Hyundai Heavy Industries 50th Anniversary
The amazing founding story of Hyundai Heavy Industries
Founder Chung Ju-yung was born in 1915 in the small village of Asan, which is located in North Korea today. His father was a farmer and the family lived in poverty. As the eldest son among eight children, Ju-yung had many responsibilities from a young age. It was said that he worked twice as hard as others to overcome the financial hardship of his family.
While still a teenager, he fled the rural poverty of the North for the capital Seoul. His father caught and called him back twice. But Ju-yung’s third attempt was successful: He sold one of his father’s cows to pay for the trip – a fact that caused him to feel guilty for the rest of his life and prompted him to send 1,001 cattle to North Korea as a humanitarian gesture in 1998.
HHI founder Chung Ju-yung (1915–2001) is one of Korea’s most successful entrepreneurs in history (copyright: HHI Group)
He worked hard in various jobs for years. By 1938 he had saved enough cash to set up a rice shop. Through many toils and setbacks, he eventually established the company Hyundai Construction after the end of World War II and Korea’s liberation in 1947. He was 31 years old. By the end of the 1960s he was heading an industrial empire with business units dedicated to construction, engineering, and cars.
Construction of HHI shipyard in Ulsan begins in March 1972 (copyright: HHI Group)
Ju-yung’s ambition went further. In a daring move, he accepted an order for two 260,000-tonne oil tankers from Greek magnate George Livanos without even having a shipyard yet. On 23 March 1972, ground was broken on an empty stretch of beach in Ulsan to construct what would become the world’s largest shipyard.
Before the 1970s, South Korea had built no ships larger than 10,000 tons. Constructing the shipyard and the two VLCCs in parallel, Hyundai was able to deliver the ships on time after just 27 months. This was the birth of Hyundai’s shipbuilding division, and South Korea was on track to overtake Japan as the world’s top shipbuilding nation less than three decades later.
Naming ceremony of HHI’s first delivered vessel, a VLCC to Greek shipowner Livanos, in June 1974 (copyright: HHI Group)
A decade after the first delivery, the Hyundai shipyard topped 10 million deadweight tonnage in aggregate ship production and has maintained the leading position in the world shipbuilding market ever since. This allowed the company to expand into other heavy industry areas, ultimately leading to the formation of Hyundai Heavy Industries.
Under Ju-yung’s leadership Hyundai not only built major industrial infrastructure in South Korea, such as the Seoul-Busan expressway or Soyang Multipurpose Dam, but also manufactured the first Korean automobile based on domestic technology.
“There are no failures, only trials,” the entrepreneur used to say. Until today, Ju-yung is seen as Korea’s most respected founder and greatest contributor to the country’s economic development.
Today, Hyundai Heavy Industries Group and its sub-holding company Korea Shipbuilding & Offshore Engineering (KSOE) are headed by CEO Chung Ki-sun, the grandson of Hyundai Group founder Chung Ju-yung. Along with Chung Ki-sun, current CEO Ka Sam-hyun is co-CEO, and Han Young-seok is the President and CEO of Hyundai Heavy Industries (HHI), the world’s largest shipbuilder.
Aerial view of HHI shipyard in Ulsan (copyright: HHI Group)
On the occasion of HHI’s 50th anniversary, Joo Won-ho, Senior Executive Vice President and Chief Technical Officer at HHI, explains how the company managed to stay in the lead as the world’s largest shipbuilder for so long and outlines some of the future strategic steps.
What are HHI’s specific strengths to be in today’s leadership position?
Joo Won-ho: Let me specify this in three perspectives: Firstly, we have differentiated engineering technologies which have developed over a long time. Secondly, we have a lot of R&D resources and design engineers who have rich experience and are well-trained. Finally, we also have many large-scale test facilities.
Let me first talk about differentiated engineering technologies. We have successively worked to reduce fuel consumption and have strengthened our LNG-related capability, which enabled our today’s engineering capacity. We are consistently developing and improving our hull form and all sorts of energy-saving devices, such as our own air lubrication system, Hi-ALS, which is being applied, or will be applied, to more than 50 vessels.
Moreover, we have accumulated various technologies while constructing many LNG carriers. We have developed and released our own fuel supply, reliquefaction, and regasification systems, and reinforced our capabilities through consistent optimization. Through this experience, we have been able to apply all kinds of LNG DF engineering capability to commercial vessels, applying our own LNG fuel gas supply system and fuel tank, and leading a paradigm shift in the market.
Next, let me talk about our R&D resources and design engineers. In HHI’s shipbuilding and offshore business unit, we are working with around 1,500 engineers and researchers in-house, and we also have an Engine and Machinery Business Unit with more than 250 engineers and researchers. HHI Group also has KSOE, our corporate research center, with around 300 researchers who do researching into future ship, energy, digital and manufacturing technologies. Also, Hyundai Global Service, Hyundai Electric, and Avikus, an autonomous navigation expertise company, are creating synergies together.
For the last, we have many large-scale test facilities which are associated with decarbonization and digitalization. We have all varieties of test facilities in-house, and are cooperating with various partners. In order to test our fuel supply, reliquefaction, and regasification systems, we have built LNG test facilities at Ulsan yard from 2016, and in 2018, jointly with Engine and Machinery Business Unit and KSOE, we built an eco-technology test center to test SOx/NOx, methane slip and CO2 reduction technologies. Domestically, jointly with KIMM, the Korea Institute of Machinery & Materials, we have built an LNG test facility to test our own LNG cryogenic systems in real ship operation scenarios.
In this regard, we were successful in developing and commercializing our own technologies.
Joo Won-ho, HHI CTO, talks to DNV on the occasion of their 50th anniversary (copyright: HHI Group)
What strategic and organizational changes has HHI implemented to future-proof your business and fulfil more complex customer needs?
Joo: HHI Group is planning to change into a technology-oriented enterprise, and we are driving it in three ways.
First, in 2019, HHI Group launched KSOE, Korea Shipbuilding & Offshore Engineering, by physical separation from HHI. KSOE plays a role as the interim shipbuilding holding company managing subsidiaries and conducting R&D activities as we transform into a technology-centered group for future growth. Hyundai Heavy Industries, Hyundai Samho Heavy Industries, and Hyundai Mipo Dockyard are subsidiaries of KSOE specialized in designing and shipbuilding.
Second, we are cooperating within HHI Group to enhance agility and to adopt the latest technologies actively. We are working closely with Hyundai Global Service, Hyundai Electric, and Avikus as well as other shipyards such as Hyundai Samho Heavy Industries or Hyundai Mipo Dockyard. This helps us to maximize each company’s strengths and provide optimized solutions to the industry.
Last, at the end of this year, the GRC, our Global Research Center, will be opened in the Pangyo area, the Korean ‘Silicon Valley’, to concentrate HHI Group’s R&D competences in one place. We are going to use the GRC as the international hub for collaboration with partners such as universities, other companies and maritime classification societies. Furthermore, GRC will be our future talent development center to recruit and develop specialized engineers in the areas of IoT, Big data, AI, chemical and electric engineering for the future.
How can HHI stay ahead of the global shipbuilding competition for another 50 years?
Joo: HHI is preparing for another 50 years by leading the industry as a ‘Future Builder’, not just a ‘Ship Builder’, as our Group CEO, Mr. Chung Ki-sun, mentioned at CES 2022. In response to these changes, we are focusing on four perspectives: decarbonization technologies, digitalization technologies, shipyard digitalization, and transforming the company into a technology-oriented enterprise.
First, to prepare for decarbonization, we are taking a two-pronged approach: we are differentiating low-carbon technologies; and we are internalizing and commercializing carbon-neutral technologies, such as ammonia, fuel cells, or electric propulsion. We are also studying small modular reactors and preparing for optimal solutions for a hydrogen value chain.
Next, with regard to the digitalization perspective, we are working with Hyundai Global Service and KSOE, Hyundai Electric, and Avikus to provide ship-optimized digital solutions. Recently, a fully autonomous navigation system was developed and tested successfully for a small boat in the Pohang channel. The same system was successfully demonstrated for a large LNG carrier in June. Fully autonomous large ships are expected to be commercialized around 2030.
Third, we are also working on developing our Future of Shipyard concept until 2030. The shipyard of the future will be connected, optimized and autonomous.
For the last item, enhancing synergy, we are establishing our abovementioned Global Research Center while celebrating our 50th anniversary. We are creating an R&D hub with 5,000 engineers and researchers of our Group all working at one place. To innovate the shipbuilding business through technology, we will focus on continuously securing R&D talents and making R&D investments.
In June 2022, Hyundai’s Avikus and SK Shipping successfully carried out autonomous navigation of a large LNG carrier across the ocean for the first time of its kind in the world. Captain and crew examine HiNAS 2.0 (copyright: HHI Group)
What is your strategy for decarbonization and digitalization?
Joo: Let me explain our decarbonization strategy first. Our strategy is to differentiate our low-carbon technologies by the mid-2020s, and to internalize and commercialize net-zero technologies by 2030.
Since 2015, we have studied low-carbon fuels in depth, which made us the only shipbuilder around the world with a full low-carbon fuel line-up and track record, including our own fuel gas supply system and fuel tank. In addition to further improvements of our low-carbon fuel DF line-up, such as engines and major equipment, we plan to apply additional technologies, such as wind-assisted propulsion, CO2 capture and storage or methane slip reduction by 2024 to reduce greenhouse gas emissions.
After 2024, we plan to internalize and commercialize carbon-neutral technologies such as ammonia fuel, fuel cell and electric propulsion systems in order to meet net-zero requirements. Basic designs for ammonia-fueled ships, such as product carriers, VLCCs, or ammonia carriers, are already being developed. And our engine business division has started developing an ammonia-fueled engine together with MAN Energy Solutions. Ships with fuel cell and electric propulsion systems are under development, and we are expecting such ships to be available around 2030.
Final testing of HHI’s own HiMSEN engine in March 2003. Engine production began already in 1979 (copyright: HHI Group)
Next, let me explain our digitalization strategy. One approach addresses digital ships, the other digital manufacturing. For digital ships, we are working with HHI Group on intelligent voyage, engine automation and infra/service technologies. To reduce operating costs, improve relevant safety, and overcome the lack of skilled seafarers, the world’s first smart ship solutions were introduced in 2011. Since then, relevant solutions and services have been upgraded continuously, and adapted for about 275 vessels. We plan to enhance them with greenhouse gas management solutions.
We have already developed relevant solutions towards an autonomous ship such as HiNAS, the Hyundai Intelligent Navigation Assistant System; HiBAS, the Hyundai Intelligent Berthing Assistant System for AI Navigator; HiEMS, the Hyundai Intelligent Engine Monitoring System; HiCONiS, the Hyundai intelligent Control & integrated System for AI Engineer; HiCAMS, the Hyundai intelligent Camera-based Alarm Monitoring System, et cetera. Fully autonomous large ships are expected to be commercialized around 2030.
For digital manufacturing, we are developing a digital twin yard to improve productivity, reduce hazards during manufacturing and prepare for the lack of skilled workers. The digital twin yard will be realized by combining smart operation systems and intelligent robot and automation systems. All production information will be digitalized, workloads will be simulated, and optimal working sequences will be determined.
HHI Group’s 50th anniversary exhibition in Ulsan in March 2022 (copyright: HHI Group)
The global transformation of the energy and transport sectors generates new business opportunities. What applications are most promising for HHI, e.g., offshore wind or LCO2 carriers?
Joo: We are preparing to provide optimal solutions for all parts of the hydrogen value chain; from production of green hydrogen based on the renewable energy, to transportation using CO2, ammonia or hydrogen carriers, to storage using liquid ammonia or hydrogen storage tanks, and through to the supply to various customers. HHI Group announced its ‘Hydrogen Vision’ last year, and we have been developing many products for the production, transportation, and utilization of hydrogen to implement a hydrogen value chain.
In terms of production, we are planning to obtain renewable energy from offshore wind turbines by 2024. We have received an AiP for our own floating structure with a 10MW offshore wind turbine. Green hydrogen will be produced by high-performance offshore water electrolysis technology as of 2024, and a 100MW offshore green hydrogen production plant is to be demonstrated by 2028. To prepare for the offshore sub-station demand, we are working with HHI Group and related electric power companies.
In terms of transportation, we are preparing for the value chain comprising CO2 transport, injection and geological storage. 20K and 40K liquid CO2 carrier projects and offshore CO2 injection projects are in progress, closely working with DNV, amongst others. Our 20K liquid hydrogen carrier design was approved in principle last year, and we are now marketing a liquid CO2 carrier with our own design. Furthermore, we are planning to demonstrate a storage tank and ships for liquid hydrogen in 2023 and 2027, respectively. An ammonia carrier will be introduced in 2024 featuring our own fuel supply system and engines. It will play a big role as a hydrogen carrier.
DNV-classed LNG-fueled 14,800 TEU container ship CMA CGM Integrity, built by HHI for Eastern Pacific Shipping (copyright: DNV/HHI)
What alternative fuels do you believe offer the biggest market potential in the short, medium, and long term?
Joo: The greatest uncertainty in terms of decarbonization of the shipping industry is the uncertain direction and intensity of future global environmental regulations. LNG/LPG technology for propulsion systems is currently the only viable and qualified solution to satisfy the forthcoming enhanced environmental regulations of IMO 2030, even though LNG and LPG are themselves carbon-based fuels.
LNG/LPG technology combined with additional technologies such as energy saving devices, air lubrication systems, wind-assisted propulsion, shaft generators, methane slip reduction measures or CO2 capture can meet regulations beyond 2040.
Methanol DF is another feasible solution, although there are some uncertainties regarding e-Methanol availability.
Ammonia and hydrogen are zero-carbon fuels tank-to-wake, but under a life-cycle assessment perspective, studies indicate that the CO2 emissions of grey ammonia are worse than those of LNG. Ammonia and hydrogen may be used for nearshore vessels, but to use them commercially, the manufacturing and bunkering infrastructure still have a long way to go, and we also have to consider energy density, which influences fuel tank sizes.
But we are not waiting for the world to change. Within our Group and with other parties, we have been preparing for new shipbuilding solutions, as we have done for LNG/LPG. In the medium to long term, we are looking into extending our LNG DF-based technologies to ammonia or mixed-fuel engines, bio-LNG and hydrogen, and into developing a large-sized ammonia-fueled ammonia carrier. Ammonia is the most promising carbon-neutral fuel and will play major role as a hydrogen carrier. Given the above, I can confidently say HHI Group is ready to deliver various solutions which comply with enhanced and imminent environmental regulations whenever our clients request them.
In piloting all these new technologies, what role do classification societies like DNV play?
Joo: Thankfully, our good partner DNV has been staying with us all along on our decarbonization and digitalization journey. We rely on their technical and safety expertise and comprehensive R&D work. We have always received strong support from DNV and carried out many JDPs and JIPs together.
Despite the uncertain future we believe that close and constructive cooperation between HHI and DNV is essential for sustainable shipbuilding. Together we will encourage new value creation, leading the market in satisfying ever more complex customer needs.
HHI President & CEO Chung Ki-sun (5th from left), Vice-Chairman & CEO Ka Sam-hyun (6th from right) and HHI management colleagues were welcomed by DNV Maritime CEO Knut Ørbeck-Nilssen (6th from left) and members of his leadership team at the DNV headquarters in Høvik during Nor-Shipping 2022 (copyright: DNV)
Apart from alternative fuels, where else do you see CO2 saving potential in modern ships?
Joo: We should not forget about classical energy saving devices. By optimizing the hull, propeller, rudder, bulbous bow and so forth, we can reduce fuel consumption by 10-15% compared to previous designs. Air lubrication alone can add another 5-7%.
New risks arise in connection with new technologies, such as cyber threats and safety challenges. How do you deal with these?
Joo: We cannot deal with these challenges individually but only through international standards. We have been cooperating with others on cyber security issues. We are closely working with classification societies, especially DNV, to meet all the rules related to decarbonization, and to develop eco-friendly, safe technologies. Cooperation is more important now than ever.
Interview: Dr. Nikos Späth, Head of Communications APAC, Maritime at DNV
DNV delegation meeting Mr. Joo in Ulsan, with a statue of HHI founder Chung Ju-yung in the background (copyright: HHI Group)
— ENDS —