight metric tonnes, accounting for 31.4 per cent of the global market, while South Korea's shipbuilding industry held a 30.6 per cent share, according to data from the China Association of the National Shipbuilding Industry, China Daily said.
Dong Liwan, a shipbuilding industry researcher at Shanghai Maritime University, said it is the first time that Chinese shipyards have surpassed their South Korean counterparts in the high-value-added mega-containership sector, and the shipbuilding industry as a whole.
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