The South Korean government has decided to save STX Offshore and Shipbuilding Co. on condition of slashing 75 percent of its production workforce. Sungdong Shipbuilding & Marine Engineering Co. plans to file for receivership while increasing the chance of revival by asking the court to turn into a repair plant.
According to the Ministry of Trade, Industry and Energy on March 7, the government will hold a ministerial meeting on March 8 to discuss ways to strengthen the industrial competitiveness and announce its restructuring plans for mid-size shipbuilders.
First of all, STX Offshore and Shipbuilding will need to reduce the number of production employees to 180. In this case, the company has to cut down about 75 percent of its current production employees at 700. The figure is about 40 percent of the total number of employees at 1,350.
Sungdong Shipbuilding plans to file for receivership instead of liquidation. The government considered putting the company into liquidation immediately but decided to offer a final chance. When a company go into receivership, the court put it into liquidation when it doesn’t think that the company has a chance to survive even after writing off its debts. A senior official from the government said, “It can be seen as a trial to focus on revival through the adjustment of its business or function.”