South Korea’s stranglehold on the shipbuilding industry loosens, but only just

Korea is still home to the world’s top four shipbuilders, but for the first time ever a Chinese company has snatched fifth place

The world shipbuilding market, once dominated by five major South Korean companies, has seen some major changes in the space of a little over a decade.
As the South Korean builders struggle with financial troubles and declining orders, China has kept up its hot pursuit and broken into the world’s top five for the first time. While the South Korean companies had previously traded the top five spots among themselves, this marks the first time [in more than 10 years] that they have lost one of them to a foreign competitor.

Clarkson Research, a British service analyzing shipbuilding and shipping information, announced on Dec. 29 that Daewoo Shipbuilding & Marine Engineering ranked first for total orders as of late November with 8.244 million compensated gross tons (CGT). Total orders reflect the amount of work commissioned from a shipbuilder, providing an indicator of its industry standing.

Coming in second and third were Samsung Heavy Industries and Hyundai Heavy Industries with 5.032 million CGT and 5.002 million CGT, respectively, while Hyundai Samho Heavy Industries took fourth place with 3.924 million CGT.

In fifth place was the Chinese company Shanghai Waigaoqiao Shipbuilding (SWS) with 3.030 million CGT. This marks the first time ever that a Chinese shipbuilder has broken into the top five. Last month’s fifth-ranked company, Hyundai Mipo Dockyard, slipped to sixth with 2.846 million CGT.
“It’s the first time in over ten years that another country has made it into the top five,” said a Samsung Heavy Industries source.

“While there could be some changes in total orders due to things like delivery delays, Chinese shipbuilders get a lot of support from their government,” the source added. “This could spell the end for South Korea’s dominance.”

South Korea accounted for eight of the top 10 shipbuilders in the world as recently as 2008. Several smaller ones, including Sungdong Shipbuilding, have since been pushed out amid rapid growth by Chinese and Japanese competitors. While the same companies held down the top five positions, the next five spots have changed hands repeatedly. Chinese and Japanese companies also held down the seven through ten spots for total orders as of late November: Jiangsu New Yangzi and Hudong-Zhonghua from China, and Imabari SB Marugame and Imabari SB from Japan.

The problem for the South Korean companies now is that recent staff cuts and belt-tightening have left them with little in the way of new orders, leaving them vulnerable to further inroads by Chinese and Japanese competitors next year.

“Unless the shipping industry situation improves and there are improvements in the kind of high value-added ship orders that domestic companies specialize in, you could see the Chinese companies that specialize in bulk carriers increasing their total orders and continuing to creep up,” said a source with Daewoo Shipbuilding & Marine Engineering.

“The big three (Daewoo, Samsung, and Hyundai) will find a way to make it through, but the middle [smaller-sized but competitive shipbuilders] has dropped out,” the source fretted.
Source: The Hankyoreh