[Samsung Heavy Industries CEO Park Dae-young]
South Korea’s Samsung Heavy Industries Co. geared up for stringent austerity and cutback that could scale down its workforce by up to 40 percent as the shipbuilder expects to earn just half of what it had in the past over the next three years.
Samsung Heavy Industry CEO Park Dae-young in internal broadcast to employees of the shipyard and its subcontractors explained streamlining was inevitable as workload has shriveled to less than half of the levels in the past years.
He warned that sales over the next year would stop around 5 trillion won ($4.25 billion). Orders in next few years are likely to average $5 billion at best, just half of the $11 billion worth in the previous five years. The shipyard recorded sales of 9.71 trillion won last year, 12.88 trillion won in 2014, and 14.83 trillion won in 2013.
It has not received a single new order from November. The company has received bigger setback from oil industry slump than its two local major rivals Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries Co. due to greater exposure to deep-sea explorations.
Park pledged to work without any pay from July while other executives were made to give up 30 percent from their monthly paycheck. The entire executive level handed in their resignation to work under contingent status.
The company would receive early retirement application with a goal to shed 1,900 this year alone to cut 13,900-strong workforce by 30 percent to 40 percent by 2018.
From the second half, it plans to incrementally shut down idle facilities including floating docks and 300-ton floating cranes. It had pledged its main creditor Korea Development Bank to raise 1.5 trillion won through cost-cutting efforts and asset sales in return for debt relief.
If it still is short of funds, the Geoje-based shipyard is also considering to issue new shares to its sister Samsung companies that are its major shareholders. Samsung Group units including Samsung Electronics Co. own a combined 24.09 percent of the shipbuilder.
Meanwhile, workers’ council that acts as the shipyard’s union voted to strike in protest to the streamlining plan.
By Park Yong Beom
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]