Published : Feb. 11, 2019 - 10:34
The labor union at Hyundai Heavy Industries Co., the world's largest shipyard by sales, demanded Monday that the company provide job guarantees to its employees if it wants to proceed with its push to buy a smaller local rival.
Last month, state-run Korea Development Bank signed a temporary memorandum of understanding with Hyundai Heavy Industries to sell its controlling stake in rival Daewoo Shipbuilding & Marine Engineering Co.
(Yonhap)
Daewoo Shipbuilding's labor union has expressed worries that the takeover will lead to massive layoffs, which Hyundai Heavy's workers have also claimed.
"Labor-management relations could go from bad to worse should the management go ahead with the takeover push without guaranteeing existing jobs," Hyundai Heavy labor union said in its newsletter.
"The management should apologize for closed-door negotiations, and promise the union's participation in the takeover process," it said.
Samsung Heavy Industries Co., another local shipyard, has been requested to make its own takeover proposal by no later than the end of this month. KDB plans to finalize a deal in early March after reviewing Samsung Heavy's proposal.
Industry sources said in the past, Samsung has repeatedly denied its intentions to take over Daewoo Shipbuilding and this time it would not be much different.
If the takeover, estimated at over 2 trillion won, goes ahead, the South Korean shipbuilding industry is expected to be dominated by two major shipbuilders -- Hyundai Heavy and Samsung Heavy.
South Korean shipbuilders, once a cornerstone of the country's economic growth and job creation, have been reeling from mounting losses in the past few years, caused by an industry-wide slump and a glut of vessels amid tough competition with Chinese rivals.
The government has been hoping that the local shipbuilding industry can be overhauled in a way that two major players could dominate the sector to better compete against Chinese rivals and tackle sectoral ups and downs.
Daewoo Shipbuilding ended a debt rescheduling program in August
2001 after being told to streamline operations in August 1999. Its parent, Daewoo Group, collapsed under heavy debt in the wake of the 1997 financial crisis.
In 2009, KDB put Daewoo Shipbuilding back on the block after scrapping a deal to sell a controlling stake in the shipyard to Hanwha Group.
So far, up to 10 trillion won has been spent to salvage Daewoo Shipbuilding.
The combination of the two shipbuilders would create an unrivaled player in the sector. As of last year, Hyundai Heavy had an order backlog totaling 11.14 million compensated gross tons, the largest among others in the sector. The comparable figure for Daewoo Shipbuilding was 5.84 million CGTs.
Their combined order backlog accounts for 21.2 percent of the worldwide total. (Yonhap)