South Korean shipbuilder STX Offshore & Shipbuilding is taking drastic measures to ensure its survival beyond mid-2016 as newbuild orders plunge and the cash-strapped company struggles to deliver those orders still remaining, according to reports.
STX chief executive Lee Byung-mo sounded the alarm in an email to employees this week obtained by the Korean Herald, touting a drastic restructuring as “the only way for survival.” Without one, maintaining business as usual “will lead to the firm’s collapse within the first half of 2016,” he said in the email.
New details emerging Wednesday say that the plan could include the elimination of 800 jobs, or about 30 percent of its workforce, and cutting salaries of those remaining by 10 percent, the Herald reported, citing sources.
The paper said that the firm’s main creditor, Korea Development Bank, has been pushing the shipbuilder to reduce its fixed expenses by 50 percent in order to avoid court receivership, a type of corporate bankruptcy.
The plan may also include focussing on tankers and shying away from loss-making offshore and specialized vessels that once helped the shipbuilder to the title of the world’s fourth largest.