Hyundai Heavy Industries, South Korea's largest shipbuilder, will suspend work at its offshore facilities shipyard in August, amid lack of orders, according to an official announcement by the company's President and CEO, Kang Hwan-goo. The offshore yard will not operate until orders come back.
HHI has two major shipyards in Ulsan, about 410 kilometers southeast of Seoul. One is to build commercial vessels, such as container carriers and LNG tankers, and the other is to build high-end offshore facilities, such as floating production storage and offloading (FPSO) units.
This follows a downward trend for South Korean shipbuilding in recent years, as a result from global economic downturn and Chinese competition. Hyundai Heavy has lost out to Chinese and Singaporean rivals in offshore projects in recent years due to higher costs.
The shipbuilder said it will have no offshore project after the last part of an offshore module leaves the Ulsan shipyard in late July, Yonhap news agency reported.
Hyundai Heavy had 15,795 employees as of the end of March. Kang appealed to employees to cut high fixed costs to win offshore orders, saying there was no way to compete with Chinese and Singaporean competitors whose labor costs are roughly a third of Hyundai Heavy's.
The company has undergone a drastic restructuring process in recent years. In 2017, it decided to impose rotational leave scheme for its workers, to tackle the problem of idle workforce, while more recently, it revealed plans to sell USD 1.22 billion new stocks to improve financial situation.