Layoff of 8,500 Workers
It is expected that the three largest South Korean shipbuilders will come up with restructuring plans equivalent to a total of six trillion won or so. The amount is estimated at two trillion won to three trillion won for Daewoo Shipbuilding & Marine Engineering (DSME), two trillion won for Hyundai Heavy Industries and 1.8 trillion won for Samsung Heavy Industries.
Last year, DSME submitted the first draft for its restructuring plan. According to it, DSME is to procure 750 billion won by disposing of non-core corporate and real estate assets and save 1.1 trillion won by redundancy for the following three years. The shipbuilder sold its subsidiary FLC last year in this context. Its second plan is likely to be equivalent to at least two trillion won, including the disposal of its shares in its subsidiary shipyard located in Shandong, China and the spin-off and initial public offering of its defense business unit.
In the meantime, Samsung Heavy Industries submitted its plan to the South Korean government on May 17. The plan is said to include the disposal of Samsung Hotel Geoje and reduction of facilities. Hyundai Heavy Industries is likely to lay off 3,000 or so employees while shutting down docks with a lower utilization rate. In short, the combined size of the companies is to be reduced by about seven trillion won within three to four years.
Under the circumstances, a massive layoff is on the horizon. In the Hyundai Heavy Industries Group, more than 1,000 section chief-level office employees have applied for voluntary retirement for the past two weeks in the five subsidiaries of Hyundai Heavy Industries, Hyundai Mipo Dockyard, Hyundai Samho Heavy Industries, HYMS and Hyundai E&T. Hyundai Heavy Industries, Hyundai Mipo Dockyard, Hyundai Samho Heavy Industries are planning on the voluntary retirement of engineers for two weeks, too.
DSME is looking to let go of 4,000 employees, 1,000 more than previously planned, for three years to come. The number is estimated at around 15,000 for Samsung Heavy Industries.
Then, the number of full-time workers of the three shipbuilders is to be reduced by up to 8,500 and approximately 40,000 workers including those of partner companies are to leave the companies within three years, which is likely to result in labor-management disputes based on employment instability.