Desperate Self-rescue
Daewoo Shipbuilding & Marine Engineering Co. (DSME) has mapped out self-rescue measures worth over 5.26 trillion won (US$4.42 billion) in total on May 31. Under the new measures, it will lay off 1,200 employees over the next five years and sell some 14 subsidiaries at home and abroad by 2020 to get an injection of capital.
According to industry sources, the latest measures include reducing workforce by 1,200 in the next five years, laying off employees with low performance and strengthening the wage peak system.
DSME plans to maintain the number of its employees, including partner companies, at 30,000 to gradually reduce its labor costs by 1 trillion won (US$839.63 million) by 2019.
Previously, the company submitted a 1.85 trillion won (US$1.55 billion) self-rehabilitation plan, which include asset sales of the headquarters and Mogok site, to creditors last year. However, DSME has come up with stronger measures as the business environment has recently become even worse due to rescission of project deals and reduced order.
Under the new measures, DSME will sell 14 subsidiaries at home and abroad by stage and move its headquarters from Seoul to Okpo Shipyard in Geoje, South Gyeongsang Province.
The company will also reduce its production capacity by 30 percent by selling two of its four floating docks to cut its sales from the current 14 trillion won (US$11.75 billion) to 10 trillion won (US$8.4 billion). Through restructuring, it will decrease the number of ships to build a year by 10.
DSME also plans to recapitalize the company by separating off its special shipbuilding business unit.