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Shipbuilder restructuring takes toll on Geoje Island

Okpo is a beautiful port in this southern island off which Admiral Yi Sun-sin defeated Japanese warships with his armada of Turtle Ships in the late 16th century.

Centuries later, Daewoo Shipbuilding and Marine Engineering (DSME) has produced a wide range of ships in the port, from warships and container vessels to drill ships, for more than four decades, creating jobs, providing orders for vendors and paying taxes to the municipal government, thus playing a key role in boosting the regional economy.

However, the heydays are gone because the shipbuilder is now under the control of creditors led by the Korea Development Bank which is pushing for a strong restructuring program, including massive layoffs. DSME promised to cut 2,000 jobs, or 15.4 percent of its workforce of 13,000 by 2018, as part of a self-rescue plan submitted to creditors.

The shipbuilder posted more than 5 trillion won in operating losses last year, hit hard by low orders for new ships and losses in the marine plant business. Last month, the nation’s three largest shipbuilders — DSME, Hyundai Heavy Industries and Samsung Heavy Industries — won no orders, worsening a downturn in the sector.

Park So-hyun, a merchant who runs a gift shop in Okpo, is one of many residents here who bears the brunt of the failing fortunes of the troubled shipbuilder.

“Daewoo was our key customer. But, now I am in trouble because it no longer orders from me,” said Park who has provided towels and umbrellas for company events. “This is not just a personal matter, but one for all of our community.”

There were no customers in the small shop filled with towels and umbrellas. Park was just chatting with her friend.

She expressed a deep distrust of politicians, policymakers and the media that she believes have led to the tough restructuring of DSME, which she said is killing the company and people relying on it. “I know that politicians push for restructuring and the media reports it loudly. Let them speak out if they want to do so.”

The owner of a laundry shop in the Okpo Central Market recounted a tale of even greater misery.

“Few people come to my shop. Many customers do not bring back their clothes,” said the owner with a gloomy face, asking not to be named. “All the merchants in the market have been living thanks to Daewoo, but our income has dropped significantly.”

A laundry store customer said his neighboring fruit store saw its sales only reach one third of that of last year, showing that traditional market merchants are among the biggest victims of the economic turmoil.

A group of DSME workers were having lunch at cafeterias outside the shipyard’s West Gate. One worker wearing a gray uniform complained that he can eat neither pork nor beef because he was having lunch with his Muslim and Hindu colleagues.

But, he refused to talk about the situation in his company. “I’m sorry, but I have nothing to tell you about that,” said the worker angrily.

Foreign supervisors from ship owners in Europe and their family members are also leaving Geoje because they have little work to do. According to data from the city of Geoje, the number of foreign residents dropped 136 to 14,704 in March from the previous month. Realtors are worrying that the lack of foreigners will hit the local real estate market hard because they lived downtown or the Jisepo Port where apartments and condos were built for them.

Geoje’s weather was cloudy with light rain, reflecting the gloomy circumstances the city is facing. Worse still, is that nobody knows when the sun will shine again. Policymakers in Seoul are deciding on how to conduct extensive restructuring, but ordinary people in this beautiful small city are feeling the stress and strain.
Source: Korea Times

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