Hyundai Heavy Industries Nears Shipbuilding Deal
Hyundai Heavy Industries (HHI), South Korea’s leading shipbuilder, may expand its presence in India, Asia’s third-largest economy. The Indian Ministry of Defense is expected to place an order for five fleet support ships later this year, and Hindustan Shipyard, India’s largest state-run yard, will build four of the vessels under HHI supervision. Hyundai would construct the fifth vessel in a deal valued at about $297 million.
HHI’s presence in Indian shipbuilding has grown significantly this year. Indian Prime Minister Narendra Modi visited HHI in May to develop India’s shipbuilding industry. In the meeting, which was held at HHI headquarters in Ulsan, Modi and Hyundai management discussed ways in which to expand cooperation on naval defense, LNG carrier construction and shipbuilding technology.
In January, Hindustan signed an agreement with Hyundai to build submarines for the Indian Navy. And GAIL, India’s state-run gas company, is expected to place an order for 11 LNG carriers to transport LNG from the U.S. to India for 20 years starting in 2017.
Additionally, HHI also signed a memorandum of understanding with India-based engineering major Larson & Toubro on technological support for the construction of LNG carriers.
If the deal between HHI, the Indian Navy and Hindustan is finalized, it will come at an ideal time for financially strapped HHI. Hyundai posted a record $2.5 billion loss in Q2 and has released 31 percent of its senior staff since 2014.
A potential strike looms as well. On August 24, union leaders representing about 28,000 workers at HHI, Samsung Heavy Industries and Daewoo Shipping & Marine Engineering stated that they would stage a joint strike on September 9 unless workers are given a raise. Each of South Korea’s big three shipbuilders announced a wage freeze earlier this year.