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Hanjin Heavy Industries & Construction Co Ltd

The first shipbuilding company in Korea, HHIC was founded in 1937 as Koreas first modern shipbuilding company. The company spearheaded advances in the nations shipbuilding industry and contributed to shaping Korea into a global shipbuilding powerhouse. It manufactured Container carriers, Bulk carriers, Crude oil carriers, LNG carriers, RO-RO vessels, Chemical product carriers & LPX, LSF-II, Patrol ships, Submarine, etc. -HHIC-Phil Inc.(Subic shipyard). Since starting construction in 2006, No.5 Dock completed in Dec. 2007. The shipyard has built high-performance and high-value-added ships with ongoing development and investment. Especially, the Subic shipyard will help the company be the world's top five shipbuilders building super-sized carriers.

Hanjin Heavy Industries & Construction Co., Ltd. is a Korea-based company engaged in the construction and shipbuilding sectors. The Company operates its business under two segments. The construction segment focuses on the architectural works, comprised of the construction of commercial buildings, hotels, hospitals, educational institutions, apartment complexes, houses, sports and entertainment facilities and military facilities, and plant engineering works, including construction of roads, bridges, railways, subways, tunnels and harbors. The shipbuilding segment builds and supplies medium- and large-sized ships, including container carriers, liquefied natural gas (LNG) carriers, chemical tankers, oil and petroleum product carriers, bulk carriers and special-purpose vessels, as well as small- and medium-sized ships, such as patrol boats, landing and support ships and other ships.

Founded in 1937 as the first steel ship builder in Korea, Hanjin Heavy Industries & Construction Co., Ltd. (HHIC) has set the records in designing and building special-purpose and naval ships in its high-tech shipyard. Starting with Korea's first high-speed patrol boat, Haksaeng (Student), in 1972, Shipbuilding Technology Development has added sophistication to the design and engineering of high-speed patrol boats, landing ships, midget submarines, and hovercraft. From the late 1970, HHIC exported about 30 naval vessels to Asia, Africa, and Latin America. To reflect the growing importance in the 21st century of ocean resources development, HHIC has also been developing oceanographic vessels, hydrographic vessels, fishery research vessels, cable-laying ships, diving support vessels, etc.

Following construction of a large scale shipyard (Subic Shipyard) in the Philippines which began opening from 2007, HHIC has secured an efficient global production system. In Korea, HHIC operates the Yeongdo Shipyard which is supported by its plants in Yuldo and Dadaepo. Subic Shipyard in the Philippines is a large-scale shipyard featuring advanced equipment, a large dock and other facilities. Thanks to EPC capability of HHIC, phase 1 construction was completed in the short span of 18 months. The EPC Team brings together HHIC Groups expertise in shipbuilding, construction and engineering.

From Koreas first patrol boat Haksaeng in 1972 to high-speed vessels, patrol combat corvettes, convoy ships, landing ships and submarines, HHIC has built a wide range of vessels for the Korean navy. The company has also exported naval combat and support ships to the Middle East, Asia and Latin America. That was followed by the development of various naval ships. Based on unique technology, HHIC also constructed and delivered hovercrafts (air cushion vehicles), high-speed craft and the large transportation ship Dokdo. These efforts have contributed to strengthening Koreas naval capabilities.

In July 2017 Hanjin Heavy Industries & Constructions Yeongdo Shipyard strengthened its ground as a special-purpose vessel builder by winning the bid to build 9 naval ships including a next-generation patrol boat ordered by the Defense Acquisition Program Administration (DAPA). The company announced that it signed a KRW 332.5 billion agreement to build 9 naval ships with the DAPA. They include 4 next-generation patrol boats (PKX-B, No. 5-8, KRW 259.9 billion), 1 multi-purpose training boat (MTB, KRW 40.05 billion) and 3 landing craft utilities (LCU, KRW 32.577 billion). The Korean shipbuilder also signed a KRW 17.1 billion depot maintenance agreement for the ROK Navys next-generation landing ship fast (LSF-II). HANJIN Heavy Industries & Construction is the only company having the knowhow and technology to build both LSF-I and next-generation LSF-II in the Republic of Korea.

In recent years HHIC has succeeded in building the greatest output of special-purpose ships in Korea, excelling in warship design and engineering capability. HHIC is committed to an impressive range of R&D activities with the aim of designing the next-generation of advanced naval ships, while meeting the need for large-scale, high-speed, computerized operation vessels along with other multi-purpose and high-performance requirements. HHIC has also emerged as one of the world's few major shipbuilders of hovercraft. HHIC foresees further excellent achievements in future vessel development, as evidenced by the development and successful testing of the WIG(WinginGround effect) ship, the first next-generation super-high speed vessel to be produced in Korea. HHIC has also pursued advanced research into innovative technologies in such diverse fields as hull analysis, navigation, propulsion, resistance, and durability through the combined research efforts of academy and industry.

Hanjin Shipping

On July 10, 2008, the Company established a wholly owned overseas subsidiary, HHIC-Shipping Limited. The family-controlled chaebol or conglomerate, Hanjin Group, counted Hanjin Shipping and Korean Air among its numerous subsidiaries. Hanjin Shipping was the worlds seventh-largest container shipping company worldwide and number one in Korea, with a fleet of 98 container vessels. Founded in South Korea in 1949, Hanjin is present in 60 countries with approximately 6,000 employees.

Hanjin Shipping filed for bankruptcy protection Aug. 31, 2016, after months of trying to raise liquidity and restructure its debt, triggering a mad scramble by shippers to locate and gain control of their containers. Hanjin vessels had been arrested and ports were refusing to work Hanjin ships for fear they will not be compensated. Hanjin Shipping's collapse was by far the largest container shipping bankruptcy in history and the consequences will continue to reverberate throughout international supply chains and the transportation sector.

Fully loaded ships were stranded at sea and in legal limbo. Supply chains were disrupted. Hanjin had been considered too-big-too-fail for South Korea, and the industry had relied on a bailout, but it was allowed to fail. After Hanjin's bankruptcy, its 98 ships with a combined nominal capacity of 610,000 twenty-foot equivalent container units (TEU) joined the already massive global idle fleet as overcapacity has been dogging the industry. According to Drewry Maritime Research, the total idle capacity soared from 904,000 TEU in August before Hanjin's bankruptcy to a peak of 1.7 million TEU by mid-November. Nearly 9% of the global fleet was anchored somewhere, waiting for better days.

A report released by its independent auditor, Samil PricewaterhouseCoopers in December 2016 said it would be more economically viable to have the carriers assets liquidated as opposed to continuing with rehabilitation measures. Thehe audit firm said Hanjin could be liquidated for roughly Won1.8trn ($1.5bn) but did not reveal the shipping lines monetary value as a going concern due to ongoing asset sales.

On February 17, 2017 a court announcement sounded the death knell for Hanjin Shipping, the nations former flagship carrier. The Seoul Central District Court, which was in charge of Hanjins rehabilitation proceedings, declared the line bankrupt after the expiry of a two-week appeal period, bringing an end to the carriers 40-year history. The bankruptcy of South Korean shipping company Hanjin Shipping cost creditors over $10 billion. Thats because the bankruptcy trustee in Seoul has raised about $220 million, according to August 2017 reporting in the Wall Street Journal, about two percent of the $10.5 billion that creditors claim. Hanjin Pacific Corporation (HPC) sold its 100-percent stake in terminals in Tokyo, Kaohsiung, Taiwan, and Algreciras, Spain, for $13.15 million Hyundai Merchant Marine, also a South Korean shipping company.

Hanjin, as well as other large carriers, gambled that global trade would continue to expand exponentially, even as diminishing global trade, saturated U.S. retail inventories, changing consumer spending patterns and the Chinese economic slowdown all contributed, instead, to a precipitous down cycle. There were additional non-economic factors that contributed to the demise of Hanjin, including a national culture that discourages questioning authority, an organizational structure that discouraged junior staff from speaking up, easy financing arrangements, and bloated capacity.

The global container fleet at four times as large as it was in 2000, a problem exacerbated by the development of larger vessels that could carry twice as much cargo as their predecessors, somewhat precipitated by the widening of locks in the Panama Canal allowing greater capacity.

The main reason Hanjin was not bailed out by the government was political, in light of the alleged accounting scandals plaguing shipbuilder Daewoo Shipbuilding & Marine Engineering, previously rescued by the authorities. Thus lawmakers were unwilling to put their support behind Hanjin, lest history repeat itself. Hanjin was the stronger of the two Korean carriers and I think they had a much better organisation, they had much better coverage and a fairly strong information technology systems used by other competitors.

The bankrupt container line Hanjin Shipping's last remaining ship, the Hanjin Rome, was sold for scrap by a Singaporean court in march 2017. All Hanjin-operated vessels have now been auctioned off, seized by creditors or repossessed by shipowners.

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Page last modified: 15-05-2018 11:40:42 ZULU