Hyundai Heavy stops operation of plant making offshore facilities

By Lee Hyo-sik

Hyundai Heavy Industries (HHI) will stop operating one of its plants, amid the falling prices of crude oil and other commodities, it said Friday.

In March, HHI will find other purposes for its Second Marine Plant in Ulsan, which currently manufactures offshore oil rigs and other resources development facilities.

In 2015, the shipbuilder failed to secure a single order for offshore plants as companies became extremely cautious of spending money to explore for crude oil.

“The plant will complete its last order in late March, and then it has no more orders to work on,” an HHI spokesman said. “So, we decided to utilize the facility for other purposes. Under no circumstances will we close the plant.”

The Ulsan plant, which sits on a 200,000 square-meter site, will likely be used as storage for the shipbuilder’s raw materials and equipment, according to the company.

Since 2012, the Second Marine Plant has been building floating production storage and offloading, LNG plants and other offshore facilities. Of its 300 workers, about 60 will be transferred to the First Marine Plant nearby. But the remaining employees will likely see their contracts terminated.

The shipbuilder said the First Marine Plant will be responsible for handling all offshore plant orders in the coming months.

HHI and other local shipbuilders, which incurred huge losses from offshore plant projects, expect to win new contracts only when global oil prices reach at least $80 a barrel. This suggests that their plants will likely remain idle for the foreseeable future as crude prices now hover below $30.

Korean shipbuilders have been hit hard by the overall global industry slump. In addition, Chinese shipbuilders have caught up with Korean manufacturers, making it more difficult for local players to win orders abroad.