Daewoo Shipbuilding to dismiss 12,000 more workers

Jung Sung-leep, left, CEO of Daewoo Shipbuilding & Marine Engineering (DSME), speaks during a press conference at the company headquarters in downtown Seoul, Thursday. / Courtesy of DSME

By Lee Hyo-sik

Daewoo Shipbuilding & Marine Engineering (DSME) will dismiss as many as 12,000 employees over the next two years as part of its ongoing restructuring campaign to prop up its worsening bottom line, company CEO Jung Sung-leep said Thursday.

The planned dismissal, which aims to bring down its 42,000 workforce to 30,000, is in addition to thousands of jobs the struggling shipbuilder already eliminated over the past year. This is widely expected to further demoralize DSME employees, who work under the constant fear of dismissal.

In a press conference at the company headquarters in downtown Seoul, Thursday, Jung said he wants to reduce the number of employees, including those dispatched from partner firms, to 30,000 in order to optimize operations.

“In 2014, we had 55,000 workers generating 16 trillion won in sales. But the size of the workforce was way too big. So we downsized it to about 42,000,” Jung said. “But we still have a way to go because we have to bring it further down to 30,000, which I think is the optimum number for the company to operate more efficiently and cost-effectively.”

The CEO said that from 2009 to 2010, DSME posted record profits with a 30,000 workforce. Its revenue stood at about 12 trillion won.

“I believe that we should maintain the 2009-2010 level to overcome the current difficulties. We will try to downsize the workforce by first dismissing those dispatched from our partner firms,” Jung said.

He then expressed concerns about falling employee morale, stressing that he will make more efforts to appease workers who have increasingly become pessimistic about the future of the company over the past year.

“When I became the CEO last June, I sensed a great deal of apathy among employees. They were indifferent to what their colleagues were doing, refused to collaborate and only cared about their wellbeing,” Jung said. “But things have changed since I came in. I have tried to boost employee morale because only after employees are motivated to work together toward our common goal, can we get the company back on track.”

The CEO projected that the shipbuilder will post operating profits in the first quarter of 2016, making a turnaround from last year’s 5.5 trillion won loss.

“It still remains to be seen but I am optimistic that the company will become profitable in the first three months of the year,” he said. “We reflected all the losses, mostly from the unprofitable offshore plant business, in our balance sheet last year. Our full-scale restructuring over the past year has significantly improved our operational efficiency and labor productivity.”

To secure much-needed cash, DSME disposed of non-core assets, including a golf course and unprofitable subsidiaries, as well as dismissing executives.

In 2016, DSME is seeking to receive new orders of $10.8 billion. But the CEO admitted that the bar may be too high for the struggling shipbuilder.