South Korean Ship Builders May Lay Off 2,000 Employees

D-Bo , Aug. 13, 2015, 8:18 a.m.

Korea's three largest shipbuilders are likely to lay off up to 2,000 workers this year alone amid massive downsizing programs to make up for self-inflicted losses. The shipbuilders have run up a staggering W8 trillion in losses from offshore plant projects over the past year, largely due to their own incompetence (US$1=W1,183). 

Some experts say it is essential for the shipbuilders to streamline their workforce since they bolstered it by more than 10 percent after achieving trillions of won in earnings in 2010. But experts urge the companies to shield research and development staff from layoffs so that the ruinous mistakes are not repeated.

Daewoo Shipbuilding and Marine Engineering on Wednesday said it will lay off around 1,300 department heads or more senior staff. The shipbuilder plans to wrap up performance evaluations by the end of this month and fire managers who performed poorly and urge others to accept retirement packages. Daewoo also plans to reduce the number of senior executives from 55 to less than 40.

Samsung Heavy Industries’ 110 senior managers meet Thursday at its shipyard in Geoje off the south coast to discuss measures to overcome its financial difficulties. The subject of layoffs is not on the agenda, but there are estimates that it will lay off staff since the accumulated losses from its offshore plant projects now total W2 trillion.

Hyundai Heavy Industries, which posted losses of more than W3 trillion last year, already laid off 1,500 workers early this year. It also made 25 managers redundant late last year and reorganized the management with younger executives.

Hong Sung-in of the Korea Institute for Industrial Economics and Trade said, "A surge in offshore plant orders won by the top three shipbuilders since 2010 led to an increase in the number of workers, but dwindling orders have made many of them redundant. Layoffs are necessary for survival."

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