Hyundai Heavy to unload offshore plant workers

By Nam Hyun-woo

Hyundai Heavy Industries is set to implement another round of a voluntary retirement program for its offshore plant employees as it has failed to secure new orders over the past four years.

The shipbuilder said Thursday its offshore plant division chief Kim Sook-hyun released a statement for its employees and said “the division will be scaled down and will receive voluntary resignation applications to cut the payroll,” because there is no work to do.

“It is inevitable to secure competitiveness to win new orders and there is no option but to deploy all possible measures including downscaling and voluntary resignations,” Kim said in the statement, adding that he will also resign from the post once several pending projects are completed.

The company will receive applications for voluntary resignation from Aug. 27 to Sept. 14 from an undetermined number of offshore plant division employees who have been with the company longer than five years. Those retirees will receive a lump sum payment of 30 months worth of their ordinary salary and scholarships for their children.

The resignation call came as the shipbuilder has failed to win new offshore plant orders since November 2016. After shipping the last module earlier this week, all of its offshore modules lines stopped, with 600 out of 2,600 workers keeping their jobs at the shipbuilding division while others are idling.

This is the second time this year that Hyundai Heavy has demanded voluntary resignations of its employees. In April, the company demanded voluntary resignations for those who worked longer than 10 years and 700 employees left the shipbuilder.

“Despite efforts to win orders, we couldn't beat companies from Singapore and China, and the company's offshore plant management, including myself, is responsible for failing to prepare for market environment changes,” Kim said. “Also, all of us are responsible for inefficiency and low productivity which compromised product quality and caused tardiness.”

Hyundai Heavy has been failing to win orders mainly because their rivals in China and Singapore making aggressive bids backed by lower labor costs.

The shipbuilder has decided to sell its 200,000-square-meter offshore modules yard in Onsan, southern Ulsan, as the site is currently only being used for storage.

The management also asked for unpaid leave for the 2,000 idle workers, but faced strong opposition from the labor union, which is demanding paid leave and a workforce reshuffle. Management and workers have failed to hold a meeting to negotiate on this issue.

Hyundai Heavy Industries Group said Wednesday it has completed its transition into a holding firm structure through a stake transaction among its affiliates.

In the move aimed at improving its governance structure, Hyundai Samho Heavy Industries decided to split into an investment firm and an operational business, while Hyundai Heavy Industries is embracing the investment company, the group said.

After the transaction, Hyundai Heavy Industries Holdings will be at the top of the structure to control Hyundai Heavy, which controls both Hyundai Mipo Dockyard and Hyundai Samho Heavy.

This allows Hyundai Heavy Group to comply with the Fair Trade Act which prohibits a holding firm having stakes in its third-tier subsidiary or “great-granddaughter” company. Formerly, Hyundai Samho Heavy controlled Hyundai Mipo Dockyard.