Shipbuilding industry didn't pay attention to R&D

Worries have been building up from concerns that the domestic shipbuilding industry may lose its international competitive edge due to a general lack of R & D (Research and Development).

The Korea Shipbuilders' Association unveiled on July 2 that 5 main domestic shipbuilding companies including Hyundai Heavy Industries invested only 0.93% of their net sales in R &D on average. This figure is far below other industries such as home appliances, which invested 4% of net sales on average.

Hyundai Heavy Industries (HHI), the world shipbuilding leader, invested only 123.9 billion won or 1.87% in R &D out of 6.63 trillion won of net sales. Samsung Heavy Industries spent 1.44 % or 51.6 billion won in R & D out of 3.58 trillion won of net sales.

Daewoo Shipbuilding & Marine Engineering, which separated from Daewoo Heavy Industries and Machinery last October, invested only 0.59% of net sales in the fourth quarter of last year or 4.6 billion won in R &D from its net sales of 781.4 billion won.

Samho Heavy Industries spent 0.66%, or 3.1 billion won, out of 482.1 billion won, and Hanjin Heavy Industries showed the lowest investment, 0.07% or 1.3 billion won out of 1.92 trillion won of net sales.

R & D investments plunged in the wake of the Asian Currency Crisis and still remain insignificant in spite of a general recovery in the industry.

HHI invested 3.41 % of its net sales on R & D in 1995 while SHI spent 3.86% on R & D investment in 1996.

"It is true that the shipbuilding industry rarely invested in R & D. At present, we can't afford to strengthen the R & D sector because shipbuilding research and development projects require sometimes tens of billions won for a single project," said a working level official in the industry.

"We are confronting Chinese and Japanese shipbuilding industry competition and we may end up losing our title as the world's leading shipbuilding nation, much to the benefit of China and Japan, unless we pay more attention to R & D," a man in the Korea Shipbuilders' Association said.