Despite major new orders in the third quarter, Hyundai Heavy Industries faces a severe shortfall in sales, said CEO Kwon Oh-gap in testimony before the National Assembly Committee on Legislation on Thursday. The firm's order backlog is down to 75 vessels – about eight months' worth of work – and it has only taken in 30 orders for the year to date, a fraction of the 100 contracts that it expected. The numbers include HHI's recent agreement for 10 very large ore carriers for Polaris, its largest order in five years.
Kwon said that a restart for HHI's shuttered Gunsan Shipyard is "wishful thinking" given present order volumes. "If I restart [it], I think I will lose more than [$90 million] . . . The suspension of the Gunsan shipyard is an inevitable choice," he said.
Kwon emphasized that he has trimmed headcount down to the bare minimum and is in his fourth year without pay himself. He appealed for policy support, but he appeared to criticize the Korean government's heavy investment in competitor DSME, which is now an owned subsidiary of the state-run Korea Development Bank.
The downturn is taking its toll on Korean shipyard employment. According to the Korea Offshore and Shipbuilding Association, the nation's yards and suppliers slashed 35,000 jobs from their payrolls in the first half of 2017, in addition to the 37,000 positions lost in 2016.
HHI has attempted to fend off the impact of layoffs by using furloughs instead. HHI's three shipyards have all asked employees to rotate out for leaves of absence due to the falling workload, reports Korea Herald. The leaves are expected to continue through June of next year. "The taking of leave will be restricted to certain areas of shipbuilding operations where there is a temporary excess of people," said a Hyundai Mipo dockyard official.