“Mass Layoff” at Major Korean Shipbuilders
According to reports, the country's major shipyards are struggling because of failing offshore rigs. Amidst gradually declining finances, they have resorted to downsizing and redundancy in an attempt to bring back huge losses. And it looks like up to 2,000 workers will lose their job.
"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", says Hong Sung-in of Korea Institute for Industrial Economics and Trade.
The past year hasn't been good to the Big Three of shipbuilding in South Korea, considering that their plan to dig into deeper seas has failed mainly due to the lack of technological know-how. This has resulted to a whopping 8.0 trillion-won ($6.78 billion) worth of losses. Now that they're losing money and don't need a bigger workforce, which they increased by over 10% in 2010, the only way to make up is to let go of some employees.
Hyundai Heavy Industries, which has reported a loss of over 3.0 trillion won ($2.54 billion) in 2014, has already dismissed 25 managers in the same year to fill its management staff with younger candidates. Early this year, it has laid off 1,500 employees.
Samsung Heavy Industries, on the other hand, hasn't resorted to a layoff yet. Its senior managers are still discussing ways to deal with the financial crisis. While laying off employees isn't part of the agenda, they're considering it because of the combined losses that have reached 2.0 trillion won (around $1.70 billion).
Daewoo Shipbuilding and Marine Engineering has announced that it will let go of an estimated 1,300 or more senior staff and department heads. It will finalize performance evaluations this month in order to determine whom to fire - particularly those who haven't done well - and whom to offer retirement packages. Another plan is to lessen its 55 senior executives to less than 40.
According to industry experts, shipbuilders need to streamline a lot of aspects, including their workforce. But while they're considering or have already considered "mass layoff", they should keep those involved with research and development to avoid the same mistake, which have brought them down in the first place.
