Belt Tightening
According to industry sources, Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering, and Samsung Heavy Industries are planning to reduce the number of their executive members by at least 30 percent and let go of 2,000 to 3,000 employees by the end of this year, as their combined losses for this year are estimated to be about 6 trillion won (US$5.1 billion).
Daewoo Shipbuilding & Marine Engineering, which recorded over 3 trillion won (US$2.55 billion) in losses in the second quarter, is going to dismiss 1,300 managers this month by voluntary retirement or by telling them to quit. This is the first time since shipbuilding process automation back in the 1980s that the company has discharged such a large number of employees. It dismissed none of its employees at all even during the financial crisis in the late 1990s. However, seven executive members have already quit their jobs, taking responsibility for its losses in the offshore plant sector, and seven to eight more are slated to follow them this week. Then, the number of its executive members will be reduced by approximately 30 percent.
Hyundai Heavy Industries let 1,500 employees retire voluntarily early this year after recording losses of over 3 trillion won last year. It paid retirement bonuses of no less than 161.4 billion won (US$137.4 million) in the first quarter of this year alone. The Hyundai Heavy Industries Group reduced the number of executive members by 31 percent in October last year, and retired 25 more late last month.
Samsung Heavy Industries is expected to follow suit, too. The company posted more than 1 trillion won (US$851 million) in losses in the previous quarter.