Korean shipbuilders' global ambitions depend on skilled labor, local support
The country's two largest players, HD Hyundai and Hanwha Ocean, are pressing ahead with new partnerships and investments.
HD Hyundai has teamed up with India's state-run Cochin Shipyard and US shipbuilders Huntington Ingalls and Edison Chouest Offshore. Meanwhile, Hanwha Ocean, backed by an 800 billion won ($582 million) rights offering from its parent Hanwha Aerospace, is pursuing additional overseas opportunities following its acquisition last year of Philly Shipyard in Pennsylvania.
Both companies aim to secure early access to surging demand for naval and commercial vessels, especially as countries seek to counter China's growing dominance in global shipbuilding.
Experts, however, warned that significant challenges remain in human resources. Despite the appetite for expansion, neither the US nor India currently has the workforce or infrastructure to build large commercial or naval vessels at the scale Korean firms are accustomed to.
'Even if they operate a yard overseas, the first challenge they will face is a lack of process know-how and skilled workers,' said Kim Myung-hyun, an ocean engineering professor at Pusan National University.
The US builds only about five commercial vessels a year, compared with a global capacity of roughly 1,300. India accounts for less than 1 percent of the world's shipbuilding output.
Such limited domestic industries mean both countries lack not only experienced shipbuilders but also local suppliers of essential components, which can constitute around 60 percent of a vessel's value.
'Ship manufacturing, where adapting to diverse orders is key, still relies heavily on skilled labor trained on-site,' said an industry veteran. 'Even with a shared language and culture, training new workers takes time, so imagine how much harder it was overseas.'
Without sufficient skilled labor and local supply chains, Korean shipbuilders risk relying on components and personnel from overseas, undermining the cost advantages of overseas production and potentially adding significant expenses.
In response, Korean firms are looking to governments in Washington and New Delhi for support to help bridge these gaps. US President Donald Trump announced in March potential tax exemptions and plans to establish a special White House office dedicated to shipbuilding. India, meanwhile, is investing $2.2 billion in its shipbuilding sector to bolster capacity and competitiveness.
Korean companies view these measures as essential for overcoming local constraints and aligning shipbuilding projects with national security and naval expansion goals in both countries.
Yet experts warn that government policies are still at an early stage and uncertainties remain.
'For instance, it remains unclear how much of the demand for US naval vessel construction and maintenance will go to Korean shipbuilders, even if they invest in the US, or what specific roles they might be assigned,' said Yang Jong-seo, a researcher at the Overseas Economy Institute of the Korea Export-Import Bank.
'A range of issues, including regulations, the potential role of Korean workers and the scope of local participation, must be clarified. This may require formal talks between governments to ensure Korean firms are not disadvantaged in negotiations.'
Despite these plans, the shadow of past failures still looms large. In the 2010s, Korean shipbuilders suffered heavy losses in overseas ventures. Daewoo Shipbuilding & Marine Engineering, now Hanwha Ocean, sold its Mangalia yard in Romania for 29 billion won — about half its initial investment.
Hanjin Heavy Industries & Construction and STX Offshore & Shipbuilding, once ranked among the world's top 10 shipbuilders, collapsed under losses at overseas yards in Subic, the Philippines, and Dalian, China.
The central lesson is that future success abroad will depend not only on political partnerships but also on building skilled local workforces and stable supply networks, according to experts.
'Relying solely on cheap labor, the yards struggled to compete with China's even lower-cost, government-backed offerings,' the industry veteran said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Korea Herald
an hour ago
- Korea Herald
Stimulus coupons: An FAQ in 2 minutes
What are stimulus coupons? A stimulus measure to revive domestic spending and support small businesses Funded by 13.9 trillion won ($10.1 billion) within a 31.8 trillion won supplementary budget From 2020 to 2022, eight rounds of supplementary budgets totaled 183.3 trillion won Korea rolled out "universal" emergency relief funds for the first time during the pandemic How much will each person receive? 1st round: General public: 150,000 won per person Low income households and single-parent families: 300,000 won per person Basic living allowance recipients: 400,000 won per person Additional payouts: 30,000 won for residents outside the capital region and 50,000 won for residents in depopulated rural areas 2nd round: An additional 100,000 won per person, excluding those in the top 10 percent income bracket Who is eligible? Korean nationals: All South Korean citizens residing in Korea as of June 18. Those abroad on June 18 can apply after returning by Sep. 12 (first round) or Oct. 31 (second round) Parents apply for children born after Jan. 1, 2007, and newborns born before Oct. 31 Foreign nationals: Those registered with Korean family members in the same household registry Permanent residents (F-5), marriage migrants (F-6), or recognized refugees (F-2-4) with national health insurance or medical aid coverage Where can the coupons be used? Small retailers with annual sales under 3 billion won are eligible. These include: Traditional markets, local grocery stores, restaurants, clothing shops, hair salons, optical stores and private academies Franchise stores operated by individual owners Delivery apps: Only accepted if paid in person using the store's terminal Not eligible: Large retailers, online malls, corporate-operated franchise stores, luxury goods shops, duty-free shops, and non-purchase expenses such as taxes and utilities How to receive the funds: 1st round of applications: July 21 to Sept. 12 In the first week, applications are scheduled by the last digit of one's birth year: 1 & 6 on Monday; 2 & 7 on Tuesday; 3 & 8 on Wednesday; 4 & 9 on Thursday and 5 & 0 on Friday. Credit card recharge: Apply via card issuer's website or app Mobile or card-type regional vouchers: Apply via local government apps Paper vouchers or prepaid cards: Apply in person at community centers 2nd round of applications: Sept. 22 to Oct. 31 Are there regional limits? Usage is restricted to the registered area Metropolitan residents can use the coupons throughout their city, and provincial residents can use them throughout their city, town, or county When do the coupons expire?
Korea Herald
an hour ago
- Korea Herald
Trump's negotiating style is often less dealmaking, more coercion
WASHINGTON (AP) — President Donald Trump prides himself on being a dealmaker, but his negotiating style is more ultimatum than compromise. In the last week, Trump has slapped trading partners with tariffs rather than slog through prolonged talks to reach agreements. He ratcheted up the pressure on the Federal Reserve to cut interest rates. And his administration launched a new investigation into higher education as he tries to reshape universities. For Trump, a deal isn't necessarily agreement in which two sides compromise — it's an opportunity to bend others to his will. While Trump occasionally backs down from his threats, the past week is a reminder that they are a permanent feature of his presidency. As Trump tightens his grip on independent institutions, there are fewer checks on his power. Republicans in Congress fear primary challenges backed by the president, and the Supreme Court is stocked with appointees from his first term. Trump recently summed up his approach when talking to reporters about trade talks with other countries. 'They don't set the deal,' he said. 'I set the deal.' Trump's allies believe his aggression is required in a political ecosystem where he's under siege from Democrats, the court system and the media. In their view, the president is simply trying to fulfill the agenda that he was elected to achieve. But critics fear he's eroding the country's democratic foundations with an authoritarian style. They say the president's focus on negotiations is a facade for attempts to dominate his opponents and expand his power. 'Pluralism and a diversity of institutions operating with autonomy — companies, the judiciary, nonprofit institutions that are important elements of society — are much of what defines real democracy,' said Larry Summers, a former Treasury secretary and former president of Harvard University. 'That is threatened by heavy handed, extortionist approaches.' Harvard has been a top target for Trump, starting in April when he demanded changes to the university's governance and new faculty members to counteract liberal bias. As Harvard resisted, administration officials terminated $2.2 billion in federal grants. The money is the lifeblood of the university's sprawling research operation, which includes studies on cancer, Parkinson's disease, space travel and pandemic preparedness. Trump has also attempted to block Harvard from hosting roughly 7,000 foreign students, and he's threatened to revoke its tax-exempt status. His administration recently sent subpoenas asking for student data. 'They'll absolutely reach a deal,' Trump said Wednesday. Administration officials also pulled $175 million from the University of Pennsylvania in March over a dispute around women's sports. They restored it when school officials agreed to update records set by transgender swimmer Lia Thomas and change their policies. Columbia University bent to Trump by putting its Middle East studies department under new supervision, among other changes, after the administration pulled $400 million in federal funding. At the University of Virginia, President James Ryan resigned under pressure following a Justice Department investigation into diversity, equity and inclusion practices. A similar investigation was opened Thursday at George Mason University. 'Federal funding is a privilege, not a right, for colleges and universities,' said Kush Desai, a White House spokesman. Such steps were unheard of before Trump took office. Ted Mitchell, president of the American Council on Education and an Education Department official under President Barack Obama, said Trump isn't seeking deals but is 'demanding more and more and more.' 'Institutional autonomy is an important part of what makes higher education work,' he said. 'It's what enables universities to pursue the truth without political considerations.' The Fed has also faced Trump's wrath. He blames Fed Chair Jerome Powell for moving too slowly to cut interest rates, which could make consumer debt like mortgages and auto loans more affordable. It could also help the US government finance the federal debt that's expected to climb from the tax cuts that Trump recently signed into law. Powell has held off on cutting the central bank's benchmark rate, as Trump's tariffs could possibly worsen inflation and lower rates could intensify that problem. Desai said the White House believes the Fed should act based on what the data currently shows, which is that 'President Trump's policies have swiftly tamed inflation.' Although Trump has said he won't try to fire Powell — a step that might be impossible under the law anyway — he's called on him to resign. In addition, Trump's allies have increased their scrutiny of Powell's management, particularly an expensive renovation of the central bank's headquarters. David Wessel, a senior fellow in economic studies at the Brookings Institution, said Trump's approach could undermine the Fed's credibility by casting a political shadow over its decisions. 'There will be real costs if markets and global investors think the Fed has been beaten into submission by Trump,' he said. Trump originally wanted to enact sweeping tariffs in April. In his view, import taxes would fix the challenge of the US buying too much from other countries and not selling enough overseas.
Korea Herald
3 hours ago
- Korea Herald
Seoul shares start slightly higher despite tariff woes
South Korean stocks opened a tad higher Monday despite renewed tariff threats by US President Donald Trump over the weekend. The benchmark Korea Composite Stock Price Index climbed 7.15 points, or 0.23 percent, to 3,182.92 as of 11:20 a.m. On Saturday, Trump said he has sent letters to key trade partners, including the European Union and Mexico, threatening duties of 30 percent on imports and setting the negotiations deadline on Aug. 1. In Seoul, major shares started in mixed territory. Market bellwether Samsung Electronics fell 0.8 percent, and its chipmaking rival SK hynix rose 2.21 percent. Top carmaker Hyundai Motor added 0.72 percent, but its sister Kia retreated 0.6 percent. K-pop powerhouse Hybe declined 0.18 percent, and entertainment giant CJ ENM increased 0.58 percent. The local currency was trading at 1,376.55 won against the US dollar at 11:20 a.m., down 1.15 won from the previous session. (Yonhap)
