Restructuring · Romania · 1996–1999
Daewoo-Mangalia: a Black Sea yard rebuilt, starting with the broom
The yard could build ships and had built them. What it lacked was a modern way of working, and the belief that it could have one.
- Daewoo-Mangalia Heavy Industries
- Mangalia, Constanța County, Romania
- Ship repair, then newbuilding, at a joint venture of Daewoo and 2 Mai Mangalia Shipyard
- Suh Wan-Chul, first Chief Executive Officer of the joint venture
- ABS Surveyor, Summer 2004, “Daewoo’s Romanian Rhapsody”; Suh Wan-Chul’s record of the restructuring
The situation
2 Mai Mangalia Shipyard, on Romania’s Black Sea coast some 400 kilometres from the Bosporus, had a long record of building strong, plain ships through the difficult social, technical and working conditions of the old regime. In the mid-1990s Daewoo was looking for a yard to build workhorse tankers and bulk carriers while its home yard concentrated on more complex ships. It chose Mangalia for its people, and in 1997 the two reached a joint-venture agreement.
The yard was not organised in the modern fashion. Pre-outfitting hull blocks was unknown, and when the first Korean team arrived the production line could hardly be seen for the things standing on it. Suh Wan-Chul led that team as the joint venture’s first chief executive, from the second half of 1996 to 1999.
What changed, in order
The first months
The managers clean first
The whole Korean staff of 22 managers and experts put on gloves and coveralls and swept the grounds themselves. Walls that should not have been there came down, and about 2,000 tonnes of scrap and junk were taken off the main production floor. When Romanian managers hesitated to join in, Suh Wan-Chul explained why in a private conversation: the yard was their house too, and respect for it had to come first.
1997 – 1999
Repair first, to build belief
For the first three years the yard concentrated on ship repair, earning the confidence of its future customers before it asked them for new ships. Behind it, the team redesigned the layout and the investment that went with it, and trained employees at every level, in sales, design, production and administration.
1997 – 1999
Technology, and the reasons for it
Design technology was strengthened and a new production system introduced, with pre-outfitting of hull blocks among the methods brought from Korea. The Korean team had allowed three months for welders to adapt to semi-automatic welding. Two weeks later they were working with it without trouble.
2001 – 2004
After the handover
The joint venture went into profit from 2001. Sales, $26 million in 1997, reached $98 million in 2003, and in April 2004 steel was cut for the first of three 69,000-tonne panamax tankers for a Greek owner: a new market for a yard that had built ships under 10,000 dwt.
Joint-venture sales · US$ million
- 1996–1999Suh Wan-Chul, first CEO. Clean-up, repair first, new layout, training at every level.
- 1997Joint-venture agreement between Daewoo and 2 Mai Mangalia Shipyard.
- 2001The joint venture makes its first profit.
- 2004Steel cut for the first of three 69,000-tonne panamax tankers, a new market for the yard.
The people: “the yard is also our house”
The managers who stayed remembered the change as one of respect rather than instruction. The Korean team did first what it asked of others, and the yard became, in the marketing director’s words, a school where people learned not only how to do things but why.
22Korean managers and experts who picked up brooms themselves
3 yearsto break through, in the words of the director of production planning
3,400employees by 2004, about 2,000 of them on the shop floor
Results
| Indicator | Before | By 2003–2004 |
|---|---|---|
| Joint-venture sales | $26M (1997) | $98M (2003) |
| Hull pre-outfitted before painting | Not practised | About 85% |
| Semi-automatic welding, time to adapt | 3 months planned | 2 weeks |
| Largest ships on order | Under 10,000 dwt | 69,000-tonne tankers |
All figures as reported in ABS Surveyor, Summer 2004. They are the joint venture’s, and most were reached after Suh Wan-Chul’s term as chief executive ended in 1999.
What lasted
2001the first year of profit, two years after the restructuring
3ABS-classed panamax tankers ordered in 2004, with the order book filled through 2006
“It wasn’t just a game of follow-the-leader. It was heartfelt communication from a man who respected us as men.”