[No One to Build Ships ④] Companies Prioritize 'Regaining Profits'... Government Must Also Step Up with Residential Environment Improvements

Need to Improve Drying Speed and Costs by 5-10% Through Adoption of Automation, AI, Big Data, etc.
Improvement of Residential Conditions Around Shipyards Also Required

Editor's NoteSouth Korea's shipbuilding industry is sweeping up global orders with eco-friendly vessels such as LNG (liquefied natural gas) carriers and propulsion ships leading the way. However, the workforce lost during the prolonged downturn has not returned. Despite having work, it is difficult to find people to work, leading to a "scream amid the boom." Both the previous and current administrations have introduced measures to train shipbuilding personnel and secure foreign workers, but these are seen as solutions that fail to address structural problems. Although it is a period of order boom, doubts remain about whether the structural issues of the shipbuilding industry?such as continued deficits, cutthroat competition, and low wages?can be resolved. Talented individuals who should be responsible for future growth are turning away from the shipbuilding sector, and skilled craftsmen needed for construction work are not moving despite reports of labor shortages at shipyards. Due to the prolonged slump, the shipbuilding industry’s working conditions have worsened compared to other industries, and the gap between downturns and booms has lowered employment stability. The issue is not only about securing skilled workers but also urgently acquiring high-level personnel in eco-friendly ship technology and design. This article examines how to solve these problems in the shipbuilding industry.

There is widespread concern that the industrial ecosystem of major shipbuilders and their partners could collapse due to labor shortages. Industry insiders and outsiders alike point out the need to break the low-wage structure, attract young talent, and create workplaces worth working in. Experts emphasize that above all, it is crucial for companies to regain profitability to have the capacity to raise wages. [Related Article] The Naked Truth of K-Shipbuilding: 'No One to Build Ships'

On the 11th, Professor Janghyun Lee of Inha University’s Department of Naval Architecture and Ocean Engineering said in a phone interview with Asia Economy, "(Shipbuilders) want to raise wages, but currently the market is tilted toward the demand side," adding, "Shipbuilding is a made-to-order industry like a tailor shop, so shipbuilders are pulled along by the orders and contracts of these clients." He diagnosed the situation and emphasized, "It is important for companies to increase productivity and advance technology to create a structure that can generate profits."

He stated, "Efforts are needed not only in automation facilities but also in developing technologies such as artificial intelligence (AI), the Internet of Things (IoT), and big data analytics to shorten construction times," adding, "If technology development can achieve even a 5?10% improvement in construction speed or cost reduction, it would be possible to create a structure that generates operating profits."

A skilled worker working at the Daewoo Shipbuilding & Marine Engineering headquarters in Geoje-si, Gyeongnam. The photo is not directly related to the article. [Image source=Yonhap News]

There are also calls for government and local governments to implement manufacturing revival strategies, including expanding foreign worker quotas and improving residential conditions near shipyards. Professor Younghoon Kim of Gyeongnam National University’s Department of Naval Architecture and Ocean Systems Engineering said, "Shipbuilding involves a lot of overtime work, but with the implementation of the 52-hour workweek system, labor shortages have worsened," advising, "It is necessary to temporarily or flexibly relax the 52-hour workweek system for shipbuilding or provide incentives such as improving residential conditions."

Recently, as South Korean shipyards’ order performance has recovered, the order drought is coming to an end. Last year, the domestic shipbuilding industry achieved its highest order volume in eight years since 2013. The Big 3?Korea Shipbuilding & Offshore Engineering, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering?greatly exceeded their target order volumes, focusing on LNG and LPG carriers, container ships, and oil tankers. Last year, the order fulfillment rates for Korea Shipbuilding & Offshore Engineering, Samsung Heavy Industries, and Daewoo Shipbuilding & Marine Engineering were 153%, 134%, and 140%, respectively. This year, Korea Shipbuilding & Offshore Engineering has already surpassed its $17.4 billion target, achieving $17.9 billion in orders.

Shipbuilders are also making every effort to attract young talent. They have set plans focused on training new personnel and are making concentrated investments.

Hyundai Heavy Industries and Hyundai Mipo Dockyard are recruiting technical trainees. Their strategy is to create synergy by sharing technology and educational infrastructure through integrated recruitment within the shipbuilding group. In the first half of last year, 230 applicants applied for 100 trainee positions, leading to an increase in the quota to 120. This was due to the effect of offering free education and providing training allowances. From the second batch this year, the scale will be increased to 200 trainees, and benefits will be expanded.

Daewoo Shipbuilding & Marine Engineering is focusing on improving the quality of education by opening a VR painting training center. An industry insider said, "As overtime and special work decreased due to the 52-hour workweek system, skilled workers moved to other industries," adding, "Government support to flexibly adjust substitute and extended work is urgently needed."

An industry official said, "Each shipbuilder is implementing various policies to secure young workers, but it is insufficient," adding, "So far, government policies have focused on workforce training infrastructure, but efforts such as establishing joint funds between primary contractors and the government to improve residential conditions around shipyards are necessary."