News and Updates on HD Hyundai

HHI Becomes 1st Korean Shipbuilder to Launch Co-Prosperity Business Office

Hyundai Heavy Industries (HHI) established for the first time in Korea’s shipbuilding industry ‘Co-Prosperity Business Office’ under the direct control of its CEO, with an aim to build a new win-win business model with its partner companies.
For this, HHI expanded and reorganized the existing business unit responsible for supporting partner companies, led by a senior vice president-level executive, into Co-Prosperity Business Office with three departments staffed with approximately 70 employees in total, appointing Kim Sook-hyun, Senior Executive Vice President of HHI to head the office. Having served as the head of HHI’s Offshore Plant Engineering Business previously, Mr. Kim has been leading the UAE’s Nasr Field Project since 2018.

Because the shipbuilding industry is structured in such a way that shipyards typically depend on their subcontractors for as much as 70% of the total production, the frequent rise and fall of these small businesses due to fluctuating market conditions have presented HHI with various difficulties along the way.

“In full recognition of how stabilizing the management of partner companies and enhancing their competitiveness are critical to the sustainability of our industry, HHI’s Co-Prosperity Business Office will commit itself to the three key goals of helping small businesses enhance technology, supporting them for better quality and promoting co-prosperity. To that end, we will take a deeper look at their areas of difficulty and room for improvement to achieve sustainable shared growth,” said Kim Sook-hyun.

With the launch of the new office, helping subtractors recruit sufficient manpower – an issue that has recently affected so many small businesses in the industry – has been set as action item No. 1. Since last year, HHI has greatly stepped up its financial investments in the training programs at Technical Education Institute and expanded recruitment of new technicians, also planning to deepen partnerships with vocational schools, such as specialized high schools, Meister high schools and Korea Polytechnics (KOPO), to actively help stabilize subcontractors’ manpower levels.

HHI will also expand its on-site technical guidance program where its tech experts of different fields pay visits to subcontractors’ sites to offer them technical guidance and assist them with quality control, while making focused efforts to enhance the competitiveness of partner companies by offering tailored management capabilities improvement programs. HHI currently has about 150 in-house partner companies, and 14 outside partners are supplying ship blocks.

“We expect not only will Co-Prosperity Business Office do much to solve the difficulties faced by HHI’s own partner companies, but also it will lay the foundation in a broader context for Korea’s shipbuilding industry to take a leap forward via shared growth between major shipbuilders and small businesses,” said Kim Yong-seok, Chair of In-house Subcontractors’ Council at HHI, in a hopeful tone.

An official of HHI stated, “Knowing how our partner companies’ growth is intertwined with that of the Korean shipbuilding industry, we will not spare efforts to help solve all the challenges they are facing via the newly launched Co-Prosperity Business Office.”

Ranging from offering management support funds (a total of KRW 49.7 billion paid out in 2019) and operating Shared Growth Fund (worth KRW 10 billion) to increasing subcontracting fees, HHI has been making various endeavors for the stable operation of its partner companies. It has also improved welfare benefits for individual subcontracting workers, including providing dormitories since March this year.

Apart from the above, HHI’s in-house subcontractors formed last month Joint Labor-Welfare Fund Corporation for the enhanced welfare benefits for the workers, to which HHI and the government contributed KRW 2 billion and KRW 1 billion, respectively.