HD Hyundai Heavy Industries has finalized the acquisition of Lee Young Industrial Machinery, a ship equipment manufacturer, for an undisclosed sum in the hundreds of billions of won. The deal, which closed on September 30, comes as the shipbuilding sector faces both a resurgence and ongoing supply chain disruptions, particularly in the availability of key components like curved ship blocks.
Lee Young Industrial Machinery, despite its expertise in producing complex curved blocks essential for shipbuilding, has posted losses for 11 consecutive years. Financial difficulties forced the company to enter the sale process, even as ship orders surged in 2022. The firm generated around 70 billion won ($54 million) in revenue last year, specializing in curved blocks that make up a significant portion of vessels like LNG carriers.
HD Hyundai’s acquisition is a strategic move to mitigate reliance on external suppliers, especially as many Korean shipbuilders have turned to Chinese manufacturers due to a domestic shortage of blocks. By bringing this capability in-house, Hyundai aims to reduce supply chain risks, improve production efficiency, and avoid penalties for delivery delays.
With ship prices on the rise, as indicated by the climbing Newbuilding Price Index, the acquisition positions Hyundai to capitalize on the ongoing boom in the shipbuilding market.
