Directions for the Sustainable Development of Korean Small and Medium Sized Shipyards

Korean small and medium sized (SMS) shipyards are facing difficulties getting new orders in the conditions of the marine recession, and many SMS shipyards have gone bankrupt. In general, SMS shipyards have fairly low credit ratings, so it is hard for them to get a Refund Guarantee (RG), which is a necessary document for contracts from commercial banks or the Export Credit Agency (ECA). I analyzed the efficiency, productivity, growth, and stability of Korean SMS shipyards using the data envelopment analysis (DEA) model and Malmquist index in order to classify competitive and uncompetitive SMS shipyards and suggest developmental directions for Korean SMS shipyards based on empirical results. Some SMS shipyards are managed efficiently and productively, such as Sungdong, Shina SB, Mokpo, and Daesun. However, support from government and financial institutions needs to be provided to these shipyards so that they can overcome the challenges of the recession, while some uncompetitive SMS shipyards should carefully consider switching to another area such as subpart supplies, repairing, or maintenance.