Posted February. 17, 2017 07:09,
Updated February. 17, 2017 07:15
Hanjin Shipping, which was once ranked as the first (domestic) and seventh (global) largest carrier, was declared bankrupt at the court today. Founded in 1977, Hanjin Shipping underwent a severe management crisis amid global recession in the shipping industry and high charterage since 2011. After going into court receivership last September, the shipping giant will disappear in history with vain hopes of “protecting the country with land, marine, and air transportation business.” The collapse was a mixture of bad management decisions when it rested on their laurels and made long-term contracts at high price, coupled with the government’s obsession with financial ideologies.
Last year, Daewoo Shipbuilding & Marine Engineering received its restructuring approval from the creditors on conditions that it will strive to stand back on its feet. This year, Hanjin Shipping went bankrupt. However, for the past several months, the biggest asset Korea lost was human resources. As the downsizing of Daewoo caused ripple effect on small and medium-sized ship builders, the industry as a whole already had to let go approximately 20,000 employees. Among those laid off, most were kicked out without their salaries, let alone severances. Moreover, brain leakage is cutting back the national technological competency, as seasoned engineers designing core technology for Liquefied Natural Gas (LNG) carriers were reemployed to competitors in Japan and Middle East countries.
Once a corporate employing around 1,300 people, Hanjin Shipping is now left with 50-some employees who are settling sequestrated assets and preparing their “corporate funeral.” What’s more, “for rent” signs are placed everywhere on the streets of Joongang-dong, Busan, where it was once called the “mecca of shipping industry.” Busan, Ulsan, and South Gyeongsang provincial regions, which traditionally depended heavily on shipbuilding and shipping, sighed and now woes, but to the eyes of the government which only stressed the cause for restructuring, their woes are merely whining.
The government argues that it will inject funds to shore up national competency in these industries. However, the plan is no more than mending the barn after the horse is stolen. The 6.5 trillion won budgeted to subsidize the Korean shipping industry already exceeds far higher than the 4 trillion won to 4.6 trillion won allocated to liquidate Hanjin Shipping in the first place. At the current time, the government plans to charge this huge amount of money to tax-payers to increase Hyundai Merchant Marine’s capital and acquire assets including terminals. This clearly proves that the ongoing restructuring process is no more than a stopgap measure implemented by the rule of thumb. Furthermore, the government seems to consider its Korea Development Bank as an automatic teller machine, as it is already reviewing plans to inject additional fund when only 380 billion won is left from the allotted 4.2 trillion won to finance Daewoo.
The Minjoo Party's former Moon Jae-in commented on the recent collapse that watching the government settle the Hanjin Shipping bankruptcy made me furious, and former co-leader of People’s Party Ahn Cheol-soo said that (the incumbent office) will be held responsible for the current crisis. Nonetheless, what Korea urgently needs at the moment is a revitalized main street economy with reviving industries and higher number of jobs, instead of political bashing. This can only be done under bipartisan decision which factors in both the troubled industry but also the economy as a whole, rather than forcing to apply financial theories. Presidential candidates should no longer sit on the fence as well.