Hyundai Heavy Industries

RATING

SECTOR

Engineering, Manufacturing

WEBSITE

CONTACT

75, Yulgok-ro
Jongno-gu
Seoul
Republic of Korea

STOCK EXCHANGE

LISTING

  • Best Global Brands By Interbrand 2020 #36
  • BrandFinance Global 500 (100) By Brand Finance 2020 #82
  • Fortune Global 500 (100) By Fortune 2020 #84
  • Best Global Brands By Interbrand 2019 #36
  • BrandFinance Global 500 (100) By Brand Finance 2019 #79
  • Fortune Global 500 (100) By Fortune 2019 #94
  • The World’s Most Valuable Brands By Forbes 2019 #94
  • Best Global Brands By Interbrand 2018 #36

EMPLOYEES

14,066

AWARDS

  • Four of HHI-built ships-a crude oil carrier, an ore carrier and two LNG floating storage and regasification units (FSRU)-were bestowed the Significant Ships 2019 awards by RINA
  • A 50,000-ton LNG dual-fuel bulk carrier and a 30,000-ton LNG carrier built by Hyundai Mipo Dockyard (HMD) were bestowed the ‘2019 World Class Products of Korea’ awards by the Ministry of Trade, Industry and Energy (MOTIE)
  • HHI Awarded Digital Twin Certification for Fuel Tank Safety

CONTENT SOURCE

FURTHER READING

Report created by Kavita Kripalani

Hyundai Heavy Industries

SECTIONS :  Sustainability    Evaluation  •  Progress  •  Watch  •  Overview

Company Activity

Hyundai Heavy Industries Holdings (or HHIH) is the world’s largest shipbuilding company. HHIH was founded in 1972 by Chung Ju-yung as a division of the Hyundai Group, and in 1974, completed building its first ships. The Hyundai Heavy Industries Group has completed its shift to a holding company structure by launching “Hyundai Heavy Industries Holdings”. The Group’s shake-up came amid growing needs to improve corporate governance, ensure financial soundness and help its subsidiaries fully focus on their core specializations. 

HHI has four core business divisions: Korea Shipbuilding & Offshore Engineering, Industrial Plant & Engineering, and Engine & Machinery. HHIH also has five non-core related subsidiaries: Hyundai Electric & Energy Systems, Hyundai Construction Equipment, Hyundai Robotics, Hyundai Heavy Industries Green Energy, and Hyundai Global Service.

Hyundai Heavy Industries Holdings also develops and manufactures robotic equipment. Its products include industrial robots, cleaning robots, controllers, and additional equipment.

Company Sustainability Activity

Hyundai Heavy Industries Holding (HHIH) assumes responsibility for protecting the environment and enriching the society for the next generation. HHIH will continue its sustainable future with the passion to overcome challenges and a strong belief in core principles. HHIH has been committed to performing corporate social responsibility as a “Global Leader” in the heavy industries sector. HHIH is constantly increasing its economic value by strengthening technological competitiveness in order to actively respond to environmental changes.

To build a better future, they will maximize their resource efficiency, conserve energy and respond to the climate changes. Also, they will promote various social contribution programs such as expanding support for the neglected class of underprivileged, children, and multicultural families and building community infrastructure.

HHIH continues to establish law-abiding management as a company that meets international standards as they further expand the value of ethics management to partners in a transparent and clean corporate culture.

HHIH will strive to create a sustainable future by continual improvement in economic, environmental, and social performance as a global heavy industries company.

Highlights

  • Total GHG emissions in 2019 – 906,332 tCO2e (HHI+HSHI+HMD)
  • Total energy consumption in 2019 – 15,712 TJ (HHI+HSHI+HMD)
  • On June 1, 2019, Hyundai Heavy Industries (HHI) was split into two entities: Korea Shipbuilding & Offshore Engineering (KSOE: HHI Group’s sub-holding company) and a reorganized HHI. 
  • KSOE is committed to developing technologies for building environmentally friendly and energy efficient ships. In 2019, KSOE developed a VLCC capable of sensing changes in cargo weight and other conditions to maintain optimum performance, improving the average fuel economy by 4%
  • KSOE also established and started full-fledged operation of a demonstration center with a capacity of 200kw to develop hybrid-electric ships
  • KSOE develops a vapor recovery system that collects volatile organic compounds (VOCs) emitted from crude oil for re-absorption into the cargo to use as fuel, placing them in a leading position in the global efforts to develop new-concept, environmentally friendly ships.
  • Year 2019 marked the 36th consecutive year that Hyundai Heavy Industries’ (HHI) highest quality was officially recognized by the Royal Institution of Naval Architects (RINA), a world-renowned international professional institution based in London whose members are involved in the shipbuilding and offshore business.
  • HHI’s Integrated Safety Training Center, Korea’s largest professional safety training facility, celebrated its first anniversary after the opening in late 2018. In 2019, the center provided a total of 30 courses, training 16,000 people.
  • Hyundai Mipo Dockyard is laying the foundation to build a smart shipyard capable of actively responding to the Fourth Industrial Revolution. Based on professional consultation on PLM (product lifecycle management), they are working to establish a comprehensive product information management system effective for the entire work process from design to delivery, promoting digital transformation and innovation across all sectors of  business.

Targets

  • The current momentum in the demand for LNG carriers is expected to continue thanks to the rising global demand for LNG, while the tightened IMO environmental regulations to cut sulfur dioxide emissions will likely increase the demand for container ships and crude oil tankers, among others. Against this backdrop, HHI is expected to maintain a high level of share in the market for environmentally friendly ships such as LNG carriers, based on its distinctive competitiveness in technology and sales competencies. 
  • For 2020, HHI has set the annual target for new orders at USD 7.2 billion for Shipbuilding, up about 17% from the previous year. The aggregate new order target, inclusive of Shipbuilding, Offshore & Industrial Plant, and Engine & Machinery, total USD 11.6 billion. 
  • They aim to achieve annual revenue of KRW 9.3 trillion in 2020, a 6% increase year-on-year.
  • In accordance with 2020 targets, Hyundai Mipo Dockyard (HMD) aims to win shipbuilding orders for 93 ships, USD 3.65 billion in contract value, and KRW 3 trillion in revenue this year.
  • In accordance with 2020 targets, HMD aims to win shipbuilding orders for 93 ships, USD 3.65 billion in contract value, and KRW 3 trillion in revenue this year.

Hyundai Heavy Industries (HHI) 

  • Zero major accidents & accident rate of 0.139% or below
  • Building a prevention-focused health management system

Hyundai Mipo Dockyard (HMD) 

  • Zero major accident, accidents rate of 0.18% or below
  • Change in safety/health/environment paradigm
  • Reinforcing safety/health guidance and support for partner companies 
  • Strengthening health management in response to the general revision of the Occupational Safety and Health Act

Hyundai Samho Heavy Industries (HSHI)

  • Zero major accident, accidents rate of 0.19% or below 
  • Strengthening the prevention of occupational diseases through customized health management
 

Progress

Hyundai Heavy Industries (HHI)

  • Strengthening practice-oriented safety management and completing 100% feedback activities
  • Reinforcing partner companies’ capabilities for autonomous safety management
  • Establishing its own safety brand and improving safety culture
  • Pursuing the improvement of company-wide safety risk assessment system
  • Establishing a health data management system
  • Strengthening proactive management for workers with suspected occupational disease or requiring observation
  • Establishing and reinforcing the companywide chemical management system
  • Pursuing the replacement of high-hazard chemicals
  • Strengthening the cardio-cerebrovascular disease prevention program

Hyundai Mipo Dockyard (HMD) 

  • Improving unsafe conditions on site 
  • Operating safety intervention program 
  • Improving safety awareness and behaviors among employees
  • Initiatives
  • Expanding Safety & Health Council and walkaround inspection at workplaces
  • Improving the computer program for safety/health data and strengthening monitoring of on-site performance
  • Providing guidance and support for safety and health management at partner companies by quarter

Hyundai Samho Heavy Industries (HSHI)

  • Establishing a culture where safety rules are respected
  • Removing fundamental risk factors
  • Building a customized safety management system
  • Supporting customized health management for senior employees and workers with suspected disease
  • Controlling three major threats to health (smoking, drinking, and obesity)
  • Providing customized health management for workers with three major underlying diseases (high blood pressure, diabetes and hyperlipidemia)

Korea Shipbuilding & Offshore Engineering (KSOE) 

  • Setting global standards for environmentally friendly ships 
  • Developing significantly differentiated LNG systems 
  • Developing new-concept smart ships 
  • Accelerating the establishment of smart yards HHI Shipbuilding 
  • Development of New-Concept, Eco-Friendly Ships: In active response to increasingly tighter environmental regulations, KSOE has been developing environmentally friendly and energy efficient ships. In 2019, they developed a VLCC which can maintain an optimal performance by taking into account cargo loads and navigation conditions, thus improving the average fuel consumption by 4%. HHI has been working on the improvement of fuel efficiency by developing ships with new structures and ships using renewable energy. Moreover, they established and started full-fledged operation of a demonstration center with a capacity of 200kW to develop hybrid-electric ships, while obtaining a type approval from DNV-GL, a shipping classification society of Norway and Germany, for their hybrid electric propulsion system for a 114,000-ton crude oil carrier. Their initiative to spearhead the development of new-concept, eco-friendly ships also includes a system which collects VOCs emitted from crude oil and reuses it as fuel. 
  • Development of Next-Generation LNG Carriers and LNG-fueled Ships: KSOE developed an SMR (single mixed refrigerant), its LNG re-liquefaction technology boasting the world’s highest energy efficiency applied to next-generation LNG carriers, and has recently succeeded in actual application. In relation to its SMR which can re-liquefy 100% of the evaporate gas generated during low-speed navigation or moorage, they developed an FGSS (fuel gas supply system) with their own technology and proved the safety and superiority of its technological capabilities. Also, for the commercialization of the LNG fuel tank made of high manganese steel for LNG dual-fuel ships, they obtained a shipping classification approval for its environmentally friendly welding devices, materials, and techniques, and completed demonstration by producing a mock-up. 
  • Development of Digital Ships: KSOE has led the development of cutting-edge digital ships featuring electric propulsion systems and autonomous navigation. HHI developed and finished the ground demonstration of its DC grid electric propulsion system, now working on its commercialization. Hi-NAS, a state-of-the-art navigation support system with AI technology, has recently been developed. In addition, HHI developed the integrated simulation technology that allows users to run a digital pre-test on and optimize the performance of various ship systems.
  • Development of Robot System for Producing Unstructured Hull Blocks: KSOE has enhanced the accuracy and productivity of unstructured hull blocks by developing a collaborative robot system for welding and an automatic curved plate forming device. The collaborative welding robot system boasts a stable manufacturing quality and strengthened productivity and safety, enabling collaborative work between a human engineer and multiple robots. KSOE will continue expanding human-robot collaboration projects by developing intelligent and autonomous robot system

Hyundai Heavy Industries (HHI)

  • Optimizing performance in navigation and speed 
  • Advancing LNG fuel tank technologies 
  • Applying fuel efficiency devices to a broader range of ship models Offshore & Industrial Plant ˙ Developing the technologies of low-motion floating platform FEED with a new shape and its sales model
  • Developing the technologies of low-weight fixed platform FEED with a new engineering method and its sales model 
  • Developing smart digital engineering technologies for offshore & industrial plant Engine & Machinery 
  • Developing an environmentally friendly gas engine with mega power and GHG reduction technologies 
  • Enhancing competitiveness of environmentally friendly products (SCR, BWTS, and FGSS) and developing new models with its own technology
  • Developing control systems for engines and environmentally friendly products, and smart solutions 
  • Developing electric propulsion systems for small/mid-sized ships
  • Development of Integrated Automation System for Ship: The Shipbuilding Business Unit developed HiCON, an integrated automation system, and obtained type approvals from Classification Societies such as ABS, BV, DNVGL, KR, LR, NK and RINA. HiCON centrally controls the distributed control systems in the ship’s main equipment by integrating systems. It is a major system for implementing the smart-ship by collecting and analyzing operational data while navigating. It features an advanced cyber security technology that protects ship data from viruses and hacking attacks. 
  • Development of Independent LNG Fuel Tank: The Shipbuilding Business Unit developed Hi-PIX (Hyundai heavy industry Prismatic Independent tank eXcellence) with its own design which is an independent IMO type-B tank and Hi-CIX (Hyundai heavy industry Cylindrical Independent tank eXcellence) with its own design which is an independent IMO type-C tank. HiPIX has been developed with integral structure through advanced evaluation technology, and it is possible to design optimally for various shapes and sizes. Applied to 14,700TEU containerships for the first time in the world, Hi-PIX is being built by HHI and HSHI now. Hi-CIX is the best solution as it can be installed on the upper deck which does not affect cargo capacity. It was used in 114,000DWT Class crude oil carriers for the first time in the industry and is applied to 180,000DWT Class bulk carriers, which is being built by HSHI now. 
  • Development of Air Lubrication System: The Shipbuilding Business Unit developed Hi-ALS (Hyundai Air Lubrication System) with its own technology and is now applying it to 174,000CMB twin-skeg LNG carriers. Hi-ALS is an energy-saving device, which reduces the frictional resistance of the hull by blowing air bubbles on the bottom surface of the ship
  • Development of Mid-Sized FPSO Standard Models: The Offshore & Industrial Plant Business Unit developed three types of mid-sized FPSO standard models which can store 1 million to 1.5 million barrels of oil. Building on HHI’s knowhow and design experiences, these standard models are designed to automate hull form selection, motion and structure analysis, structure quantity takeoff, and calculation of mooring system dimensions. Its manufacturing cost is expected to be remarkably reduced as in-house engineering database will help cut its design period. 
  • Development of Dual-Fuel Engine with Maximum Power and Efficiency: The Engine & Machinery Business Unit developed a four-stroke medium-speed dual-fuel engine that boasts the world’s best power and energy efficiency for a propulsion or generating, and obtained a type approval from six classification societies. It is an environmentally friendly engine as it selectively runs on diesel or natural gas to meet the stricter environmental regulations on NOx and SOx emissions, producing up to 36,000 horsepower. Its greatly enhanced energy efficiency is attributed to HHI’s up-to-date efficiency enhancement technologies such as a two stage turbo charging system and a variable valve timing device. This achievement has paved the way for HHI to make inroads into the market for polar LNG carriers with over 10,000 horsepower, FSRUs, and passenger vessel engines.
  • Development of Smart Solution Based on HiEMS: The Engine & Machinery Business Unit has applied HiEMS (Hyundai intelligent Equipment Management Solution), an IoT-based system for managing ship equipment launched in 2018, to a total of 48 ships. HiEMS stores big data and real-time information from generator engines of a ship, integrates and analyzes the information by using AI, figures out a way to optimize fuel consumption, and then gives orders across the on-board equipment accordingly, thereby reducing fuel consumption remarkably. It diagnoses engine failure and helps crew to address simple failure cases by providing guidance within the system. Later it will be further equipped with a guidance feature to inform users of a ship’s operation time and the replacement timing of engine parts

Certificates

  • 13 MOTIE-certified World Class Product
  • ISO 9001 (Quality Management Systems)
  • ISO 14001 (Environmental Capital)
  • ISO 50001 (Environmental Capital, HHI and HSHI)

United Nations Sustainable Development Goals

United Nations SDGs Compliance

SDG 3

  • Supporting healthcare and medical expenses for the healthy lives of personnel; operating Health Promotion Center and Oriental Medical Center; and providing professional mental health promotion services such as psychological evaluation, group counselling and group psychological education
  • Health care programs for personnel such as smoking cessation and weight management treatment

SDG 4

  • Securing tech talents through programs such as Core Skill Transfer Program, and nurturing outstanding experts through well-organized technical training programs
  • Participating in National Human Resources Development Consortium

SDG 6

  • Employing internal environmental standards for effluent discharge stricter than legal requirements, minimizing the amount of untreated wastewater by proactively managing wastewater sources, and monitoring water quality real-time 

SDG 7

  • Developing environmentally friendly and energy efficient ships 
  • Reducing energy consumption by using energy efficient LED lights, etc.

SDG 8

  • Expanding high value added business, improving economic productivity, and creating jobs by building smart shipyards based on digital transformation (DT) 
  • Creating quality jobs through employment 
  • Implementing a fair and objective performance evaluation & compensation system for all personnel 
  • Offering trainings and financial services to partner companies to promote shared growth 
  • Creating a roadmap for human rights management at the Group level 

SDG 9

  • Reducing fuel costs and optimizing energy usage through smart ship solutions and intelligent equipment management solutions

SDG 10

  • Caring for the underprivileged, pursuing co-prosperity with local communities, and promoting independence for future generations

SDG 12

  • Acquiring international certification for environmental management system
  • Minimizing pollutant discharge through prevention facilities, environment personnel training, and regular monitoring of concentration
  • Finding substitutes for hazardous chemicals and inspecting facilities regularly

SDG 13

  • Monitoring and managing energy usage and GHG emissions by worksite and facility, based on the IPCC global standard and Korea’s GHG calculation guideline
  • Operating Energy Storage System (ESS)
  • Participating in KPX’s demand response programs

SDG 14

  • Offering repair services to make existing ships more eco-friendly by installing ballast water treatment systems and SOx exhaust gas cleaning systems
  • Maintaining equipment to prevent marine accidents associated with arrival/departure of ships and performing safety management, ship operator training and joint training sessions on a continual basis

SDG 16

  • Implementing transparent and responsible management by valuing compliance and business ethics  
  • Implementing reasonable governance structure to maintain checks and balances
  • Pursuing inclusive management activities by engaging various stakeholders in management, including active communication with the labor union

Evaluation

The company has purposefully and explicitly aligned with 11 out of 17  UN SDGs. It has a decent number of certificates, awards, and listings. They have set their targets in the context of the SDGs they have chosen to adopt, which makes it easier for the public to see their efforts, and shows a reasonable effort at transparency. With that said, their targets are somewhat vague, and therefore their transparency is also limited by this. 

The company details its targets and progress for reducing their CO2 emissions, energy consumption, waste, renewable energy, and human rights, in alignment with the UN Sustainable Development Goals. 

Though the company seems to be keeping track of its environmental footprint, their approach to solutions could be more focused and aggressive.

In addition to this, the company has allegedly been involved in controversial behavior recently, including antitrust issues, bribery, and violation of subcontracting laws. 

This company has been rated a C. 

Analyst Outlook: Neutral

The company is on the right track by taking a serious approach to incorporate sustainability into their business practices. However, the shipping industry contributes to a significant amount of global greenhouse gas emissions, and despite its attempts at becoming more sustainable, Hyundai Heavy Industries Holdings still heavily depends on oil to carry out their operations. This is why it’s important for the company to be more aggressive and specific in its approach to make a greater impact toward sustainability. Their impact is simply not enough as of now.

Key Points

  • Reporting Principles: GRI (Global Reporting Initiative) Standards (Core) and International Integrated Reporting Council’s (IIRC) integrated reporting framework
  • South Korea’s largest shipbuilder Hyundai Heavy Industries Co. is banned from participating in state-led tenders such as warship construction projects for two years due to the bribery conviction related to the country’s nuclear power project in the United Arab Emirates.
  • The global shipping industry is responsible for 90% of world trade by volume. And without it the import and export of food and manufactured goods would not be possible.
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