Past Event
MARINE WEEK-KORMARINE 2009
International Shipbuilding, Marine Equipment, Sea-Port
Naval & Defence Exhibition and Conference
21-24 October 2009
Busan, Republic of Korea
www.kormarine.net
Kormarine
has indeed become a “must attend” maritime event in the Far East.
Kormarine
has been exemplary in growing bigger and better over the years.
Kormarine
has continued to attract delegations and high class decision makers regionally and globally.
Kormarine
has offered unparalleled access to world class shipbuilders of commercial and maritime defence vessels.
Kormarine
has in fact confirmed its position as the Asia-Pacific top fair, being considered one of the best exhibitions for shipbuilding, equipment, port facilities and maritime defence exhibitions.
Kormarine -
no doubt - has become the most effective platform for overseas exhibitors striving to strengthen their market position in the world’s technologically leading shipbuilding country.
Kormarine
and the associated conferences also have attracted delegates and attendees who swarmed the BEXCO exhibition centre to catch a glimpse of innovative new equipment and acquire the latest news and information.
Was it all that perfect?
In fact - on closer examination - there was something very essential missing:
substantial orders for new commercial vessels - apart from off-shore platforms and naval ships.
Order book
The Republic of Korea considers itself to be at war – both militarily with the Democratic People’s Republic of Korea and economically with the rest of the world. Korea’s number one position in shipbuilding is at stake! The People’s Republic of China is in the process of overtaking South Korea in terms of order volume, becoming the world’s largest shipbuilding country! One could argue that China has won these orders thanks to low-cost shipbuilding, but this is where the rare orders are currently, while the order book for high value-added ships has almost dried out completely.
But apart from the very critical order entry situation, the back log of orders is melting rapidly away and precise information about cancellations and delayed deliveries is rigorously camouflaged. Korean shipbuilders were confident at the beginning of the economic slowdown to avoid cancellations of ships if they were negotiating tough enough, but as the crisis progressed they had to adjust to the claims of their customers.
Nevertheless Korean shipyards have learned their lessons and are ready to bag every order for any object that floats on water or sits in the water like, wind power plants, at the most competitive price.
Korean shipyards will not hesitate to take orders from the last niches of European shipbuilding dominance and the arch will span from dredgers, off-shore supply vessels, yachts, RoRos, ferries to cruise ships.
Bulkers
The dry bulk sector is the most affected as the majority of orders was placed on a speculative basis without sound economic prospects.
Box ships
The slowdown in overall trading volumes is most accurately reflected by the cancellations, deferred deliveries, laid off ships, super slow steaming and last but not least the order entry of container vessels. The great imbalance on the trade routes Asia - USA and Asia - Europe are clearly reflecting the economic situation these huge consumer markets are in and the enormous supply chain losses of shipping lines, charterers, freight forwarders, logistics providers and port operators. The shipping lines losses per container on the Europe to Asia route are reported to be in the range of USD 400.- per container, while the intra Asia trade and imports from Europe into Asia enjoy something like a temporary boom. All reports of being back to profitability of freight rates are not more than wishful thinking and illusions lacking reality. The shipping industry suffers from overcapacities as the shipbuilding industry does and this will result in a significant exodus from container shipping of the large companies in the forefront. The candidates are well known.
The major problems in the container ship segment are financial aspects and implications which seem to have become even more important than poor global demand and over-supply of ships.
Cruise ships
Speculations on when a Korean shipyard will receive its first order for a cruise ship have been the talk of the industry for the last decade. Samsung has been considering itself as the number one candidate for the first order over a long period of time, but STX is now the big question mark. STX has the access to the customers (cruise line operators), the logistics, the supplier base, the engineering capacities and the overall know how via its yards in St. Nazaire, France and Turku, Finland.
Naval ships
Government budgets around the world are shrinking as a result of the global economic crisis. In Northeast Asia, however, the defence portions of the budget seem to be “shrink-proof”! The Republic of Korea under its present President LEE Myung-bak is following a distinct form of military Keynesianism, using defence subsidies to keep factories and shipyards in operation. Other quite often employed arguments are that military spending produces a stable, social situation.
The external pull factor that has traditionally served as a justification for increased military spending is North Korea.
It should be noted in this context that the military is also a major customer of foreign businesses. Because it plays a very crucial role in the country’s security, the military in general, and the navy in particular is constantly in need of the latest technology which can only be found overseas.
Tankers
Oversupply is acute in tankers and even worse in bulk carriers as ship yards have built almost half the fleet in mass production style and over-capacity in tanker volumes will remain a problem. Low demand for oil, declining production output, a huge number of deliveries in the first half of 2009 and a drop in ton-mile demand are the attributes of the low rates in the tanker sector. Inactive tankers are reported to have reached the highest level since 2003.
State aid
Communist China with its neo-capitalistic appearance and capitalism oriented South Korea, with a communist mindset in some specific areas of its economy, are continuing to subsidise their maritime industry massively to weather the economic turmoil in shipping and shipbuilding, initiated by the financial crisis and the slumping demand in general, ruthless speculation and thoughtless expansion of shipbuilding capacities in particular. “Commando-capitalism” is forcing Korea’s SOBs state-owned banks like KEXIM Korea Export-Import Bank, KAMCO Korea Asset Management Corporation or KDB Korea Development Bank, to assist shipping companies pay for new vessels and shipbuilders to sell ships for less than construction cost. It should be noted in this context that the liabilities of many Korean banks exceed their capital by more than 2.5x in an environment of illusions far off reality.
The system of corruption and elitism has been defining the Korean way of doing business regardless of several attempts of liberal Presidents like ROH Moo-hyun to change this, Government and the chaebols still have the say. LEE Myung-bak - “the bulldozer” - a former Hyundai Construction director, has already signalled that he will be taking an ”economy first” approach by focussing on job creation in the defence sector and extending the timeline of his predecessor’s “Defence Reform 2020 plan” to 2025.
Although the financial crisis has been teaching us that even the largest companies were hit by the downturn, it looks as if the majority of the subsidies is directed to the huge conglomerates (chaebols) although many of them are ailing and some are even operating under Chapter 11 bankruptcy protection. The privately owned SMEs, in particular the thousands of marine equipment suppliers who suffer already from dry order books, are by now confronted with a very critical if not lethal situation.
How these excessive forms of direct and indirect state aid, the strong “influence” of the Government on its expansionary monetary policy and an act of state’s target of “more than 90 percent of marine equipment from local supplies in 2010” will fit into the Free Trade Agreement with the European Union is left to the judgement of the reader.
The Korean mentality
Discipline, hard work, nationalism, and the willingness to suffer hardship for the good of the country are hallmarks of the Korean mentality.
Social unrest
The Koreans, still living in a male dominated society, are almost fearless after centuries at war with or under occupation of either China or Japan. But what Koreans really fear these days is - social unrest in their country and the threat imposed on their shipyards by China. Safeguarding of jobs might be a convincing argument when looking at these massive subsidies by taxpayer’s money, nevertheless it is in strong contrast with Korea’s membership in organisations like WTO or OECD. However, so be it, one could develop some understanding for this kind of state aid, but not for a simultaneous export promotion campaign financed from the same sources! This is definitely destroying any sense for fair competition! What will happen when the Korean government has to declare officially that the country has failed to defend its number one position as a shipbuilding nation in the world?
Will the unions accept that without opposition in the light of the tough austerity programs applied on its work force in the past? How to explain this and the schizophrenic shipbuilding joint ventures in China, the Philippines and Vietnam in front of thousands of workers who will have to be laid off?
Monetary policy
The monetary policy of Korea at first sight seems to be very volatile, the Korean Won is a currency highly manipulated, and there are strong forces who like to preserve its constrained convertibility.
As the majority of ships is sold in US dollars, the relative strength or weakness of the KRW strongly affects the competitiveness and the profitability of the shipbuilding businesses.
The exchange rate of the KRW against the US dollar has been declining steadily over the last months which – in addition to massive price reductions – has strongly contributed to the attractiveness of new shipbuilding prices. Coupled with increasing domestic equipment sourcing shipbuilders could benefit from low and stable prices contributing to an improvement of the shipyard’s financial situation. Nevertheless ship owners are in general hesitant to order in Korea.
Korea sits on a sack of 260 billion US dollars which is losing its value every day. No wonder that Korea and the PR of China share more and more common, economic standpoints and experts in the region even discuss the establishment of an Asian common currency or at least a multiple reserve currency system. It should be noted in this context that Korean shipbuilders have been for many years the major source of dollars helping to build massive current account surpluses and foreign exchange reserves. In the wake of the present order crisis, cancellations for ships will result in an increased demand for dollars, thus putting additional pressure on the KRW and this - in conjunction with Korea’s strong dependence on energy and raw material imports - might cause the dollars to melt like ice in the sunshine.
The current fragile international economic and financial system desperately needs a new Bretton Woods II regime. In the wake of Copenhagen, China will take a leading role in building a new financial system for Asia in order to get rid of the US dominated IMF. Provided that China manages the crisis without being affected by wide spread social unrest, an Asian common currency might become reality sooner than expected.
21 October 2009
Kormarine 2009 - Marine Week 2009
Opening Ceremony
BEXCO, Busan
Opening delegation lead by the Major of Busan Metropolitan City,
HUR Nam-sik
Ribbon Cutting Ceremony
High ranking naval officers and attachèes accredited to the Republic of Korea from Bangladesh, Cambodia, Indonesia, Thailand, Turkey and Vietnam
ROK Navy Booth, Visit of the Opening Delegation
NN
JUNG Ok-keun, Admiral CNO Chief of Naval Operations, ROK Navy Headquarters Gyeryong
HUR Nam-sik, Major of Busan Metropolitan City
Austrian Pavillion, Exhibitors
NN
Uwe Merl, Geislinger
Cornelius Geislinger, Geislinger
KIM Dong-won, Geislinger Korea
Matthias Geislinger, Geislinger
www.geislinger.com
J. M. KIM, Geislinger Korea
KIM Dong-won, Geislinger Korea
M. G. LEE, Geislinger Korea
www.geislinger.com
KRAL, www.kral.at
Leopold Harreither, MIBA, www.miba.com
Fritz Huber, KRAL, www.kral.at
Eckardt Laengle, KRAL, www.kral.at
Martin Uhlig, bst Brandschutztechnik, www.bst.co.at
Otto Rauscher, Architect and Contractor
ROK Navy Dolphin
Werner Somweber, Austrian Embassy - Commercial Section
Austrian Pavilion
Liebherr, www.liebherr.com
Hoerbiger www.hoerbiger.com
Frequentis www.frequentis.com
bst, www.bst.co.at
Antonio Trani, F.T. Technical Marine Napoli
Thomas Andexer, Hoerbiger Shanghai, www.hoerbiger.com
Wolfgang Slawinski, Frequentis Korea, www.frequentis.com
bst Brandschutztechnik, www.bst.co.at
John Kuehmayer, AMEM, www.amem.at
Martin Uhlig, bst Brandschutztechnik, www.bst.co.at
KORMARINE 2009
Austrian Pavilion
Visit of the Austrian Ambassador Dr. Josef Muellner and his wife Kai Wang Muellner
Werner Somweber, Austrian Embassy Seoul - Commercial Section
John Kuehmayer, AMEM, www.amem.at
Jung Kyun Moon, Hoerbiger Korea, www.hoerbiger.com
Thomas Andexer, Hoerbiger Shanghai, www.hoerbiger.com
Dr. Josef Muellner, Austrian Embassy and his wife Kai Wang Muellner
Wolfgang Slawinski, Frequentis Korea, www.frequentis.com
Dr. Josef Muellner, Austrian Embassy Seoul
Werner Somweber, Austrian Embassy Seoul - Commercial Section
Matthias Geislinger, Geislinger, www.geislinger.com
Uwe Merl, Geislinger, www.geislinger.com
KORMARINE 2009
Marine Week 2009
Welcoming Luncheon
BEXCO Convention Hall
Welcoming Luncheon
KORMARINE 2009
Marine Week 2009
Busan City Dinner Reception
BEXCO Convention Hall
Dinner Toast Speech on behalf of ROK Navy Command Headquarters Busan
PARK Jung-hwa, Vice Admiral Commander in Chief of Korea Fleet
Dinner Toast Speech on behalf of Korea Marine Equipment Association
SI Myung-sun, Chairman
Dinner Toast Speech on behalf of BMEA Busan Marine Equipment Association
LEE Dong-hyung, Chairman
Dinner Toast Speech on behalf of EMEC European Marine Equipment Council, www.emec-marine-equipment.org
Dirk Lehmann, becker marine systems, www.becker-marine-systems.com
Busan City Dinner Reception
Audience
22 October 2009
Kormarine 2009
German Embassy Cocktail Reception
BEXCO Convention Hall
Dr. Hans-Ulrich Seidt
Ambassador of the Federal Republic of Germany in Korea
Kormarine 2009
Open Ship For Public
CRF Naval Base, Busan
Republic of Korea Navy - ROKN
LPH 18800-ton Landing Platform, Helicopter Dok do, Pennant Number 6111
DDH-II 5000-ton Guided Missile Destroyer Chung Moo Gong Yi Soon Shin,
Pennant Number 981
AOE 9180-ton Fast Combat Support Dae Cheong, Pennant Number 58
Cornelius Geislinger, Geislinger, www.geislinger.com
Matthias Geislinger, Geislinger, www.geislinger.com
Martin Uhlig, bst Brandschutztechnik, www.bst.co.at
Republic of Korea Navy - ROKN
LPH 18800-ton Landing Platform, Helicopter Dok do
Pennant Number 6111
Republic of Korea Navy - ROKN
DDH-II 5000-ton Guided Missile Destroyer Chung Moo Gong Yi Soon Shin,
Pennant Number 981
Republic of Korea Navy - ROKN
MSH 900-ton Mine Sweeping Hunter Yang Yang
Pennant Number 571
Martin Uhlig, bst Brandschutztechnik, www.bst.co.at
Republic of Korea Navy - ROKN
PKG 570-ton Patrol Killer Guided Missile Boat Yun Yeong-ha
Pennant Number 711
Republic of Korea Navy - ROKN
AOE 9180-ton Fast Combat Support Dae Cheong
Pennant Number 58