Daewoo Shipbuilding & Marine Engineering (DSME) is calling for the revision of the workforce reduction plan the company presented to its creditors.
DSME president Chung Sung-rip said on Nov. 15, “The company’s performance has improved since we laid out our restructuring plan. We need to flexibly revise it.” He met reporters at the DSME head office in Namdaemun-ro, Seoul.
DSME submitted its restructuring plan to the creditors in 2016. Under the plan, the company is supposed to downsize the workforce to 9,000 by the end of this year from 13,199 at the end of 2015. The number of employees at DSME stood at 9,933 as of the end of September this year. The company still needs to lay off nearly 1,000 employees in order to fulfill its downsizing plan.
In this regard, Chung stressed the need review the workforce restructuring plan this year, saying, “When we made the plan (in 2016), we expected to post 7.5 trillion won (US$6.63 billion) in sales this year and 4.5 trillion won (US$3.98 billion) next year. However, this year’s sales are forecast to exceed 9 trillion won (US$7.96 billion).”
He added, “Next year, our sales will far surpass 4.5 trillion won (US$3.98 billion). We think that our workforce restructuring plan should be reconsidered according to next year’s sales target.” To this end, Chung is planning to discuss the matter with the creditors soon after the ongoing management inspection is completed.
However, he also said workforce restructuring is inevitable in the medium and long term for a complete revival of DSME. He said, “Our goal is to become a small but sound company with annual sales of 7 trillion won to 8 trillion won (US$6.2 billion to US$7 billion). Under this vision, we need to gradually restructure our workforce.”
Chung believed that DSME has now entered the stage of normalization. He said, “We think that DSME has crossed the threshold in the normalization process. In the past, we struggled with projects which have a lot of uncertainty, like offshore plant. But there is no single project which has risks now.”
In regard to DSME’s current order backlog, Chung said, “We have already won orders that are enough until the second half of 2020 and we will receive orders to cover the first half of 2021 by the end of this year. Winning orders to cover two and a half years is the most ideal level for shipyards.”
Regarding to whether the company can achieve this year’s goal in orders, Chung said, “We are less likely to win the Rosebank project this year so (attaining the goal) is challenging. But, it is not an impossible-to-achieve goal.” Currently, DSME has achieved 75 percent of this year’s goal of orders received at US$7.3 billion (8.26 trillion won).