Korean Yards in Recession

About thirteen executives of Daewoo Shipping & Marine Engineering (DSME) in South Korea have resigned following record Q2 losses. CEO Ko Jae-ho is among the resignations, but the company’s seven-member board was not affected.

DSME is the world’s second largest shipbuilder and reported a loss of more than $2 billion in Q2 2015. Its primary shareholder is Korea Development Bank, which is reevaluating its position. The shipbuilder intends to sell non-core assets to improve its shipbuilding competitiveness. 

Meanwhile, Hyundai Heavy Industries (HHI) and Samsung Heavy Industries (SHI) are also facing financial difficulties. Hyundai reported a $2.5 billion Q2 loss and Samsung reported a $1.2 billion loss. The Big Three South Korea yards plan to lay off about 3,000 employees this year.

The DSME board has accepted the voluntary resignations and is said to be advising others to resign. The company will release about 1,300 senior management staff before 2016.

HHI has already revamped its senior management team and the company has released about 31 percent of its senior staff in 2014 and this July it replaced 25 executives.

The yards mostly attribute losses to delays in the construction of oil and gas rigs.