Thursday, September 16, 2021

Closure of Foreign Owned Chinese Shipyard Sees Street Protests and Possible Political Come Back

Twenty Five Years After Original Deal Company Pulls Out
Shipping News Feature

CHINA – SOUTH KOREA – Whilst the old guard of international ship builders have looked on jealously as virtually the entire industry defected to Asia, it seems all is not well, at least in one part of that market.

Flexibility, politics and profits are all contributory factors in a chilling of relationships which sees Samsung Heavy Industries, a perennial loss maker, close its Ningbo shipyard, the first such establishment ever opened in China by a foreign entity.

Time has caught up with the yard which is geared up to produce older style vessels rather than the current demand for environmentally advanced ships such as LNG carriers. In recent years the South Koreans have shipped raw materials, duty free, into China with the Ningbo facility building these into modular units which were returned to Korea for assembly into vessels.

Recently the Chinese authorities have apparently been pressing for a higher proportion of home supplied raw materials to go into the constructions, something strongly resisted by Samsung. Meanwhile the company has taken the view that a return to profitability means consolidation at home and South Korea is set to surpass annual Chinese ship production within months.

Add to this mix that Ningbo has lost money for Samsung of late and the decision was made to shift any useful materials to another China based facility and shut up shop, a decision that has not gone down well with the Chinese authorities, and particularly the workers who were due to sign redundancy agreements this week.

Instead many of the near 5,000 strong workforce demonstrated outside the yard, refusing to sign and demanding better terms as they videoed the event. The company offer, allegedly a month’s pay for each full year worked plus three extra months, has been rejected by staff, many of whom have more than a decade of service.

It has been said that the local authorities have already signed an agreement with Samsung to take on the 200 acre site for redevelopment as the area becomes part of the surrounding chemical industry complex. Samsung first opened the site in 1995 but the latest news comes as China state control undertakes the merging of the country’s two biggest shipbuilders.

The country’s two largest ship builders, China Shipbuilding Industry Corp. (CSIC) and China State Shipbuilding Corp. (CSSC), and presumably their various subsidiary companies, will be merged under the massive China Shipping Group banner in a plan passed by state authorities which own all three parties.

Now it remains to be seen, not only how strike action by the Ningbo workers is dealt with, but what effect the overall situation has on Chinese/Korean relations.