Building First Korean-Owned Shipyard in China

STX Shipbuilding will be the first Korean company to build a shipyard in China. Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering have built or are currently building facilities for ship blocks but this will be the first Korean-owned overseas shipyard capable of building complete vessels. STX estimates its sales from the China shipyard will reach US$3 billion (US$1=W941) by 2012. The company is investing US$1 billion in Dalian’s Changxing Island in Liaoning (China) to build the shipyard which will include production facilities, engine assembly plants, a block factory and facilities for molding and forging by the first half of 2008.

STX will complete the shipyard and block factories by the first half of next year with a first phase investment of US$450 million. It expects to begin working on vessels from the second half of 2008 starting with the easier types such as bulk carriers, petroleum product carriers and car carriers. The company has already taken orders for 25 ships worth $1.1 billion, including 21 bulk carriers of 58,000 tons capacity and four car carriers that can carry about 6,700 vehicles.

The completed ships will be delivered from Dalian from the second half of 2009. STX said its strategy would be to mass-produce cheaper ships at the Dalian shipyard while focusing on high-value ships such as liquid natural gas carriers in Korea. Concerns have been raised that the construction of overseas shipyards could lead to a serious impact on domestic shipyards, which are key employers in Korea. There are also worries that Korean shipbuilding technology will be adopted in China, which has already reduced the industry technology gap to ten years.