Korea's Tallest Tower Embodies Industrial Malaise

      April 20, 2016 08:25

      The observation deck atop the new Lotte World Tower in southern Seoul was completed last month, and now Seoul boasts the world's fifth-tallest structure at 555 m. But the truth is that the tower was built without any Korean technology whatsoever and might stand as easily in Kazakhstan or Belgium.

      Arup of the U.K. designed the building's foundation, while architects KPF and structural engineers LERA of the U.S. were behind the steel structure that can withstand the weight of 40,000 tons of steel beams and 195,000 sq.m of concrete. Canada's RWDI designed the building's wind tunnel that enables the structure to withstand high winds of up to 80 m/s, while Japan's Lixil and U.S.-based CDC designed the outer shell.

      That means the only Korean input in the country's most prominent architectural landmark was labor.

      "The only work we did was to connect the steel beams and pour the concrete," a builder's staffer said. "This is the same thing that happens with the skyscrapers Korean companies are building overseas."

      The building underscores the limitations of Korean construction firms, which have become fixated on building things fast for maximum profit while largely ignoring technological development.

      Korea has been of the world's leading manufacturing nations since it became the top global shipbuilder in 1993 and the world's fifth-largest automaker in 1995, and it was the first country to develop the 256 mega DRAM chip in 1994. But the limitations of sheer volume growth are becoming evident across the nation's industrial landscape.

      The decline is most evident in the shipbuilding sector. Hyundai Heavy Industries, Daewoo Shipbuilding and Marine Engineering and Samsung Heavy Industries -- the top three shipbuilders -- posted around W4.5 trillion in operating losses last year from offshore plant projects (US$1=W1,135).

      The will was there, but the shipbuilders lacked the know-how. Instead they entrusted foreign companies with the basic designs and only came up with the final blueprint. Clients in some cases sent the plant designs back dozens of times due to various problems, which resulted in snowballing expenses for shipbuilders who were only in the game because they had guaranteed the cheapest price.

      Korean manufacturers are reaching the limits of their competitive potential, which was always bound to hit a wall if labor became cheaper somewhere else. The country's industrial base is hollowing out.

      Samsung now makes its smartphones in Vietnam, and Hyundai has not built a factory in Korea in 18 years. This has resulted in an 11.8-percent youth unemployment rate which shows no signs of dropping.

      Meanwhile, Koreans still work among the longest hours in the OECD.

      Lee Jeong-dong at Seoul National University said, "Korea has been successful for a long time by being a fast follower that copies what others have done, but this has happened at the expense of developing new technologies from scratch. But we're now at a point where a major paradigm shift is needed for economic growth."

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