One in Four Factory Machines Remains Idle
By Cho Jin-seo
Staff Reporter
One in four machineries sat idle in factories in South Korea last year partly because of the economic crisis, the Ministry of Strategy and Finance said on Monday.
The average manufacturing operation ratio for the whole year was 74.1 percent, which was the lowest since the Asian financial crisis in 1998.
The index measures how actively factories and other manufacturing facilities are running. A low operation ratio often leads to fewer new jobs and less capital investment in the future.
The rate hit its low at 67.8 percent during the Asian crisis in 1998. Since then, it has usually been around 80 percent.
The good news is that the ratio improved in the second half of the year, the ministry said.
"The manufacturing industry showed signs of recovery in the second half of the year after having a very tough first half," an official said. "We believe the ratio will rise to the high-70s, thanks to a recovery in consumption and exports."
The ratio was 65.8 percent in the first quarter of last year, which was the worst quarterly figure in almost 30 years. But it rebounded to 73.7 percent, 78.9 percent and 78.2 percent in the following quarters.
Various reports confirm this recovery. The Korea Institute for Industrial Economics & Trade said that its Business Survey Index improved to 113 in the fourth quarter of 2009 from 65 in the first quarter. A figure over 100 indicates optimistic outlook.
South Korea's economy is heavily dependent on the export of manufactured goods, such as cars, ships, mobile phones, semiconductors and steel products.
The output from the manufacturing industry has been growing at 6.6 percent per year on average this decade, according to Hyundai Economics Research Institute.
It is not yet confirmed whether manufacturing operations improved in January in South Korea, but it is likely that the unusually cold winter had some negative effects on it.
In China, manufacturing activities slowed in the first month of the year amid severe winter weather.