[Reporter’s Notebook] K-Chosun Risks Mutual Destruction While Chasing Profits

Recently, the shipbuilding industry has been receiving welcome news. For the first time in 13 years, the three major domestic shipbuilders are on the verge of achieving simultaneous profitability. Centered on the booming liquefied natural gas (LNG) carriers, the order volume for this year is expected to approach $40 billion, or approximately 56 trillion won.

In particular, the election of Donald Trump as U.S. President has brought active love calls to our shipbuilding industry, greatly raising expectations for the resurgence of "K-Shipbuilding." The resilience of the shipbuilding industry, which has silently endured long periods of losses and ups and downs, is shining once again.

But this momentum is not stopping here. The next focus is special-purpose vessels following commercial ships. In response to the U.S. demand to expand naval power, which has fallen behind China, it is expected that Korean shipbuilders will participate not only in the maintenance, repair, and overhaul (MRO) business of warships but also in warship construction. There is also a forecast of potential orders for submarine projects from countries such as Poland, Morocco, and Canada. Based on cutting-edge technology and excellent productivity, Korean shipbuilding faces a golden opportunity to enter a long-term boom in the global shipbuilding market.

At times like this, it is crucial to avoid conflicts caused by excessive greed. The recent withdrawal of the complaint filed by Hanwha Ocean against HD Hyundai Heavy Industries marks a positive step toward resolving nearly a year-long conflict between the two companies ahead of the Korean next-generation destroyer (KDDX) project order.

However, instead of moving toward reconciliation, regrettably, conflicts that could lead to mutual destruction continue. HD Hyundai Heavy Industries has demanded that Hanwha Ocean withdraw its application to be designated as a defense contractor and has insisted on a sole-source contract for the KDDX project. This amounts to pressuring Hanwha Ocean to give up competition altogether, preventing them even from starting at the starting line?a case of seeing the speck in others’ eyes but not the beam in one’s own.

The fact that employees were convicted in a military secrets leak case is a matter HD Hyundai Heavy Industries must clearly reflect upon. Since this resulted in security demerits, efforts to make up for this must precede. Although the investigation will end with the withdrawal of the complaint, it is clear that this does not grant immunity from the misconduct.

The Ministry of Trade, Industry and Energy is expected to proceed with the designation of defense contractors for the KDDX as early as next month. Although the selection process for the detailed design and lead ship construction of the KDDX, originally scheduled for July, was delayed, it is very welcome that it has now resumed. Rather than insisting on a sole-source contract citing "precedent," the government should consider various options to enhance our competitiveness, such as joint development and construction.

China is rapidly catching up to Korean shipbuilding under government support. The technology gap is only about two to three years. The more domestic companies indulge in internal strife and conflicts, the more their external competitiveness will inevitably fall behind. This is of no help in seeking cooperation with other countries like the U.S., which are paying attention to Korean shipbuilding.

We must not forget the bitter memories of how the three major shipbuilders suffered huge losses due to a low-price bidding war driven by greed to achieve results when entering the offshore plant market just over ten years ago, and how they had to endure to recover.