Aju Business Daily

In a bid to salvage its embattled shipbuilding industry, South Korea presented the idea of placing special public orders for more than 250 ships worth 9.6 billion US dollars Monday in return for the closure of seven docks at three major shipyards and a 32 cut in their combined workforce.

The program, outlined at a meeting of economic officials led by Finance Minister Yoo Il-ho, was aimed at regaining the competitiveness of South Korea's shipbuilding industry through speedy restructuring. Yoo suggested the government would place special orders worth 11 trillion won ($9.6 billion) to build more than 250 ships by 2020.

Such orders will not be enough to ease a prolonged slump in the shipbuilding industry, Yoo said, urging top three shipyards -- Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering, and Samsung Heavy Industries -- to speed up the sale of none-core assets.

By 2018, the three shipyards are required to streamline their bloated structure by closing seven of their 31 docks and reduce their total workforce from 62,000 to 42,000.

The government promised to spend 750 billion won for five years on research and development to help shipbuilders focus on high value-added ships, ship maintenance, and design.

The government's program, however, betrayed market expectations as the Daewoo shipyard was allowed to keep its key businesses running despite lingering concern about oversupply.

The three shipyards have been under creditor-led restructuring to cope with dwindling orders and a prolonged business slump. Daewoo has been blamed for aggravating a liquidity crisis in South Korea's shipbuilding industry, but the government has largely endorsed Daewoo's a self-rehabilitation program to keep it afloat through asset sales and cuts in jobs.

Last year the Daewoo shipyard posted a record net loss of 5.13 trillion won, compared with a profit of 33 billion won a year earlier. Former executives have been arrested for window dressing and mismanagement.

Aju News Lim Chang-won = cwlim34@ajunews.com