Korean Shipbuilders Keep Competitors at Bay
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Korean Shipbuilders Keep Competitors at Bay


Like in all other industries, global leadership in shipbuilding has been changing. And like in other industries, it is difficult to catch up once somebody else is ahead. It happened once back in 1956 when Japan took over as the world's largest shipbuilder by successfully adopting the welding method in place of riveting, thus pushing aside Britain. With the new technology, Japan maintained its global leadership for more than four decades. However, nothing lasts forever and Japanese shipbuilders were constantly meeting tough competition from Korean companies.

Their global market share fell from 47.6 percent in 1994 to 39.9 percent last year. During the same period, Korea's global market share soared from 30.4 percent in 1995 to 45.8 percent in 2000 before settling down at 32.4 percent last year, the reduction showing the smaller number of vessels being delivered although production remained strong. There is work to be done if Korea is to maintain its competitiveness in the foreseeable future, including the development of more advanced and high-performing vessels. The technology, in fact, has reached the point where Japanese companies are building floating airports that measure 1,000 meters in length and 120 meters in width.

Another important issue is trade friction, which has seen confrontations in the European Union over accusations of government subsidies for Korean shipbuilders. At the same time, Korean shipbuilders will have to monitor the situation in China where the level of technology has surpassed the point of producing very large crude oil carriers. Having made their entry into the global market in the early 1980s, China has seen its global market share increase from 4 percent in 1987 to 5.6 percent in 2000 and 11.3 percent last year. At present, China has 2.2 million workers in shipbuilding, more than four times that of Korea and considerably more than the 360,000 in Japan. It means China has no manpower problems to worry about.

The competition can only be fierce since the market itself will not be growing by large margins over the next several years. According to projections by the Korean Shipbuilders Association, global demand for vessels will grow from the average of 24.7 million gross tons between 1997 and 2000 to 28.9 million tons in 2001-2005 and 30.2 million tons in 2006-2010. Based on such market estimates, Korean shipbuilders will be focusing on the acquisition of more orders for luxury cruisers and more sophisticated vessels like VLCCs, which command an average of $70 million as compared to the $36 million for bulk carriers. At the same time, Korean shipbuilders will have to set up alliances with Japanese and Chinese companies to jointly maintain their edge in the global market despite competition.

Korea Times  

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