DSME Shipyard South Korea

DSME to Cut 24% of Workforce Amid Mounting Losses

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October 12, 2016

Ships under construction at the DSME shipyard in South Korea. Photo credit: Lappino

By Kyunghee Park

(Bloomberg) — Daewoo Shipbuilding & Marine Engineering Co., the world’s second-largest shipbuilder, plans to eliminate 3,000 jobs, or 24 percent of its workforce, this year as part of a restructuring plan to improve its financials.

Daewoo is receiving applications for a voluntary retirement program until Oct. 21, the Geoje, South Korea-based company said an e-mailed statement Wednesday. The company had 12,699 employees on its payroll at the end of June. Including contract workers, the company employs about 40,000 people.

Daewoo Shipbuilding, Hyundai Heavy Industries Co. and Samsung Heavy Industries Co., the world’s three biggest shipyards based in South Korea, are all reducing capacity, cutting jobs and selling assets amid a plunge in orders for offshore drilling units and ships. The shipyards posted losses last year and are struggling with mounting debt after a slide in oil prices prompted oil companies to slash spending and cancel or postpone projects.

Daewoo Shipbuilding expects about 1,000 employees to participate in the voluntary program, it said. The company is also planning to transfer about 2,000 workers into a new company, the statement said without elaborating. The Maeil Business Newspaper reported the job cuts earlier Wednesday.

Daewoo Shipbuilding had said in June that it plans to cut 30 percent of its employees and capacity. Earlier this year, the shipbuilder sold two of its five floating docks and reduced salaries to save money.

Korea Development Bank and Export-Import Bank of Korea, two key creditor banks of Daewoo Shipbuilding, pledged in October last year to provide 4.2 trillion won ($3.7 billion) in loans and equity. Korea Development Bank is also the shipbuilder’s biggest shareholder.

© 2016 Bloomberg L.P

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