Daewoo Shipbuilding & Marine Engineering unveiled an additional self-restructuring plan Friday, pressed by the government and its creditors concerned about the worsening performance amid falling new orders.
In the self-rescue plan submitted to its creditors, led by the state-run Korea Development Bank, the firm proposed a further cut in workforce and wages, as well as temporary closure of docks, industry sources said.
Yonhap
A fresh idea in the plan is to transform its profitable marine defense-related business unit -- which builds combat support ships and naval submarines -- into an affiliate in an apparent move to raise funds by listing its shares.
“Restructuring of the defense business is currently under review for the normalization of operations,” the firm said in a regulatory filing Friday.
The shipbuilder denied the speculations over possible auction of the defense-related unit, claiming that it is a highly unlikely scenario.
“Given that the defense business unit isn’t provided with separate facilities and shares equipment with other shipbuilding departments, it is technically difficult to put it on sale,” he said.
The proposal is a follow-up measure to the DSME’s restricting scheme announce in 2015 when it posted a net loss of over 5 trillion won ($4.2 billion)
In October last year, creditors of the company decided to inject 4.2 trillion won into the shipyard to help it get back on track as the firm said it would raise 1.85 trillion won by selling off noncore assets and laying off 2,300 employees in phases.
Such efforts include liquidating overseas subsidiaries including the money-losing Romanian shipyard Daewoo Mangalia.
As the shipyard posted another quarterly loss this year and the slump in new orders continued to weigh on the world’s second-largest shipbuilder, the creditors pressed the firm to take more active steps to reduce debts.
Daewoo Shipbuilding set its 2016 sales target at 13.7 trillion won, including $10.8 billion by taking new orders. The company, however, had only won one order for two Suezmax tankers in March.
With Friday’s submission, all of the country’s three biggest shipbuilders -- Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding – have announced their own restructuring schemes.
“As all of the big three handed in their self-rescue plans, concerns over the massive layoffs in the second half and their impact on the industry are growing,” an official at one of the firms said.
Up to 6,000 layoffs are looming based on the downsizing measures by the three major companies. Industry experts said the number could jump to tens of thousands as small and medium-sized companies will also suffer a blow from the industrywide overhaul.
On Friday, Hyundai Heavy Industries offered early retirement to senior production workers for the first time in the company’s history. The program is said to be offered to some 2,100 employees, around 8 percent of the company’s overall workforce.
About 205,000 workers were employed in Korea’s shipbuilding industry as of the end of 2014, according to the Korea Offshore & Shipbuilding Association.
By Park Han-na (
hnpark@heraldcorp.com)
