According to the Financial Supervisory Service’s electronic disclosure system, HD Hyundai Heavy Industries and Ecoprime Marine Pacific signed a Memorandum of Agreement (MOA) on May 13 for the transfer of Gunsan Shipyard assets. Ecoprime Marine Pacific is a Dongbu Engineering & Construction consortium and the largest shareholder of HJ Heavy Industries.

HD Hyundai Heavy Industries stated in its disclosure, “Following the completion of due diligence, an appraisal will be conducted to determine the base asset value, and the final contract amount will be confirmed through negotiations between the parties based on this value.” Industry observers estimate the transaction size to be around 1 trillion won.

HJ Heavy Industries’ predecessor was Hanjin Heavy Industries, a former affiliate of Hanjin Group. The company was established in 1937 as ‘Joseon Heavy Industries’ and is recognized as one of the enterprises that laid the foundation for Korea’s early shipbuilding industry. It subsequently expanded its business in the fields of merchant vessel and naval ship construction.

However, the business environment deteriorated sharply in the 2010s. The reckless investment in the Subic Shipyard in the Philippines, led by former Chairman Cho Nam-ho, came back as a boomerang, and to make matters worse, the ‘Seal Dispute’—an intra-group battle over control—erupted, paralyzing the management system.

Prolonged labor-management conflicts also became a burden. The extreme labor-management confrontation, symbolized by union representative Kim Jin-sook’s high-altitude sit-in protest and the ‘Hope Bus’ movement, pushed the shipyard with its 88-year history to the brink of collapse.

Ultimately, unable to weather the waves of the shipbuilding recession, the company came under Korea Development Bank’s management supervision in 2021 and was subsequently acquired by the Dongbu Engineering & Construction consortium (Ecoprime Marine Pacific). At the time, market sentiment was skeptical. Doubts were rampant: “Can a private equity fund revive a shipyard?”

Following the private equity acquisition, the company changed its name to HJ Heavy Industries for management normalization and embarked on business restructuring. The bone-cutting structural reforms implemented under CEO Yoo Sang-cheol created a turnaround. The company shifted its portfolio from a merchant vessel-centered business structure to one focused on specialized vessels and defense.

In this process, orders increased and performance improved. As a result, the company successfully returned to profitability in 2024 for the first time in 11 years, and in 2025, it achieved an ‘earnings surprise’ by recording revenue of 1,999.7 billion won and operating profit of 67 billion won. Operating profit, in particular, surged more than eightfold (824.8%) year-on-year, surpassing the 50 billion won mark for the first time in five years.

Gunsan Shipyard sits on a 1.8 million square meter site, equipped with a dock approximately 700 meters in length and a 1,650-ton Goliath crane. The facility is known to have the capacity to build approximately 10 vessels per year based on 180,000-ton bulk carriers.

However, as orders plummeted due to the global shipbuilding recession, HD Hyundai Heavy Industries suspended operations at Gunsan Shipyard in 2017. Subsequently, subcontractors and the local economy suffered significant damage. In October 2022, partial operations resumed for the first time in five years, but the facility has been operating primarily as a ship block production center, sending blocks to the Ulsan shipyard rather than constructing completed vessels.

If this sale is finalized, Gunsan Shipyard could potentially be converted back into a production base with newbuilding capabilities. By securing the approximately 700-meter dock and large Goliath crane, HJ Heavy Industries will be able to obtain large vessel construction capabilities that were difficult to achieve at its existing Yeongdo Shipyard in Busan.

Industry analysts suggest that this could establish a foundation for entering the large vessel construction market, including large container ships and Very Large Ore Carriers (VLOC).

HD Hyundai Heavy Industries will also secure investment resources through the asset sale. The company plans to continue placing block orders with Gunsan Shipyard for a certain period and provide technical cooperation support.

HJ Heavy Industries is also reviewing plans to utilize Gunsan Shipyard as a base for US Navy ship Maintenance, Repair, and Overhaul (MRO) operations. The US Navy MRO market is estimated at approximately 20 trillion won annually. The company has already signed a Master Ship Repair Agreement (MSRA) with the US Navy. Based on this, the strategy is to expand naval vessel maintenance service contracts going forward.

Cooperative measures for mutual prosperity have also been established. HD Hyundai Heavy Industries plans to continue placing block orders with Gunsan Shipyard for the next three years and provide support in design and smart technologies. Employment succession for approximately 800 subcontractor workers is also being pursued. Jeonbuk Governor Kim Kwan-young stated, “This will be a starting point for Gunsan Shipyard to regain its rightful status,” adding, “Jeonbuk Province will also concentrate its administrative support.”

Source: BusinessKorea