Hanwha Ocean Plans $1.3B Investment to Improve Safety for Shipbuilding
South Korea’s shipbuilder Hanwha Ocean announced that it will invest a total of $1.3 billion over the next three years to improve the safety of its shipyard operations. It comes as the company was facing mounting pressure from the government which has a very strict safety program and unions which accused the company of being lax on safety protocols.
The Hanwha Group acquired management and control of the shipbuilding operations of Daewoo Shipbuilding & Marine Engineering (DSME) completing the deal with the state-run banks in May 2023. The operation reported its first fatal accident in January 2024 under the new management and since then it has been under increasing scrutiny. Korean media reports the government was considering summoning management to report before the National Assembly after a series of incidents at the yard.
The first incident in January involved a 27-year-old subcontractor who died during grinding work at the rudder shop. A little over a week ago, a contractor worker fell from a containership under construction at the yard in Geoje. The individual who was reported in his 40s died from the injuries. A month earlier, a subcontractor in his 60s passed out at the shipyard. His death was attributed to a heat-related illness.
The Ministry of Employment and Labor inspected the shipyard in February and March of this year. They imposed a $75,000 fine for safety violations found during the inspections.
"After a thorough review of safety feedback from both internal and external experts, as well as the overall safety conditions at our shipyards, we have determined that a comprehensive overhaul of our current safety management system is needed," said Kim Hee-cheul, CEO of Hanwha Ocean, in a statement released today, September 18.
The total value of the program will be $1.3 billion with the largest piece, $853 million specifically for safety initiatives over the next three years. Over $640 million will be spent by 2026 to improve safety, including $50 million for a smart system using artificial intelligence to detect hazards such as fires, explosions, and leaks. They also plan to provide workers with body cameras, tablets, and smartwatches.
Hanwha Ocea said will also invest $528 million to replace outdated equipment that could be creating safety risks.
South Korea implemented new safety regulations in January 2022 for the shipbuilding industry. According to the labor unions, there were five fatal incidents at the Geoje shipyard after the new regulations before Hanwha took over from DSME. One particular incident, a subcontractor in his 50s drew wide attention when the man was killed in March 2022. He reportedly hit his head while nearly 200 feet in the air repairing a tower crane. The man fell and was killed by the tower crane lift wire.
South Korea indicted the former CEO of DSME in April 204 for the individual’s death. Under South Korean regulations, senior management of a company can and will be held accountable for fatal accidents in their operations. Similar charges had previously been brought against management at other shipyards.
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