The nation's major shipbuilders
have received only nine orders in the first quarter of the year, hinting that
this year may be another bad year for the shipbuilding industry. Of them,
leading shipyards Daewoo Shipbuilding & Marine Engineering (DSME) and
Samsung Heavy Industries failed to clinch any new orders in the period.
Despite having already experienced the worst year in sales in 2015, the way forward for a turnaround this year is still expected to be bumpy.
According to industry sources, Sunday, so far this year affiliate shipbuilders of Hyundai Heavy Industries Group received only six orders while the small shipbuilder Yeunsoo Heavy Industries clinched an order to build three small vessels that carry chemical products.
U.K.-based shipbuilding and marine transport-related data provider Clarkson Research Services said this is the first time in 15 years for Korean shipbuilders to receive orders amounting to only a single-digit in a quarter, the second time this has happened since the research center started collecting data in 1996.
Accordingly, the country's shipyards are experiencing sharp reductions in their backlogs of 28.44 million compensated gross tonnage (CGT) as of the end of February, the worst level since August 2004.
CGT is an indicator of the amount of work that is necessary to build a given ship and is calculated by multiplying the tonnage of a ship by a coefficient, which is determined according to its type and size.
Despite the global slump in the shipbuilding industry, Chinese and Japanese shipyards are reportedly maintaining their backlogs with domestic orders.
Korean shipyards, on the other hand, are losing business because of a resurgence in Japanese shipbuilders after restructuring, and rising competition from Chinese shipbuilders who get massive government support.
Hyundai Heavy Industries Group and DSME still maintained the world's first and second rank in the backlog of orders as of February, but Samsung Heavy Industries has given its third rank to Japan's Imabari Shipbuilding Group.
Chinese shipyards, which ranked fifth, seventh and ninth in the backlog, are seeking to enter the world's top five soon.
In the meantime, DSME is suspected of cooking the company's account books in 2013 and 2014. According to the Financial Supervisory Service (FSS), DSME allegedly changed its 440.9 billion won ($385.5 million) operating profit reported in 2013 to an operating loss of 778.4 billion won, and revised a 471.1 billion won operating profit in 2014 to a 742.9 billion won loss.
Individual and group investors are reportedly preparing class action lawsuits against the company for causing damage through window dressing its accounts.
"Korean shipyards won't go bankrupt, but if the situation persists the workload could decrease sharply by the end of this year, leading to possible massive layoffs," an industry insider said.
The nation's thee biggest shipyards ― Hyundai Heavy Industries Group, DSME and Samsung Heavy Industries ― are expected to layoff some 15,000 workers by the end of this year; and a total of 40,000 to 50,000 workers will lose their jobs in the next three years, he added.