Hyundai Heavy Industries Co., the world’s largest shipbuilder, has decided to pull out from money-losing offshore plant installation business amid restructuring efforts to overcome financial problems.

According to multiple sources from the shipbuilding industry on Sunday, South Korea’s cash-strapped Hyundai Heavy Industries has embarked on the sale of its offshore plant equipment after transferring installation business department employees under the offshore plant business unit to another production operation department.

An unnamed official from the shipbuilding industry said that Hyundai Heavy Industries has decided to withdraw from the installation business amid efforts to downsize its offshore plant business that has been logging massive losses following a prolonged slump in the industry.

The company’s installation department has been responsible for installing specifically-purposed offshore plants after transporting large-size offshore plants on sea. The department has also been in charge of core support work in a number of the company’s engineering, procurement and construction (EPC) projects. It has been overseen by more than 200 on- and off-site installation and construction employees from headquarters. When business thrived, the department had to cover manpower shortage by hiring workers from subcontractors.

Hyundai Heavy Industries’ installation-related work, however, began to see orders decline naturally when the company started to minimize its overall offshore plant business. From January to April this year, the volume of Hyundai Heavy Industries’ installation-related orders amounted to $259 million, down 61 percent from the same period last year. The order backlog value has also been reduced to $13.07 billion.

Meanwhile, the withdrawal of the offshore installation business has led Hyundai Heavy Industries to naturally pull out from large-size EPC projects, which the company has been promoting overseas. It has given up on installation work involving a large-size offshore project in Iran and gave way for another local player to land the deal instead.

An unnamed official from Hyundai Heavy Industries said the company has decided to take hands off from offshore plant installation business as part of efforts to promote management efficiency. The official noted that it will outsource the work when necessary.

Hyundai Heavy Industries has already put offshore installation equipment - including HD2500 and HD289 cranes and barges - in the market for sale.

By Park Yong-beom

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