Korea is one of the leading and growing producer of ships in the world. These Made in Korea ships contain oil supertankers, oil-drilling platforms and many more. The industry bore crisis in the mid of 1980 due to the oil glut and worldwide recession. In the era of 1980, shipbuilding export order were decreased a totaled 3 million gross tons valued at US$1.9 billion, which were 17.8% less than the previous year. These declines were caused due to labor unrest, Seoul’s unwillingness to provide financial assistance, and Tokyo’s new low-interest export financing in support of Japanese shipbuilders.
But Korean shipping industry expanded fastly in the early 1990s when Korean shipyards tripled their shipbuilding capacities, while ignoring demand levels in order to get leadership of the market, which they achieved in 1999. Also, according to an EU Commission report, the devaluation of Korean currency gave the yards an additional competitive advantage. Prices from the Korean yards had been reduced to 40% below production costs in 1999.
In the middle of the trade dispute with the EU, Korea began an ambitious program on 17 June 2002 to enhance the country’s leadership in the industry and totally ignored foreign pressure to reduce its shipbuilding capacity. In this program, a meeting was suggested between government officials and shipbuilders which was called for US $170 million to grow new technology over the next ten years. At the meeting, the Korean shipbuilders agreed to enhance their global market share from 30% in 2001 to 40% in 2010. It is also suggested in the meeting that high margin vessels like cruise ships and supply vessels, should be 35% of the total production in 2010 as compared to 13% in 2001.
Moreover, they also agreed to boost their exports of Made in Korea shipbuilding equipments and parts to US $2,000 million by 2010 from US $370 million in 2001. In this meeting, another important factor was also highlighted about Japanese shipbuilders who were teaming up to compete with Korean rivals through mergers and strategic partnerships. In May 2002, the largest shipbuilder of the world Hyundai Heavy Industries got US $400 million worth of orders from four reputed shipping organizations to build 12 petroleum carriers. At the same time, Hyundai captured the orders for 22 ships that worth was about US $800 million and from now till present, Korean shipbuilding industry is growing more and more and striving to make strong its position in the global shipbuilding market.
