South Korean shipbuilders this year started to see a recovery in orders, but their streamlining plan is still ongoing partly to meet creditors’ requirement in return for emergency relief aids they received a few years back during the slump in the global shipbuilding industry.

Daewoo Shipbuilding & Marine Engineering (DSME) has won new shipbuilding orders worth $4.86 billion between January and November this year, its best performance in four years. The shipbuilder, however, may have to let nearly 1,000 workers go by the end of this year under its self-rescue plan agreed with its creditors.

After years of logging losses, DSME received 4.2 trillion won ($3.7 billion) in bailout from its creditors and state-run banks Korean Development Bank and Export-Import Bank of Korea in October 2015. But the first batch of bailout failed to resurrect the ailing shipbuilder, and an additional financial support of 2.9 trillion won was injected last year. In return for such emergency relief aids, DSME in 2016 promised creditors to cut down its workforce to 9,000 by the end of 2018 from 13,199 in 2015 end. As of the end of June this year, it had a total of 9,960 employees.

Since the last bailout in 2017, DSME, however, has seen a recovery in orders so that the management is trying to renegotiate the terms of its self-rescue plan with its creditors to keep skilled workers to complete the new orders on time amid improving business conditions, said an unnamed official at the company.

Samsung Heavy Industries Co., which has reported operating loss for four quarters in a row in the third quarter ended September this year, is under higher pressure for job reduction than its peers.

It currently has 10,300 workers, and it needs to let go between 1,000 and 2,000 employees by the end of this year. Its self-rescue plan that it submitted to creditors in 2016 said it would reduce its workforce by up to 40 percent or 5,600 workers from 14,000.

Hyundai Heavy Industries Co., the country’s largest shipbuilder, already has cut 150 jobs through an early retirement program this year after it shut down an offshore yard in August due to depleting orders. It still has 12,000 idle workers, and the company initially planned to ask them to temporarily take leave between November and June next year with a monthly salary worth 40 percent of their normal wage and return to work in July. But such a plan was rejected by a labor relations committee.

By Kang Gye-man and Cho Jeehyun

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]