SEOUL, May 19 (Korea Bizwire) – South Korea’s major shipbuilders are pulling out of wind power generation projects as they are reeling from massive losses and a drawn-out slump in the global economy, industry sources said Thursday.
Since 2009, local shipyards, led by Hyundai Heavy Industries Co., have been tapping the alternative energy business sector as part of efforts to diversify their business portfolios.
But lower oil prices and mounting losses stemming from their mainstay business are forcing them to close down the loss-generating business as well.
According to the sources, Hyundai Heavy is working to liquidate its German operation, which produces a gear box for wind power generation.
Daewoo Shipbuilding & Marine Engineering Co., another shipyard, is also moving to sell a wind farm run by its affiliate. The U.S. affiliate which operates four wind farms there suffered a loss of 72 billion won last year.
Daewoo Shipbuilding’s Canadian affiliate was also put under court receivership in March this year.
“Major shipyards seem to be closing loss-making wind power businesses as they are struggling with mounting losses from offshore facilities,” an industry source said.
The shipbuilding industry, once regarded as the backbone of the country’s economic growth and job creation, has been reeling from mounting losses caused by an industrywide slump and increased costs.
The big three shipyards racked up a combined net loss of 7.7 trillion won (US$6.47 billion) last year, marking the first time that all three of the nation’s largest industry players registered losses.