South Korea’s shipbuilding industry struggles to fill its manpower gap

South Korea’s Ministry of Industry, Trade and Resources (MOTIE) recently announced that the department dispatched more than 14,300 domestic and foreign workers to the country’s shipbuilding industry, which is in deep manpower trouble, in the first three quarters of this year (January to September). The total number of newly hired workers in the shipbuilding industry confirmed by the Ministry of Justice and the Ministry of Employment and Labor was 14,359, including 2,020 Korean workers and 12,339 foreign workers. This figure exceeds the shipbuilding industry’s previously declared manpower gap of 14,000 workers.

In terms of the native labor force, Korea’s MOTIE sent 2,146 workers through the Regional Shipbuilding Production Workforce Training Program this year, of which 2,020 have been employed. The ministry spent 10.08 billion won (about 56 million yuan) to support training and recruitment efforts.

The foreign labor force is divided into skilled workers (E-7) and unskilled workers (E-9). For skilled workers, the MOTIE and the Shipbuilders’ Association of Korea have cumulatively recommended 7,765 applicants to the Ministry of Justice of Korea for hiring, of which 6,966 have been employed in major shipyards after the Ministry of Justice has completed the visa examination. Unskilled workers (E-9) are employed by small and medium-sized shipyards, and the Ministry of Employment and Labor of Korea has issued 5,373 employment permits.

The South Korean government plans to increase the supply of skilled manpower by converting E-9 visas for foreign laborers in the shipbuilding industry who meet requirements such as proficiency and Korean language skills to E-7-4 visas, Korean media reports said. The Korean authorities said, “Due to the continued booming ship orders and a large number of remaining jobs, we will support the shipbuilding industry in securing manpower and thus successfully realizing shipbuilding and exporting by improving the relevant system such as the E-7 training visa and expanding the employment of foreign students, among other measures. To ensure that foreign laborers live stably in Korea, we will also check the working environment of shipbuilders and the advancement of social integration programs.”

In an effort to provide skilled manpower to the shipbuilding industry, Hyundai Mipo Shipbuilding, a shipbuilding subsidiary of South Korea’s HD Hyundai Group, announced on November 6 that it has signed a Manpower Supply Agreement with Vietnam’s Ministry of National Defense and the TA Group to cooperate in the use of veterans to train skilled workers.

Upon the agreement, Vietnam’s Ministry of National Defense plans to train shipbuilding skilled workers (E-7) through its four shipyards by providing basic and in-depth technical training to military personnel and reservists to be discharged from the military. While, Hyundai Mipo Shipbuilding will develop and implement a customized training program combining theory and practice, while the Vietnam Ministry of Defense and TA Group will provide administrative support for the screening and onboarding of technicians.

HD Hyundai Group said those who complete the training program will be eligible to work at Hyundai Vietnam Shipbuilding (HVS), the Vietnamese subsidiary of Hyundai Mipo Shipbuilding. They will then travel to South Korea to work as industrial trainees (D-3) or skilled workers (E-7) at HD Hyundai Group shipbuilding subsidiaries such as Hyundai Mipo Shipbuilding.

Hyundai Mipo Shipbuilding has recruited more than 1,000 workers from more than 10 countries, including Vietnam, Indonesia and Sri Lanka, this year to address labor shortages. A company official said, “Both the Ulsan headquarters and overseas subsidiaries are making continuous efforts to cultivate and identify specialized personnel throughout Korea and overseas to cope with the shipbuilding manpower shortage.”

Vietnam has become a preferred destination for the Korean shipbuilding industry to expand its foreign workers due to the country’s mature shipbuilding labor force in the domestic shipbuilding industry.In 2022, Vietnam provided about half of the inbound foreign workers for the Korean shipbuilding industry. In October of this year, Samsung Heavy Industries announced that it would begin training its labor force in Vietnam to address the manpower shortage in the shipbuilding industry. Samsung Heavy Industries signed a MOU with Thuyloi University with the aim of providing shipbuilding training and exchange of expertise to lecturers and students of Vietnam Water Conservancy University. The main contents include dispatching manpower technology, expanding employment, improving technology, and strengthening human resource exchange.

To meet Samsung Heavy Industries’ demand for recruitment of Vietnamese technicians, Thuyloi University will focus on shipbuilding, metallurgy, cold welding, painting, electricity, etc. to train human resources that meet the company’s requirement standards, and will train students in the language skills needed to enter the domestic and international labor markets. Based on the agreement, Samsung Heavy Industries will give priority to technicians of Thuyloi University when it needs foreign technicians to work in welding, painting, electricity and other shipbuilding-related fields.

Previously, Hanwha Ocean signed a MOU with Vietnam’s Ministry of Industry and Trade in July of this year for “comprehensive cooperation” on the training and recruitment of shipyard workers, with the aim of investing in Vietnam’s vocational training schools to help Hanwha Ocean meet its staffing needs. Hanwha Ocean hopes to establish an ongoing recruitment program for skilled workers in Vietnam.

South Korean shipbuilders earlier projected that over 35,000 new shipyard workers will need to be recruited by 2025 to meet the demand of the booming shipbuilding industry. So far this year, the three major South Korean shipbuilders (HD Hyundai, Hanwha Ocean and Samsung Heavy Industries) have been advancing their order-taking progress through order screening strategies.

By now, Korea Shipbuilding & Offshore Engineering, the intermediate holding company of HD Hyundai Group’s shipbuilding business, has taken orders for 143 new ships valued at US$20.19 billion, which is 128.2% of the annual order target of US$15.74 billion, and it is the one and only shipbuilding company in Korea that has achieved the annual order target.

Samsung Heavy Industries has taken orders for a total of 26 new ships valued at $6.6 billion, realizing 69% of its annual order target of $9.5 billion. In May of this year, “newborn” Hanwha Ocean (formerly Daewoo Shipbuilding Ocean) seems to be in the field of merchant ships is too “cautious”, so far this year, only 9 ships, valued at 1.47 billion U.S. dollars of new ship orders, only to achieve the annual order target of 6.98 billion U.S. dollars of 21%. 21%. In response, Hanwha Group said it will select orders based on profitability rather than sticking to the order target it set during its Daewoo Shipbuilding & Marine days.

Yangzijiang Shipbuilding

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