Gah Sam-hyun, President of Korea Shipbuilding, "Daewoo Shipbuilding Merger... Significant for Survival"

Kang Sam-hyun, President of Korea Shipbuilding & Offshore Engineering

[Asia Economy Reporters So-yeon Park and Hyun-jin Jung] Ga Sam-hyun, CEO of Korea Shipbuilding & Offshore Engineering, recently analyzed that despite positive developments such as large-scale liquefied natural gas (LNG) carrier orders, the crisis in the shipbuilding industry due to global economic uncertainties remains, emphasizing that the merger with Daewoo Shipbuilding & Marine Engineering (DSME) is an urgent matter for survival.

On the 7th (local time), in an interview with a major British economic publication, Ga Sam-hyun warned that even if trillion-won scale LNG ship order contracts are secured, it would be insufficient to offset the damage caused by the COVID-19 pandemic.

Recently, as shipbuilding orders have poured in for the Korean shipbuilding industry, which accounts for more than a quarter of the global shipbuilding market, expectations for the resumption of international shipping activities and global trade are rising, but Ga Sam-hyun cautioned against overly optimistic forecasts.

However, Ga Sam-hyun mentioned that it is still too early to be optimistic about the global economic recovery. He said, "the worst-case scenario can still occur," adding, "some customers have already requested to postpone payments and delivery dates for ordered ships," he said.

Ga added, "It is not clear when or how the current situation will be resolved," and "but what is certain is that a short-term demand shock in the shipbuilding industry is becoming evident."

Despite the achievement of Qatar’s state-owned oil producer signing slot contracts with Korean shipbuilders to build over 100 vessels for the world’s largest LNG project, investing $20 billion, Ga remains vigilant. This is because LNG carriers account for only 30-40% of the total shipbuilding capacity.

Ga said, "With new orders in the first quarter dropping to nearly one-third, the positive impact from LNG contracts is not large enough to change the fundamental problems faced by Korean shipbuilders."

He added, "The workload from orders does not even reach half of the LNG shipbuilding capacity of the shipyards," and "moreover, the LNG ship production of these shipyards does not exceed 30-40% of each company’s total shipbuilding capacity, including other types of vessels."

He emphasized that considering intensified competition with Chinese companies and the deterioration of the global shipbuilding market, the merger plan with DSME has become even more important.

Ga Sam-hyun stated, "For Korean shipyards to compete with Chinese companies and reduce prices for shipowners, it is necessary to substantially reduce overlapping expenditures in research and development, especially in areas such as manufacturing automation and clean fuel vessel development technologies," and emphasized, "Our efforts to merge with DSME hold great significance for our survival."

This content was produced with the assistance of AI translation services.