The shipbuilding industry has been the star of the Korean economy until now, providing massive exports and employment. At the end of 2014, there were 16 shipbuilding companies in total, with another 5 800 or so businesses of varying sizes tied up in the same industrial ecosystem. Since 2000, the Korean shipbuilding industry has been growing at an astonishing pace, focusing on high-end vessels, taking advantage of cheap and flexible subcontract labour, expanding the non-shipbuilding areas of its business including the development of offshore plants, and increasing offshore production.
The global financial crisis of 2008, however, has hit the industry hard, while the plummeting oil price since 2014 has radically contracted the demand for offshore oil plants. The offshore plant businesses of all the Big Three shipbuilding companies began to produce deficits in 2014 and operating losses over the last three years. The Korean government, which waited for the market to naturally solve the problem, belatedly organised the Industrial and Corporate Restructuring Council, led by the FSS (the Financial Supervisory Service) and other government departments, in October last year. The Council announced the three principles of restructuring in April this year, and began to exert mounting pressure on individual shipbuilding companies through banks. The three principles provide a guise of consistency, but can be reduced to making cuts to facilities and the number of employees.