Heavy Restructuring
Hyundai Heavy Industries Co., the world's largest shipbuilder which has faced the worst crisis ever since the foundation, will cut 3,000 positions this year, more than 10 percent of its workforce including not only administrative but also production workers, as part of its restructuring efforts. The company is also planning the closure of nearly 100 of its 390 business divisions.
According to industry sources on Apr. 21, Hyundai Heavy Industries Chairman and Chief Executive Officer Choi Kil-seon and President and CEO Kwon Oh-gap came up with restructuring measures at a recent meeting held at its headquarters in Ulsan. The company will declare such an emergency management system on the 27th, and start implementing measures from next month.
It will first receive voluntary retirement applications from 3,000 administrative and production workers, while reducing the number of its business divisions from 390 to 290 through mergers. Also, Hyundai Heavy Industries will completely abolish holiday work as well as fixed overtime labor of administrative workers. The offshore and plant design team in DMS in Sangam-dong, Seoul, will be also relocated to the corporate headquarters in Ulsan.
The company is carrying out the largest workforce restructuring programs since the foundation. It already let 1,300 administrative workers go early this year through a voluntary retirement program. This time, production workers will be also subject to company’s workforce reduction plan.
Such a decision comes after Hyundai Heavy Industries believes that the current situation is very serious to such an extent that the business can go belly up. The company showed losses for nine quarters in a row until the fourth quarter last year, recording 4.7 trillion won (US$4.14 billion) of accumulative operating losses. It had sold its holding assets and reduced the workforce to survive. However, the business situation is not picking up as it has won only three orders of ships in the first quarter this year.