[Shipbuilding Labor Shortage Crisis] 'Order Boom' Prosperity... But No Workers Available

At the End of Last Year, 92,200 Workers Employed, Halved Over 7 Years Amid Prolonged Recession
Even with Premium Pay, Skilled Workers Hard to Find... Reluctance to Return Despite Government Training Measures

[Asia Economy Reporters Oh Hyung-gil and Jung Dong-hoon] On the 23rd, when a severe cold wave hit, the lecture room at Hyundai Samho Heavy Industries Technical Training Center was bustling with dozens of domestic and international trainees engaged in various shipbuilding technology practices. Through technical training, they receive more than 5 million KRW in support funds over six months, including local government employment support costs and training expenses. They also reside in apartments within the shipyard provided by the company. Kim Sang-jin, head of the Technical Training Center, said, "Due to the nature of the shipbuilding industry, advanced technology is required," adding, "Although the training cost per trainee exceeds 50 million KRW, it is unavoidable to nurture high-level talent needed on-site."

Since last year, the shipbuilding industry, which has been hitting 'big orders,' is struggling with a labor shortage. Although orders have exceeded expected targets, there is a shortage of people to actually build the ships. Even though they need to secure manpower immediately by offering premiums to deliver ships, the lack of skilled workers is preventing an increase in production volume.

According to the Korea Shipbuilding & Offshore Plant Association on the 24th, the number of workers in the shipbuilding industry was 92,200 at the end of last year, which is less than half compared to 202,689 in 2015. This is due to large-scale restructuring and voluntary resignations during the prolonged shipbuilding industry downturn over the past 7 to 8 years, causing skilled workers to leave companies.

In particular, there is an acute shortage of manpower to be deployed in ship construction. Although the government announced a plan last September to train 8,000 shipbuilding workers by this year, the situation remains difficult. Currently, it is a boom period for orders, but there is reluctance to return to the shipbuilding industry due to fears of another downturn. A shipbuilding industry official lamented, "It is not just about securing skilled production technicians; securing high-level personnel for eco-friendly ship technology and design is also urgent, but there is no clear solution, which is frustrating."

While there is a severe shortage of workers, orders have been pouring in since early this year, following last year. Samsung Heavy Industries recently secured an order for four liquefied natural gas (LNG) carriers from an African shipping company for a total of 998.5 billion KRW. This first order of the year achieved 9% of the annual order target of 8.8 billion USD. Korea Shipbuilding & Offshore Engineering, the shipbuilding holding company of Hyundai Heavy Industries Group, also secured a total of 34 vessels worth 3.7 billion USD (approximately 4.5 trillion KRW) this year, achieving 21% of the annual target of 17.44 billion USD. Daewoo Shipbuilding & Marine Engineering has also secured orders for a total of 12 vessels and offshore plants worth 2.72 billion USD (approximately 3.24 trillion KRW) since the beginning of this year.

These three companies secured orders worth 45.8 billion USD (approximately 54.48 trillion KRW) last year, exceeding their annual order targets by 45%, securing work for 2 to 3 years.

The outlook for orders this year is also positive. According to Clarkson Research, a UK-based shipbuilding and shipping market analysis firm, global maritime cargo volume is expected to increase by 3.4% to 12.386 billion tons this year compared to 11.974 billion tons last year.

Another shipbuilding industry official expressed concern, saying, "Orders are pouring in, but due to a lack of manpower, delivery deadlines are not being met, or production is significantly disrupted," adding, "Due to the nature of the shipbuilding industry, a certain period of training is required, and rehiring skilled workers who have left the company can take considerable time and cost."