Promotion of Domestic Production for Core LNG Ship Technologies... Increasing Market Share of High-Value Ships (Comprehensive)

Government Unveils Shipbuilding Industry Super-Gap Strategy
Development of Eco-Friendly and Autonomous Navigation Technologies
Over 140 Billion KRW Invested in 2023

Support for Expanding Workforce in Production and Technology Fields
Temporary Extension of Special Overtime Annual Usage Period
From 90 Days to 180 Days

Hyundai Heavy Industries dock view.

The government has decided to invest more than 140 billion KRW in 2023 to develop core technologies such as eco-friendly ships and autonomous ships to secure a global super-gap competitiveness in the domestic shipbuilding industry. Through this, it plans to increase the market share of high value-added ships, including autonomous ships, to 75% by 2030. To alleviate the manpower shortage in the shipbuilding industry, the special extended working hours period for manufacturing industries will also be expanded, and additional support for Refund Guarantee (RG) will be strengthened in case of problems with ship orders.

On the morning of the 19th, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho held an emergency economic ministers' meeting at the Government Complex Seoul and stated, "We will actively promote strategies to secure super-gap competitiveness in the shipbuilding industry."

According to the ‘Super-gap Strategy for the Shipbuilding Industry’ disclosed by the Ministry of Trade, Industry and Energy on the same day, the global order volume last year was 52.29 million CGT (Compensated Gross Tonnage), marking the highest level in eight years since 62.21 million CGT in 2013. It is expected that a stable order volume of more than 40 million CGT per year will continue until 2030. Last year, domestic orders also achieved the highest performance in eight years with 17.46 million CGT, and the cumulative order share as of September this year was 42% (12.54 million CGT), the highest level since 43.3% in 2011. However, despite this improvement in order performance, the production workforce to support it was found to be insufficient. The shipbuilding production workforce decreased by about 58%, from 168,000 in 2014 to about 70,000 last year, due to restructuring following a long-term recession after experiencing the ‘order cliff’ in 2016.

Localization of Core Technologies... Support for Workforce Expansion

Accordingly, the government plans to support workforce expansion in production and technical fields to alleviate the manpower shortage in the shipbuilding industry. First, the annual available period for special extended working hours in manufacturing industries will be temporarily expanded from 90 days to a maximum of 180 days. To promote the influx of foreign workers into the shipbuilding industry, a new shipbuilding quota will be established for changing the qualification of E-9 (simple labor) foreign workers to E-7 (skilled workers). Through this, it is expected that up to about 200 additional workers can be deployed in the shipbuilding industry starting next year. Rapid on-site deployment of new workers will also be supported through customized workforce training programs tailored to corporate demand. To promote employment and retention of production workers, the period for payment of hiring subsidies will be extended from the current 2 months to 6 months.

Localization of core technologies for future eco-friendly liquefied natural gas (LNG) ships will also be promoted. The target includes localization of key equipment such as cargo tanks and low-pressure pumps for LNG ships. The government plans to invest more than 140 billion KRW next year to develop eco-friendly ship technologies such as onboard carbon dioxide capture and storage technology and wind propulsion auxiliary devices (rotor sails). Liquefied hydrogen carriers will be pilot-built from 2024 and are planned for early commercialization by 2029. Through this, the goal is to achieve a 75% market share of high value-added ships by 2030. The government is also planning to diversify the future portfolio. To commercialize autonomous ships (IMO Level 3) that can operate remotely without crew onboard, legislation is being prepared. Additionally, from 2024 to 2029, a plan to support 280 billion KRW for the development of digital transformation technologies in production for small and medium shipbuilders and equipment industries is under review.

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho is presiding over the Economic Regulatory Innovation TF meeting held at the Government Seoul Office in Jongno-gu, Seoul, on the 17th. Photo by Hyunmin Kim kimhyun81@

Strengthening Financial Support... Expansion of RG Special Guarantees

In addition, measures to enhance financial support and support plans for small and medium shipbuilders and equipment industries have been prepared to boost the export competitiveness of the domestic shipbuilding industry. To enhance export competitiveness, financial support will be strengthened. The government will first ensure that Refund Guarantees (RG) are issued promptly so that shipbuilders’ order activities are not disrupted. RG is a guarantee where a bank pays the advance payment to the shipowner if the shipbuilder fails to deliver the built ship to the ordering party. RG issuance is essential to finalize orders. An official from the Ministry of Trade, Industry and Energy explained, "As order performance improves and ship prices and exchange rates rise, demand for RG is also increasing," adding, "We are reviewing additional RG issuance available until the end of this year through consultations with financial institutions."

Support for RG special guarantees will also be provided. If large shipbuilders face a shortage of RG limits, additional funds will be supported by utilizing the Korea Trade Insurance Corporation’s RG special guarantee system. The Korea Trade Insurance Corporation can support special guarantees when the financial institutions’ RG share exceeds 85%. For small and medium shipbuilders, the plan to expand the operating multiple, currently three times, for special guarantees is under consideration. Cooperation with upstream and downstream industries will also be strengthened. The Ministry of Trade, Industry and Energy plans to improve the negotiation method for the price of steel plates, which account for about 20% of shipbuilding costs. This is based on the judgment that the time gap between order contracts and ship production can exceed one year, making shipbuilders vulnerable to raw material price fluctuations such as steel plates. Accordingly, the Korea Shipbuilders’ Association and the Korea Iron & Steel Association will sign a memorandum of understanding (MOU) within the year to promote cooperation and jointly conduct research projects.

Support plans for small and medium shipbuilders and equipment industries have also been prepared. Considering that delivery contracts for shipbuilders and equipment suppliers are conducted in package units, research and development (R&D) projects will also be promoted in package units. Furthermore, to support the development of new eco-friendly ship models by small and medium shipbuilders, 4.5 billion KRW will be invested annually to provide design and engineering technology support. To expand exports of small and medium shipbuilders, the establishment of joint overseas after-sales service (AS) centers is also under consideration.

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