Samsung Heavy Industries, the nation’s second-largest shipbuilder and 26th builder, is downsizing its construction-related organizations hit by the long slump in the domestic housing market to focus more on the lucrative shipbuilding business.
Over the past few months, the company has relocated some 260 of its skilled construction-related employees to its parent group’s other subsidiaries, namely Samsung Everland and Samsung Engineering, company officials said recently.
“The personnel measure was requested by the two companies, which called for reinforcements in their construction departments,” said a Samsung Heavy official.
Samsung Heavy Industries Co.’s shipyard in Geojedo Island (Bloomberg)
The construction function of the conglomerate Samsung Group is currently split between four of its subsidiaries: SHI, Samsung Everland, Samsung Engineering and Samsung C&T.
Since the 1990s, SHI has been active in the local construction market, especially renowned for its deluxe apartment brand, Cherevil.
It has also been involved in building public infrastructure, such as roads, subways, harbors and manufacturing plants.
Amid the prolonged slump in the local construction business, however, the firm recently set to downsize its building sector, stoking speculations that it may eventually give up the corresponding business.
SHI’s construction departments had 763 employees as of the third quarter last year, down 24 percent from the same period in 2011, according to officials. The figure in the shipbuilding and marine department, on the contrary, rose by 6 percent in the same period, they said.
Also, 93.97 percent of the company’s business portfolio is dependent on shipbuilding, with only 6.03 percent on construction.
But the company denied the speculation that it may shut down its construction business altogether.
“Considering the prolonged economic slump, we strategically chose to focus more on our forte, which is shipbuilding and plant construction, as shown in the name of our company, Samsung Heavy Industries,” said the official.
The company, however, will not close down its inland construction sector as it often generates synergy with offshore construction, he said.
“The currently stagnant construction business will, in time, rebound and recover gradually,” he said.
“Meanwhile, our growth in the shipbuilding and marine industry, especially in the overseas market, will help the sector survive.”
Last year, the No. 2 shipbuilder achieved 14.5 trillion won ($1.3 billion) in sales and 1.2 trillion won in profit ― up 8.2 percent and 11.4 percent, respectively, from the previous year.
Most of its outcomes were attributable to drillship and other marine construction orders from foreign oil companies, according to officials.
By Bae Hyun-jung (
tellme@heraldcorp.com)