By Lee Hyo-sik
Hanjin Heavy Industries & Construction (HHIC) is showing signs of emerging from a years-long slump thanks to increasing orders and improving finances.
The shipbuilder had been on the brink of collapse several years ago due to the global industry slump and a labor dispute.
According to company officials Friday, the Yeongdo Shipyard in Busan, the firm’s main production base, will turn profitable in the second half of 2015 as it is building several ships designed to transport liquefied petroleum gas and liquefied natural gas.
The shipyard began operating in July last year after a three-year closure.
It has also secured orders to construct bulk carriers.
In 2013, the shipyard won 15 orders worth $650 million and 11 orders worth $770 million in 2014, which will keep its docks busy through the first half of 2017.
The shipbuilder’s production bases abroad have also begun recovering in line with improving global economic conditions.
The firm’s Subic Bay Shipyard in the Philippines recently won orders from French shipping firm CMA CGM to build three container carriers. The shipyard is widely expected to secure more contracts in the coming months for the construction of oil tankers and merchant vessels.
“Things have improved significantly for our main shipyard over the past two years because we secured new orders,” an HHIC spokesman said. “We expect to win more contracts for container carriers and other commercial vessels in the near future. This will increase Yeongdo Shipyard’s operation ratio, creating new jobs and providing vigor to the regional economy.”
The shipbuilder will see its revenue and operating profits jump in 2015 from the previous year, according to the spokesman.
In addition, HHIC’s efforts to improve its financial soundness have been credited for its recent turnaround.
Earlier this year, Chairman Cho Nam-ho said he would not receive dividends from the shipbuilder worth 2.7 billion won. He holds a 46.5 percent stake in the company.
The 2.7 billion won will be spent to finance HHIC’s projects, according to the company.
To reduce debts, the company has been disposing of real estate properties and other noncore assets over the past few years. This year, HHIC seeks to raise over 500 billion won in cash by selling properties and stakes in other companies.
In December 2010, the intense labor-management erupted when the shipbuilder decided to dismiss 2,500 workers in a bid to cut costs amid worsening business conditions.
Unionized workers fought back by going on strike. HHIC’s labor dispute became a social issue, dividing the country into two opposing camps. In November 2011, labor and management reached an agreement to end the strike.
However, significant damage was already done to the nation’s oldest shipbuilder, which began operation in 1937. Due to a lack of orders, HHC had to temporarily shut down the Yeongdo Shipyard for three years, while its debts were growing exponentially.