Samsung Heavy pressed to map out self-restructuring plan

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Creditors of Samsung Heavy Industries Co. have called on the shipyard to map out a set of self-restructuring measures as the local shipbuilding segment is reeling from mounting losses and a protracted slump, industry sources said Tuesday.

Last week, Hana Bank, the main creditor of Hyundai Heavy Industries Co., also pressed the shipbuilder to draw up a set of additional self-rescue measures.

“Samsung Heavy is expected to soon announce a string of restructuring measures, including cost-cutting ones,” said an official at state-run Korea Development Bank, the main creditor of Samsung Heavy.

The government has picked five sectors to put under intensive restructuring as their bad performances have been a drag on Asia’s fourth-largest economy.

The Financial Services Commission, the country’s financial watchdog, has demanded local shipyards ramp up self-restructuring efforts, including massive layoffs and sales of noncore assets.

Loss-making South Korean shipyards, which are facing growing pressure from their creditors to cut costs, are expected to ratchet up moves to cut down their workforces and sell noncore assets.

Creditors of Daewoo Shipbuilding & Marine Engineering Co. are pressing the beleaguered shipbuilder to devise additional restructuring moves, including downsizing its workforce, and selling wages and assets.

Daewoo Shipbuilding earlier said it will cut its workforce by 2,300 to roughly the 10,000-level by 2019.

The shipyard is also seeking to sell its headquarters building and other real estate.

Hyundai Heavy and Samsung Heavy, Daewoo Shipbuilding’s local rivals, are expected to eliminate up to 1,000 workers each through voluntary retirement plans or attrition.

Last week, Hyundai Heavy said it will cut the number of executive level officials at its affiliates by 25 percent during the first half, meaning that about 60 executives will be let go under the upcoming downsizing.

The shipbuilding industry, once regarded as the backbone of the country’s economic growth and job creation, has been reeling from mounting losses caused by an industry-wide slump and increased costs.

The big three shipyards racked up a combined loss of 7.7 trillion won (US$6.7 billion) last year. It was the first time that all three of the nation’s largest industry players registered losses.
Source: Yonhap

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