Focusing on Merchant Vessels
Small Korean shipbuilders are withdrawing from the offshore plant industry one after another due to their deteriorating profitability.
According to sources in the industry on Dec. 3, small shipbuilders such as Sungdong Shipbuilding & Marine Engineering and STX Offshore & Shipbuilding stopped receiving orders of offshore plants since they cannot burden high offshore plant design costs amounting to billions of won amid the urgency of business restructuring based on voluntary agreements with creditors. In addition, the returns on investment are also lower than those of merchant ships.
“With the shipbuilding industry still remaining in a slump, we are trying to focus on more lucrative merchant ships and special vessels rather than offshore plants,” one of them explained, continuing, “Different shipbuilders are concentrating on different types of vessels so as to keep down the production costs and maximize profits.”
For STX Offshore & Shipbuilding, the floating, storage and offloading (FSO) vessel contract it won two years ago is its latest offshore plant project as is the case with Sundong Shipbuilding & Marine Engineering.