Hyundai Heavy seeking to spin off biz unit, labor union in opposition

Embattled Hyundai Heavy Industries is seeking to spin off a business unit, while the labor union strongly opposes the move, claiming that it would lead to a massive number of non-regular workers in the end, industry sources said Tuesday.

According to the sources, Hyundai Heavy said in its emailed statement that the spin-off of its facility-assistance business division is one of its key promises to its creditors, which demand a tougher restructuring program, pledging to push ahead with related procedures.

But the shipbuilder’s labor union claimed that the spin-off of the division with a workforce of 994 will eventually make the workers non-regular ones.

The union’s representatives decided to propose a general strike last week, denouncing the shipbuilder’s latest self-rescue plan.

Earlier, Hyundai Heavy mapped out 3.5 trillion won ($3.02 billion) worth of self-rehabilitation measures, including asset sales and a cut in the workforce, in order to stay afloat amid a drop in new orders.

Under the shipbuilder’s self-rescue plans, temporarily approved by the financial authorities and its creditors, led by KEB-Hana Bank, it will reduce its stock holdings, sell noncore assets and reduce its workforce, which will lower its debt-to-equity ratio below 100 percent by 2018.

The shipbuilder swung to the black in the first quarter for the first time in 10 quarters with an operating income of 325 billion won, aided by its stronger restructuring efforts.

Meanwhile, unionized workers at Daewoo Shipbuilding & Marine Engineering, another struggling shipyard, voted for a strike last week.

The loss-making company has proposed self-rescue measures worth 5.3 trillion won in total that include an employee wage cut and asset sales. Last year the shipyard drew up a 1.85 trillion-won self-rehabilitation plan in return for 4 trillion won in financial aid. Recently, the shipyard presented an additional step estimated to save 2 trillion won.

Samsung Heavy Industries also has crafted self-rehabilitation measures, worth 1.5 trillion won, for their creditors. The scheme calls for the sale of noncore assets, such as buildings and stocks, and laying off employees.

The country’s top three shipyards suffered a combined operating loss of 8.5 trillion won last year due largely to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump.
Source: Yonhap