Hyundai Heavy orders all hands on deck

Hyundai Heavy Industries (HHI), Korea’s largest shipbuilder, has switched to emergency survival mode to overcome the worst crisis of its 42-year history, the company said.

The troubled firm, which lost 1.3 trillion won ($1.25 billion) in the first half of the year, is moving large numbers of office workers to plants, or reassigning the workers as sales people. The company will also reduce operating expenses and set up an ad-hoc task force to improve efficiency.

All executives have tendered their resignations to CEO Kwon Oh-gap, who took over in September, a move often seen in Korea when troubled corporations face difficulties.

”Company chairman Choi Gil-seon and CEO Kwon presided over a meeting with executives Sunday morning, calling on them to do everything they can to get the company back on track,” a HHI spokesman said.

”We will reappoint executives capable of leading the organization in the rapidly changing business environment. At the same time, we will choose and appoint new faces to executive posts to make the company more dynamic and agile.”

HHI’s affiliates, including Hyundai Mipo Dockyard and Hyundai Samho Heavy Industries, are also subject to the overhaul.

The shipbuilder’s bottom line has deteriorated because of fierce competition for contracts amid a sluggish global market. To secure orders, it has had to build ships at lower prices, and to build offshore plants, which has chipped away at profitability.

Chinese shipbuilders in particular have been catching up with HHI and other Korean manufacturers, making it harder for local players to win orders abroad.

HHI has also been grappling with labor disputes this year for the first time in 19 years. The union has been threatening to strike unless management accepts its demands to raise wages. However, the company says a wage rise is not practical when the company is continuing to lose money.

The HHI spokesman said it was crucial for labor and management to conclude wage negotiations as quickly as possible.

”The dispute has further worsened the situation for the company,” he said. “Against such a backdrop, we decided to take preemptive measures before it is too late to revitalize the company.”

The shipbuilder will reorganize its workforce, allocating more employees to its plants. In addition, more will work in the sales field to secure orders. HHI plans to restructure its money-losing ventures at home and abroad, and cut operating expenses.

”To inject vigor into the organization, the CEO and other top managers will hold face-to-face meetings with workers and reflect on employee opinions to create a more open and employee-friendly workplace environment,” the spokesman said.

”The company will soon launch an innovation task force to improve operational efficiency and reduce costs.”
Source: Korea IT Times