World Shipbuilding Trends (ShipTek)

WORLDSHIPBUILDINGTRENDSAND

KOREASHIPBUILDINGINDUSTRY

APRIL29~30,ShipTek

Presentedby

Dr.DongShikShinChairman

KoreaMaritimeConsultantsCo.,Ltd.

WORLDSHIPBUILDINGTRENDSAND

KOREASHIPBUILDINGINDUSTRY

ShipTek2008,COCHIN,INDIA

Presentedby

Dr.DongShikShinChairman

KoreaMaritimeConsultantsCo.,Ltd.

CONTENTS

1. WorldShipbuildingTrends

2. ShipPriceTrend

3. DeliveriesbyVesselType

4. ShiftofMarketShare

5. Orderbook&DeliverybyCountry

in2007

6. ChinaShipbuildingIndustry

7. IndiaShipbuildingOrderbook

Projection

8. KoreaShipbuildingIndustry

Growth

9. BackgroundofKoreas

ShipbuildingIndustryGrowth

CONTENTS

10.SpecialMaritimeAdministration

Committee

v MajorMilestoneActivities

11. ShipbuildingIndustryCluster

12. SevenKoreaMegaShipyards

13. WorldMarineEngineMarketShare

14. KOMACsRole:

InDevelopmentofKorean

ShipbuildingIndustry

15. AreaofCooperationBetween

KoreaandEmergingCountries

16. Recommendation

1.WorldShipbuildingTrends

q In2007(Jan.~Dec.),newshipbuildingorderworldwidereached79.2millionCGT,orderbookworldwidestoodat178.2millionCGTand33.6millionCGTweredelivered.

q Worldshipbuildingcapacityasof2007wasabout47.8millionCGTandthecompletiontonnageatthesameperiodwascloseto34millionCGT.

q FutureTrendofcurrentshipbuildingboom?

In2007(Jan.~Dec.),newshipbuildingorderworldwidereached79.2millionCGT,orderbookworldwidestoodat178.2millionCGTand33.6millionCGTweredelivered.

Worldshipbuildingcapacityasof2007wasabout47.8millionCGTandthecompletiontonnageatthesameperiodwascloseto34

FutureTrendofcurrentshipbuildingboom?

3

2.ShipPriceTrend

q Shippricefornewbuildingshavedoubledlastfiveyears.

ShipType 2002 2003

TankerVLCC 63.3 77.0

Suezmax 43.5 51.5

Aframax 34.5 41.5

BulkerCapesize 36.3 48.0

Panamax 21.3 27.0

Handymax 19.3 24.0

Container(6,200TEU) 60.0 71.0

Container(3,500TEU) 33.0 42.5

LNG(147KCBM) 150.0 155.0

NEWSHIPPRICE

Shippricefornewbuildingshavedoubledlastfiveyears.

2003 2004 2005 2006 2007

110.0 120.0 129.0 146.0

71.0 71.0 80.5 90.0

59.0 58.5 65.5 72.5

64.0 59.0 68.0 97.0

36.0 36.0 40.0 55.0

30.0 30.5 36.5 48.0

91.0 89.0 101.0 106.5

51.0 52.5 57.0 63.0

155.0 185.0 205.0 220.0 220.0

NEWSHIPPRICE (Unit:MillionUSD)

4

0

5

10

15

20

25

30

40

45

50

2004 2005 2006 2007

Source:ClarksonResearchService

(Unit:MillionGT)

Trends

3.DeliveriesbyVesselType

2008 2009 2010

Tanker

BulkCarier

LNG/LPG

Container

Trends

5

q Increasingdemandforlargersize,fasterinspeed,andhighvessels.

3M.BarrelULCC/15,000TEUContainer/380KDWTVLOC/200KCBMLNGq 88%WorldshipbuildingactivitieshasshiftedtoAsia,mainlyKorea,Japan

andChina.

1950

EUROPE

1970

JAPAN

1990

KOREA

ShiftinMarketSharesoftheWorldsMajorShipbuildingNationsShiftinMarketSharesoftheWorldsMajorShipbuildingNations

LowerWageRisingProductivityStrongPolitical

Intension


Intension

Koreaheld1.6%MKT.share

Koreaheld1.6%MKT.share

4.ShiftofMarketShare

Increasingdemandforlargersize,fasterinspeed,andhightechoriented

3M.BarrelULCC/15,000TEUContainer/380KDWTVLOC/200KCBMLNG88%WorldshipbuildingactivitieshasshiftedtoAsia,mainlyKorea,Japan

KOREA

2000

CHINA

2008~EmergingPlayers

INDIA,VIETNAM

ShiftinMarketSharesoftheWorldsMajorShipbuildingNationsShiftinMarketSharesoftheWorldsMajorShipbuildingNations


Intension


Intension

WorldMarketShare2007Korea35.7%Japan20.5%China34.6%

WorldMarketShare2007Korea35.7%Japan20.5%China34.6%

6

5.Orderbook&DeliverybyCountryin

JapanKoreaChinaEuropeOthers

35.7%(178.82)

34.6%(173.67)

20.5%(103.00)

ORDERBOOKBYCOUNTRY(DWT)

4.2%(21.2)

5.0%(24.8)

5.Orderbook&DeliverybyCountryin2007

JapanKoreaChinaEuropeOthers

35.7%(27.9)

19.3%(15.1)

34.4%(26.9)

DELIVERIESBYCOUNTRY(DWT)

7.4%(5.8)

3.2%(2.5)

Source:ClarksonResearchService

7

q Chinahasemergedasamajorhubforshipbuildingandaimsto

becometheworldsbiggestshipbuildingnationby2015.

ChinaisnowthethirdlargestshipbuilderintheWorld

Currentlyfocusingonthebulkcarriermarketandotherlowvalue

orders,butwillbeabletomoveupandbecomeathreatinthehighvalue

addmarketin5~7yearstime

GovernmentPolicyspecifiesthefollowinggoalstobehitby2015

Increaseannualoutputto17MDWT

Liftengineproductioncapacityto1,100unitsperannum

Productmorethan60%ofshipmachinery&equipmentlocally

Lifttechnologicalsophisticationofshipstointernationallevel

6.ChinaShipbuildingIndustry

Chinahasemergedasamajorhubforshipbuildingandaimsto

becometheworldsbiggestshipbuildingnationby2015.

largestshipbuilderintheWorld

carriermarketandotherlowvalueadd

orders,butwillbeabletomoveupandbecomeathreatinthehighvalue

GovernmentPolicyspecifiesthefollowinggoalstobehitby2015

Increaseannualoutputto17MDWT

Liftengineproductioncapacityto1,100unitsperannum

Productmorethan60%ofshipmachinery&equipmentlocally

Lifttechnologicalsophisticationofshipstointernationallevel

8

WorldShare(%)

Projection 2006~7 2007~12 2012~17

OrderBook(Mil.DWT) 1.3 5.0 18.0

GlobalMarketShare 1.0% 2.2% 7.8%

Turnover(Bil.$) 0.65 2.50 9.00

TotalEmployment 12,000 78,000 252,000

Orderbook(Mil.DWT) AnnualTurnoverBil.$

7.IndiaShipbuildingOrderbookProjection

9

AnnualTurnoverBil.$ GROWTHSCENARIO(Mil.DWT)

200620122017

Withsubsidy,highergrowthrateasshowninredcanbeachievedandsustainedataround30%providedsuitableenvironmentiscreated

Thiswouldbringusin2017whereChinaistoday..Thisis

clearlynotgoodenough

7.IndiaShipbuildingOrderbookProjection

1960s:Preparationstage

formodernization

1970s:Takeoffstage

1980s:Highspeedgrowth

1990s:Maturitystage

2000s:Became No.One

shipbuildingnation

8.KoreaShipbuildingIndustryGrowth

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

Year

GT

Unit:ThousandGT

Source:KOSHIPA(KoreaShipbuildingAssociation)

8.KoreaShipbuildingIndustryGrowth

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

72 77 82 87 92 97 02 07Year

50,000GT

18,000,000GT

DELIVERIESBYGROSSTONNAGE

Unit:ThousandGT


10

9.BackgroundofKoreasShipbuildingIndustryGrowth

Early1960sKoreanGovernmentindentifiedanddesignated

shipbuildingindustryasstrategictoppriorityindustryforthe

enhancementofnationaleconomy

Toachievethisgoal,thelatepresidentParkChungHeeand

governmentestablishedSpecialMaritimeAdministration

Committeetorenderunbendinganduncompromisingfullsupport

forthedevelopmentofshipbuildingindustry.

9.BackgroundofKoreasShipbuildingIndustryGrowth

Early1960sKoreanGovernmentindentifiedanddesignated

shipbuildingindustryasstrategictoppriorityindustryforthe

enhancementofnationaleconomy

Toachievethisgoal,thelatepresidentParkChungHeeand

governmentestablishedSpecialMaritimeAdministration

Committeetorenderunbendinganduncompromisingfullsupport

forthedevelopmentofshipbuildingindustry.

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10.SpecialMaritimeAdministrationCommittee

PresidentPresident

PrimeMinisterPrimeMinister

SecretariatSecretariat

MinistryofEnergy&Industry

(Shipbuilding)

NationalSecurityAffairs

EconomyAffairs

PoliticalAffairs

DeputyPrimeMinister

EconomicPlanningBoard

MinistryofScience&Technology

(R&D)

MinistryofEducation(Training)

MinistryofFinance(Funding,

Tax,Customs)

10.SpecialMaritimeAdministrationCommittee

PresidentPresident

PrimeMinisterPrimeMinister

SpecialMaritimeSpecialMaritimeAdmin.CommitteeAdmin.Committee

Advisors Specialist

DeputyPrimeMinister

EconomicPlanningBoard

MinistryofMaritimeAffairs

&Fishery(Shipping&Fishery)

MinistryofConstruction(Port,SEZ)

MinistryofDefense(Naval&

Coastguard)

MinistryofLabor

(Manpower)

12

Thiscommitteehassuccessfullyperformedfollowing:

1.Formulatedshortterm,midterm&longtermcomprehensivemasterplan

forthedevelopmentofshipbuildingindustry(1963~1965).

2.Establishedandformulatedcarefullycraftedandintegratedshipbuilding

industrypromotionpolicyandactionplantobeexecuted.

3.Committeehasfullyempoweredexclusiveauthoritytoprofessionally

monitor,guideandsupporttheindustryandalsoactasasinglewindow

clearancepointforallaspectofactivitiesrelatedtothedevelopmentof

emergingKoreanshipbuildingindustry.

v MajorMilestoneActivities

Thiscommitteehassuccessfullyperformedfollowing:

Formulatedshortterm,midterm&longtermcomprehensivemasterplan

forthedevelopmentofshipbuildingindustry(1963~1965).

Establishedandformulatedcarefullycraftedandintegratedshipbuilding

industrypromotionpolicyandactionplantobeexecuted.

Committeehasfullyempoweredexclusiveauthoritytoprofessionally

monitor,guideandsupporttheindustryandalsoactasasinglewindow

clearancepointforallaspectofactivitiesrelatedtothedevelopmentof

emergingKoreanshipbuildingindustry.

MajorMilestoneActivities

13

4. Establishmentandenforcementofvariousshipbuildingindustry

promotionlawsShipbuildingPromotionLaw(1958),Shipbuilding

IndustryEncouragementLaw(1967),ShipbuildingIndustryPromotion

Plan(1975),IndustrialDevelopmentLaw(1985),ShipbuildingIndustry

RationalizationMeasurement(1989).

5. Encouragedmajorlargeprivatecooperationandentrepreneursto

activelyparticipateandinvestinshipbuildingindustry.

6. Furnishedattractiveincentivesystemsandprogramsfortheinducement

ofadvancedtechnologyandinvestmentfromoverseasbycreating

friendlyenvironmentforJVs,tieupsandcollaborations.

7. UnsparinginvestmentfortechnicaltrainingandR&Dfacilitiesand

supportiveinfrastructure.

Establishmentandenforcementofvariousshipbuildingindustry

ShipbuildingPromotionLaw(1958),Shipbuilding

IndustryEncouragementLaw(1967),ShipbuildingIndustryPromotion

Plan(1975),IndustrialDevelopmentLaw(1985),ShipbuildingIndustry

RationalizationMeasurement(1989).

Encouragedmajorlargeprivatecooperationandentrepreneursto

activelyparticipateandinvestinshipbuildingindustry.

Furnishedattractiveincentivesystemsandprogramsfortheinducement

ofadvancedtechnologyandinvestmentfromoverseasbycreating

upsandcollaborations.

UnsparinginvestmentfortechnicaltrainingandR&Dfacilitiesand

14

8. Boldinvestmenttoconstructlargemegasizeshipyardwithadvanced

facilitiesandequipment.

9. Madeboldinvestmenttoestablishshipbuildingindustryclusterthat

providesshipbuildingrelatedmaterials&service.

Beside,wehave

Advantageousgeographicallocation.

Abundantskilledlaborer&technician.

Highspiritandsheerwillpowerofcreative,passionate

businessleadershipandhardworkingdedicatedmanpower

Now,Koreabecamenumber1shipbuildingnationand

demonstratingtotheworld,oursuperhighproductivityofquality

shipwithhighstandardofqualitydesign&High

productionfacilities&ITmanagementsystems

Boldinvestmenttoconstructlargemegasizeshipyardwithadvanced

Madeboldinvestmenttoestablishshipbuildingindustryclusterthat

providesshipbuildingrelatedmaterials&service.

Advantageousgeographicallocation.

Abundantskilledlaborer&technician.

Highspiritandsheerwillpowerofcreative,passionate

businessleadershipandhardworkingdedicatedmanpower

Now,Koreabecamenumber1shipbuildingnationand

demonstratingtotheworld,oursuperhighproductivityofquality

shipwithhighstandardofqualitydesign&HighTechoriented

productionfacilities&ITmanagementsystems

15

WewereabletoachieveourgoalwhichoncewethoughtImpossibledream

throughpassionatesheerwillpoweranddeterminationofdedicatedpeople

suchastechnocrat,entrepreneurengineerswithbusinessphilosophyof

RESPONSIBILITY

PROFESSIONALISM

CREATIVITY

TECHNICALEXCELLENCE

Underthewellplannedmasterplanwhichwasorchestratedbythe

government.Istronglybelievethatinfantstageofdevelopmentofshipbuilding

industry,governmentsupportismandatoryprerequisiteandessential

WewereabletoachieveourgoalwhichoncewethoughtImpossibledream

throughpassionatesheerwillpoweranddeterminationofdedicatedpeople

suchastechnocrat,entrepreneurengineerswithbusinessphilosophyof

RESPONSIBILITY

PROFESSIONALISM

TECHNICALEXCELLENCE

Underthewellplannedmasterplanwhichwasorchestratedbythe

government.Istronglybelievethatinfantstageofdevelopmentofshipbuilding

industry,governmentsupportismandatoryprerequisiteandessential

16

11.ShipbuildingIndustryCluster

Commercial Zone

Residential Zone

Utilities

GOVERNMENTSUPPORTGOVERNMENTSUPPORT

MasterPlan

SiteAllocation

TaxBenefit

SubsidyProgram

IncentivePlan

Infrastructure

Others

NewNewBuildingBuildingShipyardShipyard

OffshoreOffshoreFabricationFabrication

YardYard

R&DR&DCenterCenter

TechnicalTechnicalTrainingTrainingCenterCenter TechnicalTechnical

SupportSupportCenterCenter

11.ShipbuildingIndustryCluster

Hospital Hotels

Recreation Area

Schools

GOVERNMENTSUPPORTGOVERNMENTSUPPORT

MasterPlan

SiteAllocation

TaxBenefit

SubsidyProgram

IncentivePlan

Infrastructure

Others

BuildingBuildingShipyardShipyard

SubSubContractorContractor

AncillaryAncillaryIndustryIndustry

ShipRepairShipRepairYardYard

TechnicalTechnicalSupportSupportCenterCenter

17

12.SevenKoreaMegaShipyards

q 7MegasizeshipyardscapableofbuildingVLCC

:RankedinWorldTop10ShipyardsbyClarksoninJanuary2008

1. HyundaiHeavyIndustries(HHI)2. SamsungHeavyIndustries(SHI)3. DaewooShipbuilding&

MarineEngineering(DSME)

q 8MediumsizeshipyardscapableofbuildingAFRAMAX/SUEZMAX

q Morethan150companiesareproducingshipbuildingrelatedmaterials

q 14Universitieshave4yeareducationalprogramfordepartmentofnaval

architecture/marine&oceanengineeringand2collegeshave2year

programsspecificallydedicatedforthetrainingofengineers.

q 2LargeGovernmentsponsoredR&Dcenters

q 2Governmentsponsoredengineeringandtechniciantrainingfacilities

12.SevenKoreaMegaShipyards

sizeshipyardscapableofbuildingVLCC

:RankedinWorldTop10ShipyardsbyClarksoninJanuary2008

HyundaiHeavyIndustries(HHI)SamsungHeavyIndustries(SHI)

sizeshipyardscapableofbuildingAFRAMAX/SUEZMAX

Morethan150companiesareproducingshipbuildingrelatedmaterials

14Universitieshave4yeareducationalprogramfordepartmentofnaval

architecture/marine&oceanengineeringand2collegeshave2year

programsspecificallydedicatedforthetrainingofengineers.

2LargeGovernmentsponsoredR&Dcenters

2Governmentsponsoredengineeringandtechniciantrainingfacilities

4. HyundaiMipoDockyard(HMD)5. HyundaiSamhoShipyard(HSHI)6. STXShipyard(STX)9.SungdongShipbuilding&Marine

Engineering

18

13.WorldMarineEngineMarketShare

q 3Koreanmarineenginebuildersshare83%ofworldmarketin2007

STX23%

Others17%


13.WorldMarineEngineMarketShare

3Koreanmarineenginebuildersshare83%ofworldmarketin2007

HHI35%

Doosan25%

25

14.KOMACsRole:InDevelopmentofKoreanShipbuildingIndustry

q KOMAChasbeenamajorparticipantinKoreasrisetobecomeworldsnumber

oneshipbuildingnation

q KOMACwasestablishedin1969asKoreasfirstandonlyprivateorganizationof

navalarchitectsandmarineengineers.

q KOMAChasprovidedmorethan1,400shipdesignservices,1,700construction

supervisionservices,shipyardplanningservices,andtechnicalandmanagement

consultancyservicestoshipbuildersandshipownersofmorethan24countries

sinceitsestablishmentin1969.

q KOMAChasparticipatedinplanningofmajorshipyardprojectsinKoreaad

providedfeasibilitystudiesandshipyardplanningserviceformanyoverseas

shipyarddevelopmentprojects.

q KOMAChasbecomeanindispensablepartnerforthedevelopmentofdomestic

andinternationalmaritimeindustry

InDevelopmentofKoreanShipbuildingIndustry

KOMAChasbeenamajorparticipantinKoreasrisetobecomeworldsnumber

KOMACwasestablishedin1969asKoreasfirstandonlyprivateorganizationof

KOMAChasprovidedmorethan1,400shipdesignservices,1,700construction

supervisionservices,shipyardplanningservices,andtechnicalandmanagement

consultancyservicestoshipbuildersandshipownersofmorethan24countries

KOMAChasparticipatedinplanningofmajorshipyardprojectsinKoreaad

providedfeasibilitystudiesandshipyardplanningserviceformanyoverseas

KOMAChasbecomeanindispensablepartnerforthedevelopmentofdomestic

26

qProvideadvisestogovernmentsinestablishingacomprehensivemasterplan

forthedevelopmentofnationalshipbuildingindustry.

qTechnicalsupportfortheindividualshipyardplanning

qProvideTechnicalsupportforshipdesign

qAssistshipyardsinprocuringandpackagingshipyard&shipbuildingmaterial

qAssistshipyardfortheimprovementofproductivity

qTechnicalmanpowertraining

qIntroducingmodernshipyardmanagementsystem

qCooperatewithcounterpartsindevelopingshipbuildingrelatedindustries

(ShipbuildingIndustryCluster)

15.AreaofCooperationBetweenKoreaandEmergingCountries

Provideadvisestogovernmentsinestablishingacomprehensivemasterplan

forthedevelopmentofnationalshipbuildingindustry.

Technicalsupportfortheindividualshipyardplanning

ProvideTechnicalsupportforshipdesign

Assistshipyardsinprocuringandpackagingshipyard&shipbuildingmaterial

Assistshipyardfortheimprovementofproductivity

Introducingmodernshipyardmanagementsystem

Cooperatewithcounterpartsindevelopingshipbuildingrelatedindustries

15.AreaofCooperationBetweenKoreaandEmerging

27

16.Recommendation

qThedevelopmentmodelofKoreanshipbuildingindustryisaproductofwell

orchestratedeffortsofKoreangovernment,entrepreneursandengineers.

Koreasdevelopmentmodelisregardedasthemostuniqueandbest

exampleofitskindintheWorld.

q NewcomersshouldbenchmarkallareasofKoreanshipbuildingindustryand

utilizethebenchmarkingresultsasguidelinesforthenewshipyard

development.

qSelectthemostqualifiedandexperiencedinternationalconsultingcompany

capableofprovidingtechnicalassistanceforshipyardprojectfromthe

projectplanningstagetothedeliveryandoperationoftheshipyardwith

comprehensivemasterplanandmasterprojectschedule.

ThedevelopmentmodelofKoreanshipbuildingindustryisaproductofwell

orchestratedeffortsofKoreangovernment,entrepreneursandengineers.

Koreasdevelopmentmodelisregardedasthemostuniqueandbest

NewcomersshouldbenchmarkallareasofKoreanshipbuildingindustryand

utilizethebenchmarkingresultsasguidelinesforthenewshipyard

Selectthemostqualifiedandexperiencedinternationalconsultingcompany

capableofprovidingtechnicalassistanceforshipyardprojectfromthe

projectplanningstagetothedeliveryandoperationoftheshipyardwith

comprehensivemasterplanandmasterprojectschedule.

28

THANKYOU!THANKYOU!

World Shipbuilding Trends (ShipTek)

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