SME Fund Set Up for Struggling Shipbuilding Suppliers

STX sees cooperative "survival fund" as first of many to come

Woori Bank and the STX Group signed an agreement on Dec. 2 to set up a 100 billion won loan fund to help SMEs experiencing financial difficulties due to a slowdown in the shipbuilding industry, according to a joint announcement by the two partners.
Chairman Kang Duk-soo of the STX Group and President Lee Chong-whi of Woori Bank signed an MOU to set up "the survival fund" at the group's Namsan Tower in the presence of the CEOs of SME cooperative firms.
The two partners agreed that STX will deposit 50 billion won in its account at Woori Bank and the bank will set aside an equal amount to launch the fund, they said.
The occasion marks the first time that such a fund will be created to assist SMEs in financial trouble and the STX Group, which includes two shipbuilding companies, will be the first large company to set up such fund.
Under the agreement, Woori Bank will provide loans from the fund to SMEs recommended by STX Group at low interest rates. President Lee said at the signing ceremony that this marks the beginning of cooperation among banks and business firms to set up funds to help out SME subcontractors, adding that banks and industrial firms will further cooperate to expand the number of such funds in the country through their partnerships.
Chairman Kang of the STX Group said SMEs are having a hard time borrowing money amid the current world financial crisis and when this type of fund program is expanded, it will not only assure the mutual survival of large shipbuilders and small vendors, but also strengthen the nation's shipbuilding industry.
STX has an ambitious long-range plan to make itself a top-class conglomerate in the world by focusing its attention on such business sectors as shipbuilding, machinery, shipping and trade, plant projects and general construction.
The group will step up the growth of shipbuilding and machinery to lead the expansion of shipyards and engine manufacturing to the extent that the sector's total sales would reach 24 trillion won by 2012. The group projects its shipyards in Korea, Norway, and China will be strong enough to lead the growth of the entire group.
In trade and shipping, the group expects the sectors to record 14 trillion won in combined sales in 2012 with STX Shipping projected to rank the fifth largest in maritime shipping in the world. STX Shipping, which operates bulk shipping lines, will expand into LNG, VLCC, car carriers and container ships so that it will be the largest shipping firm in the country.
The plant and construction sectors are projected to record 9 trillion won in sales by focusing on overseas projects in the areas of civil and plant construction. The energy sector is projected to generate 2 trillion won in sales by 2012 through the exploration of natural resources overseas and the new and recycled energy business.
The group changed the name of its recent acquisition in Europe from Aker Yards to STX Europe ASA. The names of its affiliate shipyards in Norway, Finland and France will also be changed gradually. STX Europe, which generated 6.5 trillion won in sales last year, will continue to maintain its operations as before, building mainly cruisers and other ships including ice breakers.
Its shipyards in Norway will continue to be expanded as an offshore base to build various offshore equipment needed in natural resources exploration in a number of regions of the world such as Africa, Southeast Asia and Central and South America. The shipyards in France will continue to build cruisers and defense industrial equipment along with new growth engines in those areas. The yards will put into use its technologies for various defense industries including those for the construction of submarines, LNG carriers and aircraft carriers, through cooperation with the French government for further expansion into Europe, Africa and the Middle East. The shipyards in Finland will continue to develop the technologies for ice breaker construction and create a business model for the development of arctic regions.
Chairman Kang said Aker Yards has top technologies in various areas of its operations including cruisers, offshore equipment and defense industries and they will be put to use for maximum effect to help boost the group's second half performance. nw

President Lee Chong-hwi of Woori Bank and Chairman Kang Duk-soo of STX Group holds a copy of the MOU to cooperate each other to set up a fund to help SME suppliers for STX Shipbuilding Dec. 2.