South Koreans to continue welding investment

Edited by the Engineeringtalk editorial team Aug 11, 2006

The presence of welding-intensive end-user sectors such as shipbuilding and automotive has fuelled the growth of the South Korean welding equipment market.

The presence of welding-intensive end-user sectors such as shipbuilding and automotive has fuelled the growth of the South Korean welding equipment market.

Requirements for welding equipment will continue to expand as strong global demand drives South Korea's export-focused industrial sectors with the principal demand originating from the shipbuilding and automotive sectors.

Frost and Sullivan finds that South Korean welding equipment and consumables markets earned revenues of $656.2 million in 2005 and estimates this to reach $955.0 million in 2012.

Rising productivity will be essential for the strategically important shipbuilding industry in South Korea to remain internationally competitive.

The presence of strong unions in the sector means that enhanced productivity through automation will be the best way to offset the possibility of rising labour costs.

"Strong shipbuilding orders will ensure robust demand for welding technology in South Korea in the short and medium term", says Frost and Sullivan Research Analyst Titus Hocevar.

"Increasing productivity in shipbuilding will force companies to hike investment and capital expenditures, thereby having a positive ripple effect on the uptake of welding equipment".

Heightened international trade is triggering a need for more ships, which, in turn, is having a beneficial impact on the welding technology markets of the Far East.

At the same time, rising incomes are fuelling demand for cars in emerging Asian markets.

As capital expenditures rise in order to expand automotive production capacity in the region, the use of welding equipment will receive a boost.

Moreover, strong global growth will stimulate export demand for industrial goods, translating into higher capital expenditures.

This will positively influence the demand for welding technology in the export-focused South Korean economy.

However, the loss of international competitiveness in relation to China threatens to have a detrimental effect on export demand, on which South Korea is heavily reliant.

The impact on some industries could be particularly severe and could dampen demand for several capital equipment inputs, including welding equipment.

"China is attracting most international investments in the Far East region at present", cautions Hocevar.

"At the same time, South Korea's automotive, shipbuilding and other industrial sectors are under constant competitive pressure from other South-east Asian economies, meaning that they have to continually invest in new capital equipment to remain competitive".

A strategic response to this challenge will centre on increasing competitiveness by boosting productivity through process automation.

As this trend widens, it will have a favourable impact on welding equipment demand in the country.