A continued recession in the shipbuilding industry could lead to the loss of as many as 22,000 jobs this year on Geoje Island in the southern part of Korea where two large shipbuilders are located, warned a report by Geoje City on Friday.
It is the first time that a local government has released a report forecasting a massive layoff in the shipbuilding sector, which is reeling from a drought of orders for new shipbuilding and offshore plants.
If the two shipbuilders Samsung Heavy Industries and Daewoo Shipbuilding and Marine Engineering continue not to receive orders for new ships, 22,031 or 25 percent of the total workforce of 89,113 created by the two shipbuilders and their subcontractors are expected to vanish this year, the city said.
The number of jobs lost may reach 27,257 or 30.5 percent of the total workforce if the recession prolongs to March next year, it said.
Workers at a dock of Daewoo Shipbuilding and Marine Engineering in Geoje City, South Gyeongsang Province. (Yonhap)
The report comes with the government gearing up corporate restructuring in ailing manufacturing sectors including shipbuilding and shipping.
Layoff fears are materializing first at the world’s largest shipbuilder Hyundai Heavy Industries, located in Ulsan, on the southeast coast of the peninsular.
The company is receiving voluntary retirements from employees at managerial levels from Monday to May 15, according to sources. It is rumored to be cutting 3,000 jobs through voluntary retirement this time, after laying off about 1,300 employees last year.
Hyundai Heavy is expected to submit a self-rescue plan this week to creditor banks led by KEB Hana Bank, in a move to accelerate the government’s push for corporate restructuring in ailing sectors.
Hyundai Heavy’s layoffs face strong resistance from its labor union, which publicly opposed restructuring plans and embarked on collective bargaining for a wage hike on Wednesday.
Samsung Heavy is also projected to submit restructuring measures to its state-run creditor Korea Development Bank.
Meanwhile, the manufacturing industry, where most jobs are created in Korea, is suffering a third prolonged recession, following the first during the 1998 Asian financial crisis and the second during the 2008 global financial crisis, a report said Sunday.
According to a report by the Hyundai Economic Research Institute, the manufacturing sector suffered a year-on-year contraction for the sixth quarter in the first quarter.
It is the third time that the industry saw a contraction for more than three quarters since the fourth consecutive contraction in the last quarter of 1998 and the third consecutive contraction in the second quarter of 2009, the report said.
By Kim Yoon-mi (yoonmi@heraldcorp.com)
