It looks like korea is going through a 1960s and 70s moment with rising labor costs, suffering industry, increasing competition and etc. The next 20 years will be interesting.https://maritime-executive.com/article/mounting-pressure-on-south-korean-shipbuilders-as-dsme-declares-crisis
Despite a surge in orders over the past two years, the South Korean shipbuilding industry is facing mounting pressures due to rising costs and labor shortages. Faced with the continuing competition from China and the industry’s exposure to Russian shipping, several South Korean shipbuilders are struggling to strengthen their positions.
The Korean Ministry of Trade, Industry and Energy yesterday highlighted the strength of the industry in the first half of 2022 saying that South Korean shipbuilders received the most order volume and highest value of orders so far in 2022 beating out their Chinese rivals. According to the figures, the South Koreans received 45 percent of the volume measures in gross tonnage, and with their focus on higher value ships such as LNG carriers received 47 percent of the value of orders placed this year.
While the Ministry was highlighting the order success, Daewoo Shipbuilding & Marine Engineering (DSME) one of South Korea’s leading shipbuilders announced mounting problems in a regulatory filing. The company’s financial losses increased by more than 120 percent with management citing rising costs and the Ukraine war. The mounting losses have driven DSME's debt to equity ratio to 547 percent as of the end of March.http://www.businesskorea.co.kr/news/articleView.html?idxno=33591
In case of Hyundai Motor, Kim said, labor costs are higher than Toyota and Volkswagen but labor hours per unit are 11 percent to 26 percent higher than Toyota, Ford and GM. On the other hand, Korea ranks low among major countries in labor management cooperation (24th) and labor flexibility (21st). The price gap between the Hyundai Elantra (the Avante in South Korea) and Toyota in the U.S. market dropped from 7 percent in 2005 to 1.3 percent in 2018.
As the car industry is falling, its employment is also on the decline. The number of employees in the auto industry decreased from 401,000 at the end of 2017 to 385,000 as of April this year. The workforce of first-tier suppliers was reduced by 8,000 from 294,000 to 286,000 last year because 20 first-tier component producers went bankrupt last year.
Experts say that domestic auto parts companies are being pushed out of the market due to a lower level of technology. The research & development (R&D) expense to revenue ratio of South Korean component producers stands at only 2 to 3 percent which is one third to fourth compared to that of advanced countries’.https://koreajoongangdaily.joins.com/2022/09/29/business/industry/korea-posco-hyundai-steel/20220929163421076.html
The country is also short of experts. Demand for workers with skills in both automobiles and information technology (IT) is growing, but there are not enough experts.
The price of hot-rolled steel stood at 1.1 million won ($773) per ton on Sept. 23, up 10 percent on month. The price of imported hot-rolled steel also jumped 24 percent to 1.2 million won on month. Hot-rolled steel is commonly used to make components in vehicles.
A ton of H-beam steel traded at 1.3 million won, up 7.5 percent, during the same period. H-beam steel is the major material at construction sites.
The price of stainless hot-rolled steel rose 10 percent to 4.4 million won while the prices of steel plates, which are the main materials for shipbuilding, rose 14 percent in just two weeks.
Prices are expected to rise even more rapidly in coming weeks as Hyundai Steel employees are planning more strikes.
Hyundai Steel’s four labor unions went on strike for eight hours on Sept. 24 and 25. They said they will stage strikes unexpectedly until the company accepts their demands.
Hyundai Steel unions are demanding a base monthly pay raise of 165,200 won and 15 percent of last year’s operating profit as incentives. It also requested 4 million won of bonuses, arguing that employees of Hyundai Motor, Kia and Hyundai Mobis received that amount.