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The company has asked employees to take paid leave amid slump.
By Kim Hyun-bin
Doosan Heavy Industries & Construction, the country's largest power equipment maker, is struggling to stay afloat, asking employees to take paid leave to cover for ballooning losses following a sharp fall in orders due to the government's cancellation of nuclear and coal-fired power plants and a slump in the global power generation market.
If the crisis worsens, many fear the company, which is a key affiliate of Doosan Group, could directly affect the conglomerate's operations.
The company is contemplating temporarily suspending operations at some plants as revenue has been cut in half and losses topping 2 trillion won in the past five years.
Doosan Heavy's decision to temporarily halt the operation of some plants will mark the first time this has happened since Doosan Group took over Korea Heavy Industries from the government in 2000.
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| A motorcyclist enters the main entrance of Doosan Heavy Industries & Construction, in Changwon, South Gyeongsang Province, Wednesday. / Yonhap |
Many experts believe that to revive the company's heavy industry sector, it needs to expand renewable energy projects and the government needs to slow its nuclear phase-out policy.
CEO Jeong Yeon-in sent the labor union a request for a temporary business suspension, Wednesday, citing the tough business situation, with the company losing 10 trillion won in orders when the government scrapped its nuclear and power plant projects.
"We need more substantial emergency management measures," Doosan Heavy CEO Jung Yeon-in, said in a message to the union.
The company is taking applications for paid leave for around 2,600 workers out of a pool of about 6,700 accounting for nearly 40 percent of the payroll. Despite the cut, the company says it will maintain a minimum workforce to carry out daily operations.
Doosan Heavy says workers who apply for paid leave can receive 70 percent of their basic monthly wage for up to three months.
The union slammed the move and said it would not take part in future negotiations.
"Instead of cutting the number of workers, company owners and the management should first take the responsibility by donating their personal wealth and hiring professional CEOs," the union said. "If we engage in any kind of layoff negotiations it will give them the means to cut workers so we will not take part in negotiations."
The move comes as Doosan Heavy posted an accumulated 2.68 trillion won ($2.24 billion) net loss from 2014 through 2019.
Shares also plummeted 21.44 percent to 3,590, Wednesday, far underperforming the broader KOSPI's 2.78 percent decline. The shares dropped further to 3,105 won on Friday.
The country decommissioned two nuclear power plants in 2017 and 2019 as part of a policy to switch to renewable energy. Korea is set to retire 10 of its 24 reactors by the end of 2030.
As a result, plans to build two reactors in Daejin and Yeondeok in North Gyeongsang Province were scrapped in December 2017 even after Doosan obtained all licenses for construction. The cancellations were estimated to have cost 700 billion won.
In February, Doosan announced it would liquidate its castings and forgings plant in Romania because shipbuilding, offshore plants and energy industries had dealt a serious blow to profitability.
In 2006, Doosan Heavy acquired IMGB from Norway's Kvaerner for 14.5 billion won, and planned to focus on Doosan IMGB as its manufacturing base in Europe.
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