Big Three Shipyards Cut 5,000 Jobs in First Half

Hyundai
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By MarEx 2016-08-15 13:20:39

South Korean media reported Sunday that Korea's Big Three shipbuilders have already shed 5,000 jobs so far this year, and will cut at least 1,000 more positions by the end of December (including voluntary retirements). 

Hyundai Heavy Industries, Samsung Heavy Industries  and Daewoo Shipbuilding & Marine Engineering have been restructuring their operations and cutting costs in order to reduce ongoing losses from the shipping downturn; their combined order backlog is now at the lowest level seen in 13 years. A combined 3,000 employees left the three yards in the first half of the year, and an additional 2,000 took advantage of an early retirement program at Hyundai Heavy. 

In Ulsan, the home of the largest shipyard in the world, Hyundai Ulsan, unemployment is up 1.2 percent year over year, reaching four percent. This would be an enviable number in many economies, but it is higher than the national average of 3.5 percent. 

The cuts have already helped the yards' bottom lines: aided by reductions in overhead, Hyundai Heavy made a profit of neary $600 million in the first half, and Samsung Heavy narrowed its losses to only $180 million. Troubled DSME, the most debt-burdened of the three, has not yet released its numbers for the first half. 

Employment at shipbuilding contractors has also taken a hit. Component maker ST – a provider of parts to bankrupt STX Offshore & Shipbuilding – filed for bankruptcy itself in June. Local media report that an additional 500 suppliers and contractors for STX have not received millions in payments for goods and services delivered, raising concerns of a wave of bankruptcies across the smaller firms that form the local supply chain for South Korea’s shipyards. 

Manufacturing employment is also down across the board in South Korea, where the automobilie industry is also experiencing a decline in ordering. Overall, manufacturers reduced head count by 65,000 employees, according to numbers recently released by Statistics Korea.