Shipbuilding Boom Meets Geoje's Economic Stagnation

After the COVID-19 pandemic, there has been a significant increase in orders for LNG (liquefied natural gas) carriers and other ships, which...

After the COVID-19 pandemic, there has been a significant increase in orders for LNG (liquefied natural gas) carriers and other ships, which has brought new life to the two main shipyards in Geoje, South Gyeongsang Province. Samsung Heavy Industries reported an operating profit of 327.9 billion Korean won for the first half of this year, with projections to surpass 700 billion won this year. Hanwha Ocean, which became profitable last year, achieved an operating profit of 630.3 billion won during the first half of this year. Due to continuous successful bids, analysts believe that "K-shipbuilding has entered a 'supercycle' (period of growth)." There is also high anticipation for the 'MASGA (MASGA·Korea-U.S. Shipbuilding Cooperation Project).'

However, Geoje City, which was visited on the 7th, looked similar to Pohang in North Gyeongsang Province, an area facing difficulties because of a steel industry downturn. In front of Hanwha Ocean's Geoje Shipyard (previously known as Okpo Shipyard), almost one out of every three shops was empty. Business owners noted, "Although K-shipbuilding is experiencing growth, Geoje's economy seems to be stuck."

Geoje's commercial vacancy rate in the second quarter of this year stood at 35.1%, ranking as the second-highest across the country—higher than Pohang's 34.9% and Yeosu's 28.1%. At a restaurant in Ajou-dong, 14 out of 15 tables were empty during lunchtime. Owner Ahn, aged 42, mentioned, "We used to be crowded with shipyard workers during lunch and dinner, but I can't remember the last time we received a group reservation. These days, shipyards are mostly filled with low-wage foreign workers, so money isn't flowing locally."

Residents of Geoje stated, “The ‘trickle-down effect’ (where funds move from big companies to smaller contractors and local areas) that was effective ten years ago is no longer present.” During the early 2010s, when the shipbuilding sector was booming, Geoje was referred to as a “prosperous city.” Property prices rose significantly, similar to those in Seoul, and money circulated throughout the city on shipyard paydays. Nevertheless, the city's economy stalled in the late 2010s as the industry experienced a long-term downturn caused by competition from low-cost Chinese manufacturers.

A former worker at Samsung Heavy Industries said, "Following significant restructuring and labor conflicts, competitive subcontractors—the foundation of K-shipbuilding—went out of business, and skilled workers moved to the capital area and other regions." Geoje's population reached a high of 257,000 in 2016 but has since dropped, standing at 231,000 as of August this year. The departure of young individuals is especially pronounced: the number of people aged 20 to 30 fell by 46% from 77,489 to 41,937 during the same time period—cutting in half over ten years.

◇Even on Payday at Shipyards, Neighborhoods Stay Quiet… Only Daiso, a 'Popular Spot' for Foreign Workers, Is Busy

A person from the shipbuilding industry stated, "Under these circumstances, shipyards are managing the excess orders by employing low-paid foreign workers or contracting work abroad." The number of foreign workers in Geoje has tripled to 15,790 this August, compared to 5,410 in 2022.

Subcontractor workers still in Geoje mentioned they have no funds available for spending. Lee Joon-kwon, a 40-year-old subcontractor employee, noted, “Only employees of major companies and some engineers are reaping the benefits of the current boom. Subcontractor workers earn just 3 to 4 million won per month, even after working extremely hard.” Subcontractor pay rates continue to be between 50–70% of those at main contractors. Another subcontractor worker, Mr. B, said, “Major corporations make the profits, but the situation for subcontractors hasn't improved. The absence of local economic activity is also because large corporations are pressuring subcontractors.”

Economic specialists observed, "The shipbuilding environment has crumbled, resulting in a contradiction where the sector thrives yet local communities and inhabitants continue to suffer from poverty."

On the afternoon of the 7th, near the main entrance of Samsung Heavy Industries' Geoje Shipyard in Jangpyeong-dong, employees left on motorcycles and bicycles following their shift. A closer look revealed that eight out of ten workers were foreigners—some with hijabs or long beards, and wearing name tags such as 'Rustam,' 'Van Minh Chien,' and 'Jin Xuru.'

The most crowded "hotspot" in Geoje was Daiso located in Jangpyeong-dong. On the evening of the 7th, 28 out of 32 shoppers at Daiso were foreign workers, picking up products such as socks priced at 1,000 won and masks.

A local grocery store was also packed with foreign workers coming back from their shifts. Kim Jin-ho, a 48-year-old store employee, said, "Foreign workers eat lunch at the shipyard cafeteria and prepare their own dinners. They purchase the most carrots, potatoes, and raw chicken—probably for spicy braised chicken." Foreign workers interviewed that day mentioned, "Most of us are in debt because we paid recruitment fees of 10 million won. We have to save money very carefully." Bikash, 30, from Nepal, said, "I send 2 million won of my monthly salary of 2.5 million won to my family of 11 back home."

The cost of apartments in Geoje dropped by 49% over the last ten years (2015–2025). As demand decreases, properties constructed during the peak remain unoccupied. Across the country, apartment prices increased by an average of 10.3% during the same time, with Seoul seeing a rise of 33.6%.

In Ilun-myeon, Geoje, 147 out of 767 households in a single apartment building were empty. A real estate agent, Mr. C, stated, "It was launched in 2018, yet unsold units continue to accumulate." Eighteen of the 22 commercial spaces within the apartment complex remained unoccupied.

Residents felt a shift across generations. Lee, who is 65 years old, remarked, "There were always foreign workers, but not to this degree. I never thought the city that was once the richest in the country would transform like this." Park, aged 61, added, "Even on days when shipyard workers get their pay, the neighborhood remains quiet. While people in Seoul hope for the 'MASGA effect,' it seems like an unreachable dream for us."

There is increasing pressure on the two main shipyards to recruit more local workers. On the 5th, Lee Tae-yeol, a member of the Geoje City Council from the Democratic Party of Korea, introduced a proposal asking Samsung Heavy Industries and Hanwha Ocean to increase their hiring of local residents. The council member said, "Although Geoje has become a global shipbuilding center thanks to initiatives such as the $150 billion 'MASGA' project and U.S. Navy ship maintenance contracts, the advantages have not been adequately distributed to the community and young people. The regular employment of local talent needs to be greatly expanded."

As per Geoje Technical High School, a institution focused on shipbuilding, just one graduate was employed by Hanwha Ocean or Samsung Heavy Industries in the previous year. Ten years ago, 7–8 students were hired each year, but job prospects have now become extremely limited. A 17-year-old student, Mr. Byun, mentioned, "Even after graduating from a specialized high school, I can't join subcontractors where job security is uncertain. I'll need to leave Geoje to find employment."

A representative from the shipbuilding sector stated, “To ensure the supercycle isn't the 'final one,' it's essential to rebuild the industry's core stability. It's important to bring back experienced workers and develop the next generation of talent.”

Mayor of Geoje, Byun Gwang-yong, stated, “I suggested creating a 150 billion won ‘Regional Co-prosperity Development Fund’ in collaboration with the two shipyards. The goal is to develop local talent and enhance the working conditions of subcontractors through this fund.”