Succession plans at Hyundai Heavy fuels anger as world’s largest shipyard faces China threat
- Ulsan was once South Korea’s richest city, but a change in the global shipbuilding industry has caused a downturn, leading to job losses
- There is also anger over the way family-run conglomerates like Hyundai Heavy are reorganising in order to hand over power to the next generation
Before then, Ulsan was the richest city in the country for nine straight years by income per capita. The decline that followed tells the story not only of the seismic forces shaking the global shipbuilding industry, but also a schism that is dividing South Korea over its vast, family-run conglomerates – the chaebol – which lifted South Korea into the pantheon of leading industrial nations.
“There was a lot of pressure, especially for those who had only a few years left until retirement and received high salaries,” Park, 46, said in an interview in Ulsan on the southeast coast.
Ulsan is known as Hyundai Town, an industrial powerhouse with the world’s largest car assembly plant, its third-biggest oil refinery and the giant shipyards. The four kilometres of docks were begun by Hyundai Group founder Chung Ju-yung in the 1970s, sounding the death knell for rival yards across Europe and the US.
Now, South Korea faces the same threat from China. By 2021, China’s market share will reach 52 per cent, up from 24 per cent in 2008, according to Bloomberg Intelligence. In the same period, South Korea’s is expected to fall to 22 per cent from 38 per cent. China plans to merge its biggest state-run shipmakers, China Shipbuilding Industry Corp. and China State Shipbuilding Corp., to create a behemoth that would overtake Hyundai.
At the same time, South Korea’s chaebol are facing their own structural threat as more Koreans question the benefits of the nation’s industrial model now that growth in many industries is slowing. That is making it more complicated for families like the Chungs to hand over power to the next generation.
