A rapidly changing shipbuilding industry has prompted South Korea’s Samsung Heavy Industries (SHI) to shut one of its plants in China.
The company, which has been posting losses and is hoping for a turnaround in 2023, announced that it will close the obsolete SHI Ningbo Co. plant in China. The decision was informed by decreased productivity due to the facility’s antiquated conditions.
The shipbuilder has begun talks with Chinese authorities to hand over the land and other assets held by the plant, and the process is expected to be completed early next year.
The SHI Ningbo plant started operations in 1997 and specialized in the production of ship blocks, iron structures and shipbuilding for overseas and domestic markets.
“To keep up with trends, investment in green new technologies, smart production and ESG (environmental, social and governance) is needed,” said the company in its September Investor Relations note.
It added that by securing a competitive edge through improved financial structure and investment in technology, the company aims to make a turnaround in 2023 through growing its order book.
SHI narrowed its net loss to $388.9 million in the second quarter from $599.2 million a year ago. It is in the process of raising $1.1 billion by selling new shares to improve its financial structure and fund the development of eco-friendly shipbuilding technologies.
In the six month period ending in July, the company secured $7.1 billion in new orders. The majority are for containerships (totaling $4.8 billion) followed by LNG carriers ($1.7 billion) and tankers ($600 million). The company has an enviable order backlog totaling $25.5 billion.