South Korea's HHI to Halt Ops at Onsan Shipyard Due to Industry Downturn
South Korea's Hyundai Heavy Industries Co., Ltd. (HHI) planned to halt operations at one of the company's yards amid the downturn in the global oil and gas industry, a report in local daily the Korean Times said Friday.
The firm intends to seek alternative use for its Onsan yard, which currently manufactures offshore rigs and other resource development facilities, in March following its failure to secure a single order for offshore oil and gas facilities as the petroleum industry cutback on capital spending.
"The plant will complete its last order in late March, and then it has no more orders to work on ... So, we decided to utilize the facility for other purposes. Under no circumstances will we close the plant," an HHI spokesman said, as quoted by the Korean Times.
HHI is likely to use the Onsan yard, which occupies an area of 2.15 million square feet (200,000 square meters), as storage for the shipbuilder's raw materials and equipment. The yard has been used to build floating production storage and offloading, liquefied natural gas plants and other offshore facilities.
Around 60 of the workers from the Onsan yard will be transferred to another shipyard, with the remainder expected to see their contracts terminated, the Korean Times indicated, adding that the other shipyard -- Gunsan -- will handle all future orders for offshore facilities.
HHI and other major South Korean shipyards, namely Daewoo Shipbuilding & Marine Engineering Co., Ltd. (DSME) and Samsung Heavy Industries Co., Ltd. (SHI), incurred heavy operating losses amouting to $6.1 billion in 2015 -- as mentioned in a Yonhap News Agency report on Jan. 19 -- due to weak demand to build offshore oil and gas facilities as well as more intense competition from rival shipyards in China.
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