SEOUL, Jan. 12 (Korea Bizwire) – The brutal job-cutting in South Korea’s shipbuilding industry is expected to continue into this year, with the nation’s three largest shipbuilders expected to slash more than 4,000 jobs, according to industry sources Thursday.
South Korean shipbuilders have been under serious financial strain since the 2008 global economic crisis amid falling oil prices, which sent new orders tumbling amid a glut of vessels and stiffer competition from Chinese rivals.
Daewoo Shipbuilding & Marine Engineering Co. (DSME), which cut about 2,000 jobs last year, plans to slash some 2,000 jobs this year, according to the sources.
The number of DSME’s employees will be reduced to 8,500 people by the end of this year from 13,200 as of the end of 2015.
Starting this month, about 200 office workers of DSME will go on a monthlong unpaid leave as part of efforts to cut costs.
They will be the first batch of DSME’s 4,700 desk-job employees who will take turns on unpaid leave starting this month in line with the company’s self-help measures aimed at helping the ailing shipyard stay afloat.
This year DSME plans to sell about 500 billion won (US$420.5 million) worth of its assets.
In the first half of last year, Daewoo Shipbuilding suffered a net loss of 1.19 trillion won, with its debt ratio exceeding 7,000 percent. In 2015, its loss reached a staggering 5.5 trillion won.
Samsung Heavy Industries Co., which raised 1.1 trillion won via a rights issue and cut 1,500 jobs last year, is expected to eliminate additional 1,800 jobs this year.
According to Samsung Heavy’s self-rescue plans, the shipyard plans to cut a total of 5,000 jobs by the end of 2018.
Samsung Heavy has been also considering selling about 400 billion won worth of its noncore assets.
Hyundai Heavy Industries Co., the world’s biggest shipbuilder by orders, is also expected to announce a job cut this year, but details have not been set because of a plan to reorganize its businesses into six separate companies.
Last November, Hyundai Heavy decided to spin off its wide-ranging businesses into six business divisions — shipbuilding-offshore plant-vessel engines, electric and electronics, construction equipment, renewable energy, robotics, and services — by the first half of this year.
The decision is part of the shipyard’s self-rescue plans announced early last year in which it said it would seek the sale of noncore assets and job cuts to lower its debt-to-equity ratio below 100 percent by 2018.
This year, Hyundai Heavy plans to complete selling its brokerage affiliate, Hi Investment & Securities Co., to focus on its shipbuilding business.