GEOJE, South Korea (Reuters) - Geoje Island, off the southeastern tip of the Korean peninsula, appears as prosperous as ever: foreign cars cruise the streets, young mothers pushing strollers converge on coffee shops, and workers on motorcycles pour into bustling shipyards.
It is what comes next that worries people in Geoje, the world's largest producer of ships by tonnage.
South Korean shipbuilders are facing their biggest ever crisis, with mass layoffs expected later this year as finished vessels leave the shipyards and few new orders come in.
"We've never had a serious downturn - ever," Kim Hyeon-gyu, director of Geoje's main industrial park, said on the sidelines of a public hearing to discuss looming layoffs.
Because it takes about two years to build a ship, Geoje's docks are still busy. But without a major uptick in orders by September, which looks unlikely, 20,000 shipbuilding jobs in Geoje will be lost by March, city officials say.
Some 70 percent of Geoje residents rely for a living on shipbuilding, an industry that for four decades was a key engine of South Korea's export-driven growth and still employs about 200,000 across the country.
Now, a global slump in trade and commodities, plus rising competition from China, is forcing Geoje to find ways to ease its dependence on the shipyards.
"Past strong shipbuilding growth made us lax in finding ways for the tourists to spend money here instead of driving through," said Kwon Min-ho, the mayor of Geoje, which is building a 424-room resort as part of a plan to expand its tourist infrastructure.
But the shift is painful.
Subcontractors at the massive Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries Co Ltd yards in Geoje and at Hyundai Heavy Industries Co Ltd in nearby Ulsan are especially hard-hit.
"The number of subcontractors going out of business has exploded this year," said Kim Dong-sung, an official with a lobby group representing them. "Unpaid wages and bonuses plus 20-30 percent pay cuts are now seen as the norm."
In the first quarter of this year, South Korea's total shipbuilding industry landed just eight orders totalling 171,188 CGT (compensated gross tonnage).
That compares with 68 ships totalling 2,886,589 CGT in the same period last year and roughly 100 per quarter during a 2003-2008 industry boom that saw massive capacity expansion.
The legacy of those boom days is still apparent, even as activity slows.
Geoje's gross regional domestic product exceeded $50,000 (£34,504) per person in 2013, nearly double the $27,214 national average in 2015, according to the Bank of Korea.
A short drive from traditional fishing villages and the massive shipyards stand smart apartment blocks resembling those of Seoul's well-to-do suburbs. The island's 270,000 residents include 14,800 foreigners mainly working in the shipyards as shipowner representatives or workers, giving Geoje's city centre a cosmopolitan feel.
"Business is alright near tourist spots, but it has slowed down in downtown stores," said Lee Mi-eun, owner of a large beef rib soup restaurant near one of Samsung's shipyards. "People ask for lower-priced menus, come in smaller groups."
Shipbuilding here was largely spared the state-driven restructuring many other South Korean industries went through during the 1997-98 Asian financial crisis as it earned valuable dollars and had years of orders in place.
While in the aftermath, some shipbuilders were bankrupted or sold, and Daewoo Shipbuilding was bailed out by a state-run bank, industry heavyweights built a dominant position against European and Japanese rivals.
More recently, as orders for traditional ships dried up or moved to China, Daewoo, Samsung and Hyundai - the world's three largest shipbuilders - bid aggressively to build complex, expensive offshore oil and gas facilities.
That kept the yards humming but cost overruns and delays led to combined net losses of $4.9 billion for the three giants in 2015.
Under prodding by Seoul, shipbuilders have been shedding assets and cutting staff and wages in hopes of riding out the downturn.
Clarksons Research previously said it expects global commercial ship orders to begin resuming some time around late 2017, with a full recovery only emerging in 2020.
Seen as "too-big-to-fail", the government is looking for ways to shore up the solvency of state-run creditor banks in the event that they need to step in to save one of the giant shipbuilders before then.
Cho Hyun-woo, planning manager at the Daewoo Shipbuilding workers' union, said restructuring should not cut so deeply that the industry loses expertise it has developed for high-end structures, which it should bid on once demand returns.
"If you kill the technology that can make these ships when they are ordered en masse starting 2018, it's painfully obvious the technology will go to China or Japan," he said.
By Joyce Lee
(Editing by Tony Munroe and Lincoln Feast)
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Oil and gas sector is one of the most lucrative sectors for job seekers from industries all over the world. It offers great salaries and benefits packages and an opportunity to travel and work overseas. Due to its high demand, scammers are preying on the vulnerable oil and gas workers. To ensure you don’t fall prey to their mischievous tactics, we would recommend reading our guideline below:
How does scamming occur?
The scammer poses as an employer or recruiter of an oil and gas company or he may claim to be an employee or recruiter for a job consultancy firm catering to the oil and gas industry. They offer irresistible employment opportunities and often demand money in advance to conduct further processes. Money is often demanded on the pretext of work visas, travel expenses, background or credit checks that the job requires.
What do scammers want from you?
It is important to understand what the scammer's agenda is so that it helps you shield yourself from getting conned:
To extract money: On the pretext of getting you a job in the energy sector employing any of the tactics mentioned above
For identity theft: scammers look for valid identity of people and ask for confidential personal details including bank details to commit fraud through your name or to withdraw money from your account.
Whatever be their modus operandi, their goal is to either separate you from your cash or accomplish an identity theft. The bigger problem is, the scammers are getting better at their game and coming up with innovative ideas to lure innocent job seekers. In oil and gas industry, the scammers are targeting the job seekers from overseas, immigrants or contractors as they feel it is easier to attract them on the pretext of work permits, high salaries, paid travel, better lifestyle in the first world countries.
How to spot a job scam and keep yourself secure?
There is always a difference between real and fake, all you need to do is be watchful to notice the underlying discrepancies. There is a pattern that scammers usually follows, which is discussed below. Make sure you watch out for these red flags when you receive any job offer next time:
Free email provider - No legitimate hiring agency or company will use the services of free email provider like Gmail, Hotmail, or Yahoo. So, if you are receiving an email or have been requested to share your details on emails that use free email services, then be extremely cautious. The scammers try to trick the job seekers by using an email address that looks authentic for instance: [email protected]. It is important to notice here that the ‘xyz’ part of the email ID is usually a gmail, yahoo, etc. which is a free email address. A legitimate job provider would never use.
Fake or new company name - If company name or oil and gas recruitment agency name is mentioned along with the free email id, then do a quick search on the company. Verify its existence and contact them via official email address and contact numbers mentioned on the website. Check their social media presence too. If the website and social media page look new while the company claims to be in business for a substantial amount of time, know for sure that there is something fishy.
Bad grammar and confusing job details - The scammers usually do not pay much attention to structure the mail. You can spot grammatical errors and even the job descriptions are not explained well or is completely different than your skillset and experience. Any authentic mail from a company or oil and gas recruitment agency will ensure an error-free, concise, and clear communication
Fee to conduct a job interview - No legitimate oil and gas company or recruitment agency will ever ask for money to conduct a job interview or to apply to job positions. If the mail says, the money will be refunded once you appear for a job interview, then please do not trust such claims as it is always bogus.
Asking for confidential personal information - Anyone asking for information that you will never put on CV, is a warning sign. It includes your bank details, passport copy, identity cards, your current residential details and so on. No genuine company will ever ask for such details before you sign the offer letter. If by chance, you have shared your bank details or another confidential detail to the scammer, contact your bank and email service provider and register a complaint against it.
Unknown source - There are countries who have strict spam rules and until you subscribe or give consent to the company, they cannot send you emails. So, if you receive an email from a company you haven’t contacted or have not applied for jobs, then be cautious it might be a scam.
The principle on which scammers operate is “Too good to be true”. Don’t entertain any job offer that offers a position, you are not qualified for or offers a salary which is unrealistically high. In the oil and gas sector, be careful not to reveal your passport/work visa details to the scammer. Remember, if you find anything which is way beyond the realistic expectations, then trust your instincts and drop the offer and do not respond.
See our infographic below for a quick summarized glance -
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Searching for the right talent is often a tedious chore for the HR. However, with technological improvements, the usage of app-based recruitment has increased manifold. Recruiters and job seekers are increasingly adopting this new method. A mobile application simplifies the labor-intensive and time-consuming recruitment task and comes loaded with features that help to automate the recruitment cycle. For all the good, app-based approach can do, it still comes under fire from the critics. Here's our take on the pros & cons of App-based talent search.