Facility operation ratio reaches record low
The average facility operation ratio of the manufacturing sector has reached its lowest level since the 2009 global financial crisis, government data showed Sunday.
The ratio can translate into declining investment and increasing unemployment, posing a setback to the Moon Jae-in administration’s policy of income-led growth and employment.
According to Statistics Korea, local manufacturers posted an average facility operation ratio of 71.6 percent in the second quarter of the year, down 1.2 percentage points from the previous quarter.
The figure is the lowest since the first quarter of 2009, when it registered 66.5 percent amid the global financial crisis hitting the country hard.
In addition, it is the second-lowest index registered in the April-June period following 66.4 percent in 1998 following the Asian financial crisis which forced Korea to go to the International Monetary Fund for a bailout.
Since 2000 the operation ratio has been hovering over 70 percent — even once surpassing 80 percent — but it has failed to return to the 80 percent mark since it last hit 80.9 percent in the third quarter of 2011 as the nation began a long-term economic slump.
By year, after peaking at 80.5 per- cent in 2011, the ratio has been sliding from 78.5 percent in 2012 to 72.6 percent in 2016.
To make matters worse, industrial polarization is becoming more serious.
The government recently raised its growth forecast for 2017 by 0.4 percentage points to 3 percent as the nation has been basking in brisk exports led by the global economic recovery. Korea last recorded an economic growth of more than 3 percent in 2014 — at 3.3 percent.
However, market watchers say the upbeat outlook came from a strong performance in the chip sector. In the second quarter, Samsung Electronics and SK hynix posted record earnings thanks to the memory chip “super cycle.”
“The recent sluggish economy is offset by the memory chip boom,” said Sung Tae-yoon, an economics professor at Yonsei University.
The manufacturing production capacity index stood at 112.8, compared with 100 in 2000, but stark differences appeared between industries.
Although the semiconductor sector had 256.5, transportation equipment and machinery, including the shipbuilding industry, recorded 105.1 and the car and trailer sectors gained 99.6.
“Other than chip manufacturers, many industries are struggling to operate their plants,” a government official said.