[Will Joseon Stop Again] Will Construction Halt Despite Order Boom... Worsening Labor Shortage

Hyundai Heavy Industries Shipbuilding 3 Union
Unprecedented Simultaneous Strike Countdown

Order Backlog Secured Until 2025
New Ship Prices Positive
But Joint Strike Would Worsen Labor Shortage, Critical
Wage Increase Is the Solution
But Funds Are Tight Despite End of Recession

As the strike by the labor unions of the three shipbuilding companies under Hyundai Heavy Industries Group becomes visible, concerns are rising that the shipbuilding industry may once again halt construction. The shipbuilding industry, which is emerging from a long recession by leveraging eco-friendly ship technology, is now facing the 'union risk' once again. If the strike materializes amid an already severe labor shortage in the shipbuilding industry, there are concerns that production disruptions could cause significant damage.

◆Shipbuilding Booming, Facing Stop Crisis=According to the industry on the 27th, the order backlog of the three shipbuilders is secured until 2025. Korea Shipbuilding & Offshore Engineering has an order backlog worth $45.1 billion (64.3035 trillion KRW as of the end of August), Daewoo Shipbuilding & Marine Engineering has $29.7 billion (42.3462 trillion KRW as of the end of September), and Samsung Heavy Industries has 39.8 trillion KRW (as of the end of August). The improvement in the shipbuilding market is expected to continue into next year following the second half of this year. The order backlog and the new ship price composite index, which can gauge the profitability of shipbuilders, are positive. There is also growing expectation of a turnaround (return to profitability) among shipbuilders, led by Hyundai Heavy Industries.

The shipbuilding industry, which follows economic cycles, has accumulated a large volume of orders since the end of 2020, resulting in many vessels waiting to be constructed. Since shipbuilding involves 1 to 2 years of design before full-scale construction begins, the period requiring a large influx of production personnel starts from the second half of this year. In particular, a solidarity strike by the shipbuilders under Hyundai Heavy Industries Group, the largest among the three, could increase the scale of construction stoppages.

An industry insider said, "Construction volume has been increasing since the second half of this year, and if a strike occurs, there is concern that the labor shortage will worsen," adding, "The shipbuilding ecosystem is organic, so labor shortages in some shipbuilders tend to transfer to others, but the scale of the three Hyundai unions is overwhelmingly large." Previously, Daewoo Shipbuilding & Marine Engineering claimed it suffered damage worth several hundred billion KRW due to a subcontractor union strike in June and July.

◆Worsening Labor Shortage, Adding to Shipbuilding’s Troubles=The labor shortage in the shipbuilding industry is becoming entrenched. According to data from the Korea Shipbuilders' Association, the number of workers in the shipbuilding industry peaked at 203,441 in 2014 and has steadily declined to 92,394 as of July this year. This represents a 54.5% decrease over eight years. In particular, design and research personnel and production workers, which determine the competitiveness of the shipbuilding industry, decreased by 6,645 (-46.9%) and 98,003 (-58.3%) respectively during the same period. Within the industry, there are complaints that it is difficult to find not only design personnel but also skilled workers. As a result, if a solidarity strike actually occurs, it is pointed out that the weaknesses in the shipbuilding labor structure will be revealed once again.

A study also showed that an additional 43,000 workers need to be deployed over the next five years to maintain the competitiveness of the shipbuilding industry. According to the Korea Shipbuilding & Offshore Plant Association’s (Shipbuilders' Association) 'Study on Workforce Support Measures for the Shipbuilding and Marine Industry,' considering domestic construction volume over the next five years, the workforce needed in the shipbuilding and marine industry by 2027 is estimated to be 135,000, which is 43,000 more than last year.

Specifically, research and design personnel are estimated to increase by 4,000 to 14,000, production personnel by 37,000 to 107,000, and other personnel (office, specialized professionals, etc.) by 2,000 to 14,000. The report proposed three major strategies for workforce supply and demand in the shipbuilding industry: ▲expanding customized workforce training to respond to future new markets ▲creating a stable environment for workforce inflow ▲establishing a foundation for an advanced workforce supply and demand ecosystem.

The industry consensus is that the solution to the current labor shortage is 'wages,' but shipbuilders, which have yet to escape from a deficit structure, lack the capacity. The entrenched low-wage problem is a dilemma that is bound to surface amid the order boom.

Professor Kim Young-hoon of the Department of Naval Architecture and Ocean Systems Engineering at Gyeongnam National University said, "Shipbuilding is an industry with many extended working hours, and the implementation of the 52-hour workweek has further intensified the labor shortage," advising, "Temporary or flexible lifting of labor hour restrictions or incentives such as improving living conditions should be provided."

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