Page 17: of Maritime Reporter Magazine (June 2016)

trated in Geoje Island where Daewoo and sponse to the downfall. Small yards will the Suez Canal and the need for VLCCs. industry has bought itself into without a

Samsung call home and control nearly close and we will lose at least one of the Korea enjoyed the double hull regula- world incident of this magnitude.

70% of the large ship market. 20,000 giants. China must follow suit and con- tions as a result of the Exxon Valdez. Having built and worked in this coun- workers have been laid off between the trol their capacity. The industry will then China serviced the continued growth of try for over 30 years, employed its en- two companies in recent weeks. The two have to wait for the single world incident dry bulk with the county’s 8% growth gineers and boasted about its ability and shipyards have reported the lowest for- that creates new trade routes, extends a and thirst for raw materials. The current respect for our nation, the news is a sad ward order book level in 11 years with ton-mile voyage, or requires a building market will have a dif? cult time correct- day for us and for shipping. no shipbuilding interest beyond an early of a new nation. Japan had the closing of ing the supply and demand balance the 2017 delivery. The layoffs and the pro- duction decline have already affected the local economy. Housing is down by 50% and restaurant and service companies re- port a 30% downturn this year.

Ulsan, South Korea and home of our

Amtech of? ce is also suffering. Hyun- dai Heavy Industries has laid off 11,000 workers collectively throughout its fa- cilities and its losses continue despite valiant efforts to control costs. Rumors abound of management closing ? ve of its nine drydocks; the ? rst attempt to close and downgrade the production in the remarkable history of the company.

There is no longer global interest in the

THREE TUGS 144-CAR FERRY larger ship types moving forward. The markets are not supporting the construc- tion of Post – Panamax containerships,

Ultra large Ore carriers, 150,000 cubic meter LNG ships or VLCCs and those

THE VIGOR/KVICHAK NEW BUILD TEAM ship types were Hyundai’s bread and

ALUMINUM, STEEL, SMALL, MEDIUM OR LARGE, WE DELIVER QUALITY.

butter.

Why now; what does the future hold?

The mid 80s collapse of the Japanese shipyards dealt with a rapid rise in crude oil prices. The Korean collapse is deal- ing with a rapid fall. Owners rushed to build under IMO Tier II emission regula- tions before the 2016 deadline occurred and Tier III requirements raised the cost of construction by a projected $3 million plus U.S. dollars. Contracts of 80 ship and 120 ship orders replaced historical orders of 8 to 10 hulls. The container gi- ants introduced slow steaming to mask an overcapacity in their markets only to be faced with owners building larger containerships, adding to the problem.

Where Japan consolidated it shipbuild- ing industry and opened discussions with the young Korean yards to control their excess capacity, China built shipyards in every city and open ? eld with access to a waterline. Japan provided more than several ? nancial incentives to build and owners took advantage of that ? nancing. 19M PILOT BOAT

Korea is faced with a ? nancial market that has taken its losses and is no lon- ger interested in ? nancing ? eets. Over- capacity from China, the uncertainty of crude oil prices and global recession has brought ship orders down to near zero.

Aluminum, steel, small,

And Korea estimates this market to last medium or large the at least another 24 months.

206.545.8485 1.855.VIGOR99

The forces of the market are so strong,

Kvichak/Vigor team is

KVICHAK.COM VIGOR.NET and the overcapacity so large, a down-

[email protected] [email protected] ready to build it for you. scaling of the industry must take place to weather that period. Consolidation of Korea’s shipyards will be the ? rst re- www.marinelink.com 17

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