ULSAN, South Korea, August 12, 2018 – When Lee Dong-hee came to Ulsan to work for Hyundai Heavy Industries five years ago, shipyards in the city known as Hyundai Town operated day and night and workers could make triple South Korea’s annual average salary.

But the 52-year-old was laid off in January, joining some 27,000 workers and subcontractors who lost their jobs at Hyundai Heavy  between 2015 and 2017 as ship orders plunged.

To support their family, Lee’s wife took a minimum wage job at a Hyundai Motor supplier. His 20-year-old daughter, who entered a Hyundai Heavy-affiliated university hoping to land a job in Ulsan, is now looking for work elsewhere.

The Lee family’s fortunes mirror the decline of Ulsan, which is now reeling from Chinese competition, rising labor costs and its over-reliance on Hyundai – one of the giant, family-run conglomerates or chaebol that dominate South Korea.

Generations of Hyundai workers like Lee powered South Korea’s transformation from the ashes of the 1950-53 Korean War to an industrial and manufacturing powerhouse, making the southeastern port of Ulsan the country’s richest city by 2007.

But some experts say the chaebols have now become complacent and risk averse, failing to keep pace with their overseas competitors.

South Korea’s focus on exports has also made Asia’s fourth-largest economy vulnerable to growing protectionism by major trade partners and other external shocks.

“Hyundai was everything to me. I feel hopeless,” Lee said at his apartment, a high-rise complex popular with Hyundai Motor workers 10 km (6 miles) from the automaker’s factory.

With young people fleeing in search of jobs, Ulsan is now the fastest-aging city in the country, according to Statistics Korea. The city’s population of 1.1 million has more than quadrupled since 1970, but fell for the first time in 2016 even as population grew in the rest of the country.

ONCE A PROSPEROUS COMPANY TOWN

In many ways, the challenges facing Ulsan mirror those faced in the American Midwest in the 1970s and 1980s, when the once prosperous industrial heartland was hit by massive job and population losses.

Some experts and industry executive warn Ulsan – home to the world’s biggest shipbuilder and largest carmaking complex – might be South Korea’s ‘Rust Belt’ in the making.

“It could be worse here, since it’s all about Hyundai and its suppliers,” said Mo Jong-ryn, a professor of international political economics at Yonsei University in Seoul. “There is no alternative.”

Legendary businessman Chung Ju-yung founded Hyundai Motor in Ulsan in 1967 and Hyundai Heavy six years later, turning the small fishing village known for whale hunting into a giant company town.

For decades, job seekers flocked to the city, drawn by high wages, company-subsidized housing and generous benefits.

Hyundai’s dominance is still keenly felt. Workers wearing gray Hyundai uniforms drive Hyundai cars, shop at Hyundai department stores, live in Hyundai apartments and go to Hyundai hospitals for medical service. Their children go to Hyundai schools and universities.

In the wake of the downturn, Hyundai Heavy has been selling assets such an employees’ dormitory, and a large foreign community complex it used for clients such as BP and Exxon Mobil and their families, officials say. The foreigners’ complex featured townhouses, a golf course, a swimming pool and school.

A spokesman said Hyundai Heavy was doing its utmost to “normalize our company”, working with labor unions to address a lack of work and an idled workforce.

Ripples from Hyundai’s struggles spread throughout Ulsan.

Eom Soon-ui runs a small noodle place in a traditional market blocks away from Hyundai Heavy’s headquarters. One recent workday, the market was mostly empty, with about a dozen restaurants as well as uniform shops catering to shipyard workers closed.

“Hyundai makes or breaks for merchants like us. They’re doing poorly, so I’m struggling to make ends meet,” she said.

Ulsan accounted for 12 percent of South Korea’s exports last year, the lowest since 2000 and down from its peak of 19 percent in 2008, according to customs data.

The city also has seen a rising number of suicides and now has the highest suicide rate in the country for those aged between 25 and 29, according to Statistics Korea.

Ulsan University Hospital, run by Hyundai Heavy, recorded 182 suicide attempts in the first half of this year, compared to about 150 a year earlier, a hospital official said.

Taxi drivers have been told by police not to drop people off on Ulsan’s newly built bridge after three people killed themselves there in just one month.

“People believed that if they work hard, they will be better off, and if their children study hard, they will be better off,” said Park Sang-hoon, an official at an Ulsan suicide prevention center. “Confronting a different reality now, it seems that many of them are getting to a point of hopelessness, and some are even making extreme choices.”