S. Korea set to help struggling shipbuilders

(ATTN: ADDS with more details, comments in paras 6, 9, 11-12)
SEOUL, Nov. 9 (Yonhap) -- State-run financial institutions will increase their
support to shipyards and shipping lines struggling to cope with the fallout from
the worldwide economic slump, the government said Monday.

The Ministry of Knowledge Economy said the global economic crisis has caused new
orders won by local shipyards to fall 90 percent on-year from January through
September, making it necessary to take active measures to prop up the sector.
South Korean companies like Hyundai Heavy Industries Co., Samsung Heavy
Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. won 47 new orders
in the first nine months of this year compared to 655 vessels won for the whole
of 2008.
According to Clarkson Research, South Korean shipyards won 1.33 million
compensated gross tons (CGT) of ships up till September, compared to the 2.42
million CGTs won by Chinese rivals.
"Under the action plan, the Export-Import Bank of Korea will move to increase
shipbuilding-related financing, while Korea Export Insurance Corp. plans to
introduce a package support coverage program that can reduce the burden on
shipping lines," Cho Seok, deputy minister at the ministry said.
The latest announcement is a follow-up to the plan outlined last week at a
meeting chaired by President Lee Myung-bak to deal with the plunge in new ship
orders. Such a drop could lead to a liquidity crunch throughout the important
heavy industry.
Cho said in the short term 500 billion won (US$430 million) will be offered as
loans to shipyards to build and launch new ships, with efforts made to link
direct loans with greater export insurance coverage that can help shipping
companies place orders for new vessels.
"The financial support will be extended to both local and foreign companies
without discrimination," the official said.
In the long run, efforts will be made to expand global market control in
value-added ships such as liquefied natural gas tankers, super-larger container
ships and offshore plants including drill ships.
The official, meanwhile, said creditors of eight mid-sized shipyards undergoing
workout programs plan to get these companies to move away from building complete
ships and to become components manufacturers and to operate as ship repair yards.
"These companies had actually built key components and repaired ships in the past
before they tried to become full-fledged shipyards," he said, adding that Seoul
is pushing for year-round restructuring efforts for the whole shipbuilding
industry to deal with current overcapacity.
Cho, in addition, said that healthy mid-sized shipyards could aim to make inroads
into the marine leisure industry dominated by North American and European
companies. The global market for this industry stands at roughly US$47 billion
yonngong@yna.co.kr
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