Hanjin Heavy Industries plans to reorganize its business structure toward building general-purpose merchant ships at the Philippines’ Subic shipyard and special-purpose ships at Busan’s Yeongdo shipyard.
This move is based the creditors’ judgment that the current structure of building merchant ships and special-purpose ships both at Yeongdo shipyard would continue to incur losses. Some industry watchers see this decision as a signal for the restructuring of the whole shipbuilding industry.
If Yeongdo shipyard’s merchant ship division is liquidated, it would inevitably lead to the downsizing of workers as well, which could certainly bring about opposition from the labor union and political parties.
At present, Hanjin’s Yeongdo shipyard has three docks, with the length of each dock estimated at 200-300 meters, about a half of those at other major shipyards.
With the limited length of its docks, Yeongdo shipyard, accordingly, is unable to build ultra-large containerships, VLCCs, and LNG carriers which are emerging as new cash cows for other major Korean shipyards.
The main areas of business for the shipyard are mid-sized tankers and containerships, the areas where Chinese shipyards are growing at a rapid pace. Hanjin creditors said that considering that the shipyard’s merchant ship division is lagging in cost competitiveness behind its Chinese rivals, it is difficult for the division to make profits.
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