South Korean major shipbuilders contract offshore plants successfully one after the other, however, poor localization rate is stopping them from making money as much as expected.
So, cooperation among private companies, government and academia is suggested to overcome the situation.
In case of Korean shipbuilding industry, equipment localization accounts for over 90% in commercial ship sector, while only 20% level in offshore plant. Sources said that major shipbuilders' orders are shifting to offshore plant from commercial ship but paying massive royalty for core equipment to overseas companies.
In 2011, South Korea's Hyundai Heavy Industries, Samsung HI, Daewoo Shipbuilding & Marine Engineering, etc., recorded order intake of overall $29.3bn in offshore plant sector, of which around half goes to equipment costs. Of $14.6bn of equipment expenses, $11.6bn, accounting for 80%, had been paid to overseas equipment makers.
In case of explosion proof device, the most important equipment in ship and offshore plant, localization rate only remains at 5% and piping and instrument devices at 15-20%. Localization rate of electric apparatus stands at 35-45%, however, electric panels and electric motor all are imported.
Shipbuilding player said, "Company's sole development of core devices which are installed in FPSO is virtually impossible. In case of high-end core devices, they should be co-developed by major yards, equipment makers and universities and equipped in the plant, while led by governmental authorities."