Daewoo Shipbuilding & Marine Engineering ( DSME ) said Wednesday it will fire 30 percent of its executives responsible for the poor performance of the shipbuilder.
DSME said it has already dismissed seven executives and plans to axe 10 more later this month. The company had 55 executives in June.
“We decided to cut the number of executives by 30 percent to overcome a crisis as soon as possible and make a new start,” said a company spokesman.
The announcement came two weeks after the shipbuilder posted a 3 trillion won operating loss in the second quarter, reflecting accumulated losses which have been hidden for the last few years. Most of the losses came from its marine plant business.
The shipbuilder said it also seeks to slim down its workforce through an early retirement program. It will accept applications for the program from the company’s 1,300 senior employees later this month.
This is part of the company’s plan to improve its financial structure, including selling non-core affiliates and unloading stakes in overseas subsidiaries. The shipbuilder’s headquarters in downtown Seoul will be included on the sales list.
Earlier this year, market leader Hyundai Heavy Industries (HHI) cut 1,300 workers from its payroll. The shipbuilder also reduced its executives by 31 percent, with 25 additional executives let go last month.
HHI CEO Kwon Oh-gap, who led the restructuring process, announced in June that the company will soon end its cuts to human resources, saying the process is almost completed. It posted a net loss of 242.4 billion won in the second quarter.
Market observers say that Samsung Heavy Industries, which posted more than 1 trillion won in losses during the second quarter, will follow the lead of its rivals, cutting its executives and introducing a voluntary retirement program, though the shipbuilder has not decided on specific restructuring plans.
Analysts said the country’s top three shipyards ― DSME, HHI and Samsung Heavy ― are expected to post a combined 6 trillion won in losses this year, hit hard by decreased business in marine plants. Kyobo Securities analyst Kim Ji-hye said the shipbuilding industry will see its combined operating losses reach 190 billion won this year, referring to the consensus data of local brokerage houses.
The Original Posted by KIm Jae-won/ The Korea Times