DSME plans to save W3 tril. by cutting wages
Ailing shipbuilder to move Seoul office, sell affiliates
By Kim Yoo-chul
Daewoo Shipbuilding and Marine Engineering (DSME) announced a heavy restructuring plan Tuesday that included cutting wages and selling off core affiliates.
“DSME will cut the wages of employees by up to 20 percent, while imposing unpaid holidays in the latter half of this year,” a company official said.
He said DSME’s Seoul headquarters will be moved to its Okpo Shipyard in Geoje, South Gyeongsang Province.
“These drastic measures are part of a self-rescue plan to be submitted to the Korea Development Bank (KDB), the shipyard’s main creditor.”
The plan will help the company save up to 3 trillion won.
Since August last year, DSME cut the number of company executives from 55 to 41 and cut their monthly pay by between 10 and 20 percent.
Officials at DSME and its creditor banks said the shipbuilder is looking at reducing its workforce earlier than scheduled, though they said no exact timetable has been set.
Earlier, DSME said would cut the number of employees by 2,300 by 2019 to streamline its business.
The updated plan is also expected to include selling two of its four floating docks.
“Moving the headquarters to Okpo is part of the group-wide restructuring plan. The Seoul office will only house employees working in the finance and sales divisions. The remaining space will be rented to third parties,” the official said.
In addition, some of DSME’s research staff who are now housed in Mirae Asset Center 1 Building will move to the Seoul office.
The 250 researchers involved with the company’s offshore plant business will be moved to Geoje.
“DSME’s special shipbuilding unit will be separated off and plants in China and Korea may be sold. However, the updated plan still needs approval from KDB and other creditors,” said another official.
KDB said it will thoroughly review the plan with the creditors and bank will decide whether or not to approve it by the end of next month.
In a related move, DSME’s local rival Hyundai Heavy Industries (HHI) earlier submitted its self-rescue plan that includes reducing its workforce by up to 10 percent, and to unload none-core assets to raise up to 1 trillion won.
DSME, HHI and Samsung Heavy Industries reported a combined operating loss of 8.5 trillion last year hit by weak demand, order cancellations and delays in building offshore facilities. Out of this DSME accounted for 5.5 trillion won.