SouthKorea: Overhaul of Shipbuilding Industry Going Awry

S. Korea: Overhaul of Shipbuilding Industry Going Awry
30/09/2019 https://www.hellenicshippingnews.com/s-korea-overhaul-of-shipbuilding-in...

The Daewoo Shipbuilding & Marine Engineering branch of the Korean Metal Workers’ Union is planning to stage a demonstration on Oct. 1 in Brussels, Belgium, where the EU headquarters is located, against a business combination between Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries Group. The Korean Metal Workers’ Union is going to stage a similar rally in Japan, too. At present, Japanese shipbuilders are preparing WTO litigation with regard to government subsidies for South Korean shipbuilders.

Experts are expressing concerns that the workers’ attempt to hinder the reorganization can hamper the South Korean shipbuilding industry’ recovery that has just begun. The industry was about to collapse with a loss of trillions of won in the mid-2010s. Since then, close to 14 trillion won has been poured into Daewoo Shipbuilding & Marine Engineering from taxpayers’ pockets.

Local shipbuilders’ order backlogs slightly increased in 2017 and 2018 but their business has deteriorated again since the beginning of this year. They have yet to fulfill 40 percent of their business goal for this year with October around the corner. Specifically, Samsung Heavy Industries fulfilled 53.8 percent of its goal until last month and the figures are 35.8 percent and 31.4 percent for Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries Group, respectively.

The sale of Daewoo Shipbuilding & Marine Engineering to Hyundai Heavy Industries Group is to revamp the industry relying on taxpayers’ money. With the number of new orders limited in the global shipbuilding market, Hyundai Heavy Industries Group, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering have been engaged in dumping. However, the business combination can result in a more efficient R&D investment and an economy of scale for more competitiveness.

Nonetheless, the Daewoo Shipbuilding & Marine Engineering branch of the union is claiming that the sale will lead to a layoff. In addition, unionized Daewoo Shipbuilding & Marine Engineering workers are demanding a 5.8 percent increase in base pay, working condition improvement for in-house subcontract workers, retirement age adjustment from 60 to 62, and so on, which are not being accepted by the management.
Source: Business Korea