South Korean shipyards in trouble

[Grey Havoc]

As Korean Shipyards Founder, Central Bank Dragged Into Rescue Bid (Reuters, via gCaptain)

Thoughts?

 

[Moose]

There are people who claim that the American shipbuilding industry was decimated by its workers turning into lazy, overpaid slobs. As Korea's troubles show, in a globalized world it's entirely possible to be at the very apex of productivity and market share and still be brought to the edge of collapse. Korea's industry should survive, even if it has to shrink and become more dependent upon their givernment's support.

 

[fredymac]

I'm having trouble following your line of reasoning. Let me paraphrase: if you can be killed by a sword and then if someone else is killed by a bullet, then the sword didn't actually kill you? A global recession/depression didn't kill American shipbuilding. Something else did. If you are simply saying there are many ways to die, well yes there are. And?

 

[sferrin]

We should let them build a few LHA-6s under license. I'm sure both they and Japan could find a use for them.

 

[TomS]

We should let them build a few LHA-6s under license. I'm sure both they and Japan could find a use for them.

You know they have their own indigenous design capabilities, right? Why should they build our stuff under licence when they can employ their own naval architects too?

 

[Moose]

I'm having trouble following your line of reasoning. Let me paraphrase: if you can be killed by a sword and then if someone else is killed by a bullet, then the sword didn't actually kill you? A global recession/depression didn't kill American shipbuilding. Something else did. If you are simply saying there are many ways to die, well yes there are. And?

A global recession isn't killing South Korea either, a market overcapacity caused by a post-recession purchasing boom and subsequent massive downturn of orders is. So how does that compare to the US situation?

After the Vietnam War, USN shipbuilding contracts plummeted. During the immediate postwar period, however, Subsidy of Commercial sector kept shipbuilding in the US afloat despite the Oil crisis. In the latter 70s through 1980, rebound of Navy Shipbuilding and significant investment in the Domestic market (offshore oil and the Alaska crude fleet) helped the industry stabilize itself. Then, in the 1980s 4 things happened in rapid succession:
The Alaskan fleet reached capacity, ending that market
The Offshore Oil construction boom ended
Several inland fleet operators went belly-up
The Reagan Administration killed all funding for Title V, VI, and XI of the Merchant Marine Act

As a result, US Commercial shipbuilding could not endure the downturn and collapsed. South Korea likely will act sufficiently to save their industry from a broadly similar situation, because nobody in South Korea's government blames the shipyard workers for the situation or is making political hay on the idea of letting the Shipbuilding Industry die.

 

[fredymac]

I couldn't find any charts covering commercial shipbuilding for the period 1946-2016 but I did find one for 1975-1998. US labor rates make building products that have high "touch" content very uncompetitive and only offsetting factors in technology can help. Unless something like 3D printed ships become viable I doubt US yards can make a comeback. I wonder how Europeans haven't been priced out of the cruise ship market? Their labor rates can't be much lower than ours.

 

[sferrin]

We should let them build a few LHA-6s under license. I'm sure both they and Japan could find a use for them.

You know they have their own indigenous design capabilities, right? Why should they build our stuff under licence when they can employ their own naval architects too?

Same reason Japan was over here checking out the Wasp design. The design is already done. Save them some money reinventing the wheel.

 

[Arian]

Did the US even have a civilian shipbuilding industry of any significance, in the last 50+ years? The US had (and has) a huge military shipbuilding industry, but civilian wise from what I can see, it was mainly focused on specialized and small vessels (tugs, service ships, riverine ships and barges) and now LNG tankers (but these are always going to be few in numbers).

These aren't in the same industry as these Korean firms, from what I can tell.

 

[starviking]

Same reason Japan was over here checking out the Wasp design. The design is already done. Save them some money reinventing the wheel.

The Japanese are interested in amphibious ship operations, but there has been no indication to date (that I am aware of) that they are interested in purchasing/building a foreign design.

Some info in this thread: http://www.secretprojects.co.uk/forum/index.php/topic,25987.0.html

 

[Arian]

Some info on US civilian shipbuilding over the years. Seems there hasn't been that much of a drop off, since there doesn't appear to have been very much to begin with. The 1970s were an anomaly and the highest decade in civilian ship production. But looking at number of civilian ships and tonnage, the US was never a world player. Profit wise, however, it seems very solid.

1977-2004: http://shipbuildinghistory.com/today/statistics/deliver1.htm
1947-1977: http://shipbuildinghistory.com/today/statistics/deliver2.htm

Total ocean-going shipbuilding since WW2: http://www.shipbuildinghistory.com/history/merchantships.htm#SINCE_WORLD_WAR_II
Seems very small.

Employment 1958-2013: http://www.shipbuildinghistory.com/today/statistics/bocjobs.htm

Revenues 1958-2013: http://shipbuildinghistory.com/today/statistics/bocrevs.htm
Value added 1958-2013: http://shipbuildinghistory.com/today/statistics/bocsales.htm

 

[Arian]

"US labor rates make building products that have high "touch" content very uncompetitive and only offsetting factors in technology can help.

The US shipbuilding industry employs nearly as many as the Japanese one (and the Japanese shipbuilding industry has shrunk by about 300% since the 1970s, in terms of people, far more than the US one). Wages are probably not all that different (although certainly higher in the US). But it seems the US shipbuilding industry never did focus on civilian ships, unlike the Japanese industry. They focused mainly on oil rigs and service ships, tugs and barges, and military ships.

Capital expenditures (i.e. investments in technology) per employee seem to be increasing too: http://shipbuildinghistory.com/today/statistics/boccapex.htm Although I suppose that would need to be compared with other countries

 

[Arjen]

I wonder how Europeans haven't been priced out of the cruise ship market? Their labor rates can't be much lower than ours.

A few years ago, I visited Meyer Werft in Papenburg, Germany. I was told they're still building cruise ships, partly because they're *fast*.
Financing a new cruise ship is an art form in itself - fast assembly can greatly reduce the interest paid on the required loans. Most of their subcontractors are a short distance away from Papenburg, Meyer has a very firm grip on logistics. With one 600 metre covered dock and another one half that size, bad weather doesn't stop them building ships.

Cruise ship construction is a very complex affair. All the yards that have survived are masters of logistics, with lots of experience of building on schedule, price and quality.

 

[sferrin]

Same reason Japan was over here checking out the Wasp design. The design is already done. Save them some money reinventing the wheel.

The Japanese are interested in amphibious ship operations, but there has been no indication to date (that I am aware of) that they are interested in purchasing/building a foreign design.

Some info in this thread: http://www.secretprojects.co.uk/forum/index.php/topic,25987.0.html

I didn't say Japan was interested in purchasing/building a US design. I said, tongue in cheek, South Korea could build some if they were looking for something for their ship yards to do. And Japan HAS been looking at US gators (probably to get a better feel for what they're capable of etc.).

 

[starviking]

Same reason Japan was over here checking out the Wasp design. The design is already done. Save them some money reinventing the wheel.

The Japanese are interested in amphibious ship operations, but there has been no indication to date (that I am aware of) that they are interested in purchasing/building a foreign design.

Some info in this thread: http://www.secretprojects.co.uk/forum/index.php/topic,25987.0.html

I didn't say Japan was interested in purchasing/building a US design. I said, tongue in cheek, South Korea could build some if they were looking for something for their ship yards to do. And Japan HAS been looking at US gators (probably to get a better feel for what they're capable of etc.).

Ooops! My apologies to you.

 

[Arian]

I'm having trouble following your line of reasoning. Let me paraphrase: if you can be killed by a sword and then if someone else is killed by a bullet, then the sword didn't actually kill you? A global recession/depression didn't kill American shipbuilding. Something else did. If you are simply saying there are many ways to die, well yes there are. And?

A global recession isn't killing South Korea either, a market overcapacity caused by a post-recession purchasing boom and subsequent massive downturn of orders is. So how does that compare to the US situation?

After the Vietnam War, USN shipbuilding contracts plummeted. During the immediate postwar period, however, Subsidy of Commercial sector kept shipbuilding in the US afloat despite the Oil crisis. In the latter 70s through 1980, rebound of Navy Shipbuilding and significant investment in the Domestic market (offshore oil and the Alaska crude fleet) helped the industry stabilize itself. Then, in the 1980s 4 things happened in rapid succession:
The Alaskan fleet reached capacity, ending that market
The Offshore Oil construction boom ended
Several inland fleet operators went belly-up
The Reagan Administration killed all funding for Title V, VI, and XI of the Merchant Marine Act

As a result, US Commercial shipbuilding could not endure the downturn and collapsed. South Korea likely will act sufficiently to save their industry from a broadly similar situation, because nobody in South Korea's government blames the shipyard workers for the situation or is making political hay on the idea of letting the Shipbuilding Industry die.

One would think, with all the industries in the US that have been declared dead or dying, that there'd be nothing left in the US these days.

And yet, the US shipbuilding industry generates more value added than the South Korean shipbuilding industry: ~$17 billion vs ~$14 billion. That's one hell of a death!

One would hope for a similar kind of death for the South Korean shipbuilding industry. But really, no one really thinks this is going to happen, right? Shipbuilding is a cyclical industry. They've seen worst in the 1980s. And coming off from the highest boom and peek they have ever seen, is hardly the "death" of this industry. Here's some info on South Korea's shipbuilding industry: http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=c/wp6(2014)10/final&doclanguage=en

Not sure why there's such a fascination with not "letting industries die", whether they're dying or not.

 

[lastdingo]

I can't quite call overpriced warship construction "value added".

The U.S. shipbuilding is essentially limited to USN, USCG, yachts, Mississippi/Missouri shipping, Great Lakes and oil industry specialised ships. U.S. naval shipbuilding isn't competitive. U.S. warships get exported when old, not as new orders unlike French or German ones.
U.S. shipbuilding failed 100% in markets where it faced foreign competition save for Great Lakes shipping, where it competed with Canadians only.

Its shipbuilding in gross tonnage is 94% PRC, South Korea and Japan.

http://www.rba.gov.au/publications/bulletin/2013/dec/2.html

 

[Arian]

I can't quite call overpriced warship construction "value added".

The U.S. shipbuilding is essentially limited to USN, USCG, yachts, Mississippi/Missouri shipping, Great Lakes and oil industry specialised ships. U.S. naval shipbuilding isn't competitive. U.S. warships get exported when old, not as new orders unlike French or German ones.
U.S. shipbuilding failed 100% in markets where it faced foreign competition save for Great Lakes shipping, where it competed with Canadians only.

Its shipbuilding in gross tonnage is 94% PRC, South Korea and Japan.

Lots of nations on the market for 10,000 ton destroyers and aircraft carriers? No? So who are they competing with exactly? As for civilian market (which you're lumping together with the military one), US shipbuilders were never in that industry to begin with. Any other large lake-fearing shipbuilders out there, besides the Canadians?

They're not competitive, in that they are not competing in the same markets.

 

[Arian]

China's shipbuilding industry is in even more trouble. Orders fell by 60% compared to 2014.
http://atimes.com/2015/12/chinese-shipbuilding-orders-sink-62-amid-commodity-slump/