Focus on Marine Structures, LNG Tankers

Pres. Nam of Daewoo Shipbuilding bets on LNG carriers and marine structures orders to get the company going this year

President Nam Sang-tae of Daewoo Shipbuilding and Offshore Co. said recently that the shipyard signed a contract worth $1.1 billion to build three submarines weighing 1,400 tons each for an Indonesian owner, the largest order ever for the defense industry in Korea. He said the project is a shot in the arm for the shipbuilder to spur the shipyard's growth in the days to come and is considered a huge feat for Korea. It also marks the first export of submarines since it first obtained the submarine building technology from Germany in 1988.
CEO Nam said the shipyard, with its 1.3 million-pyeong complex located on Goje Island west of Busan, will now be able to compete with the shipbuilders in such advanced countries as Germany, France, and Russia in exporting its submarines to foreign countries.
Nam said the shipbuilder expects to get more submarine orders from countries in Latin America and Southeast Asia as word of Daewoo's feat as a strong submarine builder spreads around the world, boosting the shipyard's reputation and putting a spotlight on its mammoth facilities such as its 1 million-ton dry dock, as large as eight football fields; a floating dock that can hold as many as two million people; and a goliath crane with the capacity to lift 900 tons of material and equipment.
Nam said the European crisis will have an impact on his company's overseas operations, but you don't get out of any thing by talking about the crisis. "There will be opportunities for business even amid the crisis, and we should seek them," he said.
The opportunities he talked about are in the area of offshore marine structures, as the company has not been engaged in turning out ships; it's been an integrated heavy industrial firm. A marine plant order is worth $1 billion to $2 billion and is a blue ocean in which the company has been very strong. Nam felt that the marine plants generate more profit than building vessels and the company's operation would not be affected too much even if the shipbuilding sector becomes sluggish. The CEO, therefore, plans to expand the ratio of the company's offshore plants to 7-3 or even to 8-2 compared to the shipbuilding sector.
Despite the slowdown in global shipbuilding orders, the company secured $14.3 billion worth of overseas orders last year, 30 percent higher than its target of $1.1 billion, the second largest order value in its history, with sales revenue amounting to 10 trillion won and net profit of 1 trillion won, an outstanding record the company set two years in a row.
Nam predicted that orders for container ships and bulk carriers would not be good this year due to the sluggish global economy, but he expected the high value-added LNG tankers and marine plant markets would have normal growth in 2012.
He expects such oil majors as Chevron, Texaco, Total, and Shell will issue large orders for offshore plants for their operations in Africa and Southeast Asia as the price of oil has been rising lately.
Nam also has taken moves to invest for the company's future, selecting 104 high school graduates among the employees to train as junior executives who started working for the company as clerks. They will be trained systematically for seven years at the company's Officers Academy so that they will be treated as well as college graduates or better.
The CEO spends about a third of his time abroad visiting such countries as Norway, Greece, France, and the Netherlands, among others, to help win ship orders for the company through meetings with ship owners in those countries, most of them from very wealthy families with titles in Europe.
The subjects of talks with them range from history, wine, yachts, private planes, and football, among others, Nam said, adding that he has to learn about their family backgrounds before calling on them for business. nw

A view of an iron ores and mineral carrier weighing 400,000 tons, the largest such ship in the world built and launched by Daewoo Shipbuilding and Offshore Co.