DSME to speed up job cut plan

Daewoo Shipbuilding and Marine Engineering will speed up its job cut plan as part of its restructuring scheme, the company said Wednesday, amid growing concerns over the company’s fate.

The ailing shipbuilder said it is pushing for a faster self-rescue plan to cut some 3,000 jobs, thereby, keeping its total staff number under 10,000 by the end of this year. As of June, about 127,000 workers are employed, according to DSME. 

The company initially sought to gradually cut the jobs by 2020 but the company has struggled from continuous liquidity woes and a drop in orders. It added that it would also consider additionally selling its facilities to secure cash.

“The plan to sell the three floating docks will be finalized based on the future shipbuilding market conditions,” said the company.

DMSE already sold two out of its five floating docks earlier this year.

While speeding up its restructuring plan, the ailing company objected to the tentative result of consulting firm Mckinsey Korea’s assessment on the country’s top three shipbuilders, claiming that the assessment was made based on the wrong premise.

Mckinsey Korea is currently wrapping up its assessment which will be used as the government’s guideline for revamping the struggling shipbuilding industry later this month. The assessment was commissioned by the shipyards.

While the official result has not been released yet, the preliminary assessment reportedly said that DSME is unable to survive on its own due to the lack of the 3.3 trillion won ($2.9 billion) needed by 2020. The figure was calculated based on the sales and operating profits from 2011 to 2015, the shipbuilder said.

The assessment reportedly added that DMSE will likely be the weakest shipbuilder to survive among the three as it does not have a parent group while having a financial system vulnerable to risk.

The shipbuilder objected to the preliminary assessment, claiming that it could not accept the report as it “ignored the potentials of the world’s top shipbuilding industry of Korea.”

“Mckinsey’s report presumed that the past five-year performance will repeat in the next five years and that the business will continuously be scaled down amid the worsening market conditions. The report, which is based on unreasonable assumptions, did not ever count the company’s self-rescue efforts or the business strategy to cut the marine plant business,” the company said. 

By Lee Hyun-jeong  (rene@heraldcorp.com)