Embassy of the Republic of Korea to Norway

The Shipbuilding Industry of the Republic of Korea – world leading and important for Norway

Sebastian A. Løe

Though many are most familiar with Korea’s consumer electronics, perhaps cellphones in particular, the Republic of Korea excels in other industries as well. In fact, the country is one of the world’s leading shipbuilding nations.  When Japan became the world’s leading shipbuilding nation in 1956, Europe still held 75% of the market share. Today, however, more than 90% of orders for new ships have been placed at shipyards in China, Japan and the Republic of Korea. How did this come to be, and why is this relevant for Norway? 

The Republic of Korea is a coastal country with long maritime traditions. Their modern shipbuilding industry started in 1910, during the Japanese colonial period when Japanese shipbuilders started building in major ports such as Busan and Incheon. After the Korean War, Korean companies took over operations. The shipbuilding industry, however, did not take off until the 1970s when the government focused on building up the industry. Despite having over a hundred shipyards in the 1960s, just nine of them were producing steel vessels. Hyundai Construction Company began building the Hyundai Heavy Industries Ulsan Shipyard, which is still the world’s largest, in 1972, and established the HHI company the same year. In 1983, HHI had become the world’s leading shipbuilder. They would hold onto this position for another 30 years, before being surpassed in the last decade. Beginning in the early 80s, Daewoo Heavy Industries and Machinery as well as Samsung Heavy Industries got involved in shipbuilding , and grew their market shares throughout the 80s. It was in this period, the 70s to the 90s that the Republic of Korea became a major shipbuilding nation, despite world shipping being in crisis.

How did the Republic of Korea manage this success? All three of these companies were supported by the state, at first through the Shipbuilding Promotion Law from 1958 (replaced by the Industry Promotion Law in 1986), and later through development plans. There were both economic and political reasons to promote heavy industries, and shipbuilding in particular. The economic reasoning revolved around the notion that light manufacture export was unsustainable in the long run, and that a competitive edge in heavy industries should be sought after as well. The political reasoning revolved around national security. The United States withdrew a lot of troops and military presence from the peninsula in the 1970s, which in turn pressured President Park Chung-hee to upgrade the military and promote defense and defense related industries. 

What is the connection to Norway? While the Republic of Korea is among the leading shipbuilding nations, Norway is among the top shipping nations. Norwegian companies buy many of their ships from the Republic of Korea. In fact, in 2019, passenger, cargo, and other special purpose ships accounted for over 50% the Republic’s exports to Norway. Some shipowners have even been honored for their patronage. Herbjørn Hansson, founder of Nordic American Tankers, received a citation from President Moon Jae-in last year for his longstanding promotion of friendly relations between the two countries. More than two thirds of NATs fleet are built in the Republic of Korea. Even the Royal Norwegian Navy has placed orders at Korean shipyards. In 2013 a new logistics and replenishment ship, HNoMS Maud, was commissioned from Daewoo Shipbuilding & Marine Engineering.

Shipbuilding is not only an industry in which the Republic of Korea is a world leader, but it is also an important industry in their trade relation with Norway.

Sources:

https://www.hellenicshippingnews.com/korea-leading-global-shipbuilding-industry/

https://www.ilovesea.or.kr/eng/resour/industry3.do

Lars Bruno & Stig Tenold (2011) The Basis for South Korea's Ascent in the Shipbuilding Industry, 1970–1990

https://www.usfunds.com/investor-library/frank-talk-a-ceo-blog-by-frank-holmes/top-10-countries-with-the-largest-shipping-fleets/#.YR8_bogzY2z

https://oec.world/en/profile/bilateral-country/kor/partner/nor  

https://www.sb.no/herbjorn-har-kjopt-mange-skip-i-sor-korea-na-har-han-fatt-medalje-fra-presidenten/s/5-73-1243334?&session=fb819add-d223-42c5-9f1b-2b0baa70390b&onboarding_mode=true

https://www.tu.no/artikler/na-bygges-sjoforsvarets-storste-skip/223895 

Image Sources:

Image 1: Shipyard. Pixabay

Image 2: HNoMS Maud sailing away from the shipyard. Creative Commons.