No Way Forward
The three major Korean shipbuilders have posted record losses, and the Korean government’s industrial restructuring plan based on coupling between smaller shipbuilders and them is about to be thwarted. The government is claiming that the plan is for co-prosperity, but the industry is saying that it could lead to the opposite result.
The government worked on mergers between Samsung Heavy Industries and Sungdong Shipbuilding & Marine Engineering and between Daewoo Shipbuilding & Marine Engineering and STX Offshore & Shipbuilding. Although the former deal managed to be signed last month, things have changed drastically, as it was found that Daewoo Shipbuilding & Marine Engineering had recorded more than 3 trillion won (US$2.6 billion) in losses in the second quarter. The second deal seems to be going awry now, after the Korea Development Bank, the largest shareholder of Daewoo Shipbuilding & Marine Engineering, appointed STX Offshore & Shipbuilding President Jung Sung-lip as the new president of Daewoo Shipbuilding & Marine Engineering five months ago.
Creditors had discussed mergers between small shipbuilders last year, including those between STX and Sungdong and between Sungdong and SPP Shipbuilding. However, the talks reached no conclusion at all due to conflicts of interest.
STX is currently going through financial and accounting audits. The company is slated to be liquidated or entrusted once the result of the audits is made available.