Global Network Giving STX Boost in Downturn

Under the principle ``making global dreams come true,'' STX Group aims to effectively tide over the prevailing global economic slump by strengthening the management of its global shipbuilding network. The nation's 19th largest business group jumped to one of the world's top four movers in the global shipbuilding industry, and most of the outcome is attributable to beefing up its size overseas.
Its order backlog amounted to 7.5 million compensated gross tons as of February, placing fourth among the shipbuilding firms in the world, according to data from Clarkson Research Services.
Its Chinese unit, STX Dalian Shipbuilding Complex (DSC), delivered its first vessels in April. The two 58,000 dry-weight-ton (dwt) ships, STX Begonia and STX Crocus, were ordered by the Korean affiliate, STX Pan Ocean.
Also by using ship blocks delivered from the DSC, STX Shipbuilding can secure more manufacturing space for high-value vessels out of its Jinhae Shipyard. With the operation, STX Group has completed a global cooperative network linking its big three production complexes ― STX Shipbuilding in Korea, STX Europe as well as DSC ― that gives STX Group an edge in production capacity.
``This means the establishment of STX Group's global shipbuilding system that incorporates the shipyards in South Korea, China and Europe was also completed,'' an STX official said.
STX completed the acquisition of STX Europe, formerly the Norwegian-based Aker Yards, in January.
The shipyards will have distinguished roles in the STX business. Jinhae Shipyard will construct high value ships such as liquefied natural gas (LNG) carriers, very large crude oil carriers and ultra-large containerships, while also playing the role as a research and development center.
STX DSC plans to build mainly bulk carriers, car/truck carriers, midsize container ships and tankers, while STX Europe, which operates 15 shipyards in six countries, will be used in the production of cruise ships, specialized vessels, offshore plants and ferries.
With the launch of its European unit, STX has set Norway, France and Finland as strategic bases on the European continent. The countries will be in charge of different roles, with Norway being the offshore vessels headquarters, France in charge of cruise ships and defense businesses, and Finland specializing in cruises and icebreakers.
Buoyed by the new engine in special fields, STX plans to focus on raising efficiency within STX Europe and maximizing synergetic effects with other global affiliates.
Along with the European leg, STX DSC, the first overseas yard the Korean maker constructed, is expected to be a key production base to lead the growth of a globalized STX. Following the first yard, its second complex will be completed this year as the company secured financing of 2.9 billion yuan ($417.4 million) in April.
DSC is expected to post $3.8 billion in sales next year, adding to stable growth of the STX Group. ``Collaboration between Korea and China could play a pivotal role in improving the limited domestic production conditions and meeting the due dates for a flood of orders,'' STX Shipbuilding President Kim Kang-soo said.
Growth in Other Businesses
Aside from shipbuilding, other major STX affiliates are gearing up with a series of overseas orders.
STX Pan Ocean, its shipping firm and South Korea's No. 1 bulk-shipping line, hit a mega deal last month by inking a contract with Vale SA to transport 12 to 13 million tons of iron ore over the next 25 months for the Brazilian-based mining giant.
This is the biggest-ever deal STX Pan Ocean has won, and is expected to provide a boost to the company from a slumping first half this year. The company was in need of a large amount of cargo to generate new profits during times of extreme recession in the shipping industry.
The deal, which runs through the fourth quarter of 2037, also enables STX Pan Ocean to lock in rates amid rising competition. The company said that its main objective for entering into the consecutive contract was to secure a stabilized source of revenue and profit.
STX Heavy Industries last month won a $200-million integrated steel plant in Saudi Arabia. The company expects the project to build a factory by 2011, to pave the way for it to emerge as a global plant maker and supply momentum to its Middle Eastern businesses.
Earlier this year, it signed a 240-billion-won deal with MAN Diesel, an affiliate of the German industrial conglomerate, to provide diesel power generation equipment that will be installed in a plant in Bahia, Brazil.
Elsewhere, STX Construction will embark on a new project transforming an island in the United Arab Emirates into a luxury beach resort, after it won the $187-million order for the Nurai Island Development Project in April. The island of Nurai, near Abu Dhabi, will have a five-star luxury resort with the completion of the project.
The new order has also enabled STX Construction to make a new entry into the Middle Eastern market, following its $187 million order to build luxury hotels and villas in the country last April. The Nurai project will give the company an upper hand in joining other development and resort-constructing projects in overseas markets in the future.
At the turn of the year, when most heavy and shipbuilding industries were struggling amid the frozen economy, STX Group CEO Kang Duck-soo said ``challenge'' was the keyword for the year. Now its affiliates are achieving success in their own business challenges across the world in integrated efforts to weather the crisis.