Hyundai shipyard union opposes fresh round of redundancy

By Park Sae-jin Posted : May 9, 2016, 15:42 Updated : May 9, 2016, 15:42

[Yonhap News Photo ]


The union of South Korea's troubled Hyundai Heavy Industries opposed a new round of redundancy Monday after the world's largest shipbuilder unveiled a package of voluntary retirement targeting thousands of office staff as part of its restructuring.

The union said in a newsletter that it has received a "unilateral" notice from the company about the retirement package, which was contained in its restructuring plan to be presented to creditors.  

"We oppose such a unilateral package of voluntary retirement ... because it is tantamount to resignation under instruction and layoffs," the union said, accusing company executives of shifting their responsibility for poor management to employees.

The retirement package targeting up to 3,000 people at the shipyard and four subsidiaries came after Hyundai Heavy cut the number of executives and top managers by 25 percent last month.  

For a week starting on Monday, those applying for voluntary retirement will receive 40 months of basic monthly payment and education expenses for children. Hyundai Shipyard also vowed to push ahead with the aggressive streamlining of its bloated structure as well as the sale of non-core assets.

The company swung to a  net profit of 244.5 billion won (212 million US dollars) in its first quarter earnings from a net loss of 378 billion won a year ago, but sales dropped 16 percent on-year to 10.27 trillion won.

The company attributed the turnaround to cost-cutting efforts, a smaller deficit in offshore plants, and an improvement in its non-shipbuilding segment, but it benefitted much from a profit in its petroleum and refinery affiliate, Hyundai Oilbank.

For years, Hyundai Heavy has made rigorous restructuring and cost-cutting efforts to improve its financial status as a slide in oil prices has caused a decline in new orders for facilities such as FPSO (Floating, Production, Storage and Offloading) units and oil rigs.

Like other South Korean shipbuilders, Hyundai has shifted their strategy to focus on deep-sea drilling rigs and production facilities after the global financial crisis damped orders and Chinese shipyards out-priced them.

However, Hyundai suffered a second consecutive year of deficit, posting 1.36 trillion won in losses last year after a drop of 2.21 trillion won a year earlier, due to increased costs from a delay in the construction of offshore facilities and order cancellations.

In the first quarter of this year, the shipyard won $1.74 billion worth of overall orders, down 42.3 percent from a year earlier. Its shipbuilding orders tumbled 63 percent on-year to $234 million.

A survey conducted by the Korea Chamber of Commer and Industry showed that up to 50,000 workers from South Korea's three major shipyards would be laid off in three years. The shipyards have 144,000 workers, including 91,000 hired temporarily or based on contracts. Their combined loss surged to 7.7 trillion won last year, but market watchers say their woes would continue this year.

Aju News Lim Chang-won = cwlim34@ajunews.com

 
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