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Temporary Market Leader

Kang Gyoung-Taek expects the global shipbuilding overcapacity to persist for years to come. The Korean politician told nonstop about possible ways to cope with the crisis, the shortage of highly-skilled engineers, and Asia’s growing influence in international shipping

K orea has built up a strong and diverse industrial port- folio. Shipbuilding and mobile phones are among the most important products. Exports of eight key pro- ducts – including oil products, ships, steel and general ma- chinery – showed double-digit growth last year. Out of a total export volume of 422.4 billion US dollars, ship exports accounted for more than 40 billion US dollars, the highest level ever recorded. Nevertheless, according to the Korea Shipbuilding Association, newbuilding orders dropped by 40.6 per cent in 2008 despite a strong first half. For obvious reasons, few orders were received in the latter part of the year. How do Korean shipyards cope? How does the Korean government see the situation? nonstop spoke with Kang Gyoung-Taek, Deputy Director of the Automobile & Shipbuilding division of the Ministry of Knowledge Economy (MKE). His division is a department of the “Office of In- dustries” which reports to the Vice Minister of Industry and Technology. nonstop: How do you support the Korean ship- building industry? Kang Gyoung-Taek: Large shipyards of Korea, such as Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuil- ding and Marine Engineering (DSME), have a world-class competitive edge in their sca- le and productivity. However, we cannot say that they are world leaders in technology. The government is committed to assisting their efforts to develop core, original technology or enabling technology so that they can con- tinue to enhance their technological compe- titiveness. nonstop: What are the specific challenges the Korean maritime industry and economy are facing? Kang: In the second half of 2008, orders in the global ship- building market decreased sharply. We had anticipated such a decrease in orders, but for a later time. However, the global financial crisis and a sluggish real economy in re- cent months have sped up the decline more than expected, and we are concerned about possible adverse effects on the industry. For example, some companies who entered into the shipbuilding market during the recent boom period have not even finished building their shipyards. In the worst cases, they are likely to suffer from adverse effects of the gloomy economic situation today. The question of how the companies who have expanded their facilities extensively, including new start-up shipyards, will solve the problem of redundant facilities will be the pending issue for the domes- tic and global shipbuilding industry in the coming years. nonstop: How does the worldwide shortage of engineers and maritime personnel impact you and how do you deal with it? Kang: Korea has a sufficient technolo- gical workforce – about 600 graduates majoring in Shipbuilding Engineering enter the market every year. However, what the industry is lacking is an ade- quate number of engineers skilled in specialised technological disciplines. In addition, the level of technological expertise of the personnel may not always be up to industry expectation. In other words, there is a certain mis- match between the demand and sup- ply sides in our workforce. The government is making efforts to eliminate this mismatch through joint research and development projects in cooperation with companies and local governments, as well as through em- ployee retraining programmes. nonstop: Energy prices are volatile. What does that mean for the Korean maritime industry? Kang: The world experienced both a sharp hike and a sud- den drop of energy prices in 2008. Currently, oil prices are decreasing. As long as the global economy continues to rely on fossil fuels, energy prices may rise sharply at any time. Such a sudden energy price increase will likely boost the development of deep-sea and smaller oil fields, creating more business opportunities for local shipyards to make highly value-added products such as drillships. “The strength of Korean shipyards is their ability to deliver prod- ucts in a timely manner” Kang Gyoung-Taek


nonstop 02/2009

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