World’s top two shipbuilders in deal to merge: Seoul

Year after year, the top three shipbuilders churned out enormous cargo ships, oil tankers and offshore drilling rigs for shipping firms and energy giants around the world. (File/AFP)
Updated 31 January 2019

World’s top two shipbuilders in deal to merge: Seoul

  • The world’s top three shipbuilders are South Korean, but the industry has been hammered in recent years
  • South Korea’s “Big Three” shipbuilders were once hailed as a major driver of the country’s export-reliant economy

SEOUL: The world’s biggest shipbuilder, South Korea’s Hyundai Heavy Industries, has reached a deal to acquire a majority stake in ailing number two Daewoo from the government, Seoul said Thursday.
The world’s top three shipbuilders are South Korean — Samsung Heavy ranks third — but the industry has been hammered in recent years by overcapacity and plunging ship prices.
Daewoo Shipbuilding & Marine Engineering has struggled in particular and has repeatedly been bailed out by the government to avoid collapse, at a total cost of several billion dollars.
Hyundai Heavy itself announced net losses of 633 billion won ($569 million) for 2018 on Thursday, blaming higher steel costs and lower demand.
But the state-funded Korea Development Bank (KDB), which owns 55.7 percent of Daewoo, said Hyundai had agreed to take over its stake.
Rather than paying cash, the shipbuilder will split itself in two and issue KDB shares in a new holding company that will own Daewoo and most of Hyundai Heavy’s existing businesses.
The deal would further consolidate Hyundai Heavy’s position as the world’s largest shipbuilder, giving it more than 20 percent of the global market.
It will go through unless Samsung Heavy makes a better offer, KDB officials said, with a final decision expected in March.
South Korea’s “Big Three” shipbuilders were once hailed as a major driver of the country’s export-reliant economy — the world’s 11th largest.
Year after year, they churned out enormous cargo ships, oil tankers and offshore drilling rigs for shipping firms and energy giants around the world.
But a prolonged slump in oil prices and the global economic slowdown sapped demand for tankers and container ships, while overcapacity, regional rivalry and competition from cheaper Chinese shipbuilders squeezed profit margins.
Hyundai Heavy’s 2018 losses represented a significantly worse performance than the previous year, when it was 93.4 billion won in the red.
The shipbuilder said its acquisition of Daewoo was aimed at “boosting the competitive edge of South Korea’s shipbuilding industry by maximizing the synergy effect.”


US President Trump does not want to do business with China’s Huawei

Updated 19 August 2019

US President Trump does not want to do business with China’s Huawei

  • US Commerce Department expected to extend a reprieve that permits Huawei to buy supplies from US companies to service its customers

WASHINGTON: US President Donald Trump on Sunday said he did not want the United States to do business with China’s Huawei even as the administration weighs whether to extend a grace period for the company.
Reuters and other media outlets reported on Friday that the US Commerce Department is expected to extend a reprieve given to Huawei Technologies Co. Ltd. that permits the Chinese firm to buy supplies from US companies so that it can service existing customers.
The “temporary general license” will be extended for Huawei for 90 days, Reuters reported, citing two sources familiar with the situation.
On Sunday, Trump told reporters before boarding Air Force One in New Jersey that he did not want to do business with Huawei for national security reasons.
He said there were small parts of Huawei’s business that could be exempted from a broader ban, but that it would be “very complicated.” He did not say whether his administration would extend the “temporary general license.”
Speaking earlier on Sunday, National Economic Council director Larry Kudlow said the Commerce department would extend the Huawei licensing process for three months as a gesture of “good faith” amid broader trade negotiations with China.
“We’re giving a break to our own companies for three months,” Kudlow said on NBC’s “Meet the Press.”