By Lee Hyo-sik
Korean shipbuilders have fallen behind their Japanese rivals in their order backlog for the first time in 17 years.
Korea’s backlog of orders totaled 19.91 million compensated gross tonnage (CGT) as of last December, lower than Japan’s 20.64 million CGT, according to data from Clarkson Research, a global information provider on the shipbuilding industry, Wednesday.
A year earlier, the Korean shipbuilding industry had 31.08 million CGT, compared to Japan’s 25.55 million CGT.
This is the first time in 17 years that domestic shipbuilders have fewer ships to build than their Japanese counterparts. Since 1999, Korean shipbuilders have had larger construction volume than their Japanese competitors. But with local firms struggling to win new orders in 2016, their backlog orders have declined at a faster rate than those of Japanese shipbuilders.
“This shocking overturn shows how dire the situation has become for Korean shipbuilders over the past few years,” said an official at one of Korea’s three largest shipbuilders. “For the past two decades, Korea ruled the global shipbuilding industry. But now it is behind China and Japan in orders secured. Local shipbuilders must double their efforts to win new contracts in 2017.”
Hit hard by falling orders, local shipbuilders have laid-off thousands of workers over the past two years. In 2016 alone, Hyundai Heavy Industries downsized its workforce by 1,700, followed by Samsung Heavy Industries’ 1,500 and Daewoo Shipbuilding & Marine Engineering’s 1,300.
Thousands more employees are expected to be laid off this year if things do not improve for the struggling industry.
Amid the ongoing massive layoffs, some employees, with expertise in ship design, engineering and core areas of business, are reportedly being recruited by Japanese and Chinese shipbuilders, according to the Ministry of Trade, Industry and Energy.
The ministry, which appears to be concerned about the country’s advanced shipbuilding knowhow going abroad, has been tracking people with core skills since last November to learn of their whereabouts.
“I heard some of the laid-off employees found jobs in China and in Japan. But I wouldn’t worry too much about it,” the official said. “Chinese and Japanese shipbuilders, who have also been hit hard by the prolonged industry slump, have laid-off thousands of workers, as well. They won’t be able to hire large numbers of engineers and other skilled workers from Korea.”