Cash-strapped STX Offshore & Shipbuilding has proposed drastic restructuring measures to its labor union in order to avoid court receivership, sources said Wednesday.
They noted that STX chief executive Lee Byung-mo plans to ensure the company’s survival by slashing 800 jobs, or 30 percent of its workforce of around 2,600, and cutting salaries by 10 percent. He also seeks to drastically streamline the organizational structure.
In a recent email to employees, Lee said that restructuring is “the only way for survival” while presenting the revival scheme.
“Maintaining the current management system will lead to the firm’s collapse within the first half of 2016,” he said.
The move comes as the shipbuilder has suffered from a severe liquidity crisis even after its creditors pumped in 4.5 trillion won ($3.83 billion) since March 2013. STX posted an operating loss of 26.5 billion won in the first half of this year.
Industry insiders said STX will be able to avert court receivership if it carries out the restructuring program after obtaining the labor union’s consent.
The firm’s main creditor banker Korea Development Bank has been pressing STX to come up with measures to reduce 50 percent of fixed expense, saying court receivership is inevitable without such a plan.
The firm, only recently the world’s fourth largest shipyard operator, plans to shrink itself to a medium-sized firm focusing solely on tankers as it withdraws from the offshore and special ship business.
“When the restructuring is completed, STX will morph into a medium-sized company while shifting our focus to tankers,” Lee said in the email.
KDB plans to review the restructuring plan after completing an on-going inspection of STX.
“We will thoroughly review the plan along with the inspection result to analyze the possibility of the company’s normalization,” a KDB official said.
By Park Han-na (email@example.com