South Korean shipbuilders must collaborate in core technology development instead of competing amongst themselves to solve overcapacity and sagging productivity in order to save the country’s shipbuilding industry which is crumbling down from once the world’s mightiest rank, said Lee Byung-mo, chief executive of STX Offshore & Shipbuilding Co.
Lee, speaking to the Maeil Business Newspaper in a kind of mea culpa after creditors decided to send the once world’s fourth largest shipbuilder to court receivership, admitted that complacency and over-competition have brought about the crisis in his company and corporate peers.
“The local shipbuilding industry grew too fast over a short period of time. Manpower was not sufficiently skilled and oversight was lax,” he said. Local shipbuilders – big and small – all raced to get their feet into the offshore oil drilling field as if gold rush although the technology is hugely costly, risky and complicate for a single company to take up.
Lee who had been dedicated to dockyard business for 34 years painfully had to accept the inevitability of his company heading to court protection after creditors decided to cut off the lifeline after custodian management from April 2013. Having spearheaded Daewoo Shipbuilding & Marine Engineering and Daehan Shipbuilding, he was recruited by creditors to run the company in May last year.
“People devoted and skilled had worked in the shipbuilding industry in the past, but since the sector became big, many without expertise were hired,” he said. “Output had to be moderated and watched over, but that did not take place.”
Majors should voluntarily cut capacity, and companies must end competition to lure orders via bargain prices and instead cooperate to develop new technologies as the venture is too costly for individual companies, he advised.
The time is best for local shipyards to restructure and cut back capacity as ship owners are putting off orders believing vessel prices would fall, he said.
He also pleaded for a second chance for his company, saying the country would strategically need mid-sized dockyard as well as majors.
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