Hyundai Heavy: Tax Evasion Fine, New Labor Demands
[Brief] Hyundai Heavy Industries, already under financial pressure from a severe downturn in shipbuilding, faces a fine of $100 million for tax evasion.
The yard confirmed the charge in a statement to the Korea Herald, and it has reportedly appealed the National Tax Service's decision on grounds that it cannot afford to pay, given significant headwinds in a poor business environment.
Hyundai, the world's largest yard, booked just $400 million in orders in the first quarter of 2016, down sharply from the same period last year; it posted an operating loss of over one billion dollars in 2015 (on top of a $2 billion loss the year before). Additionally, last week it announced that it faces a demand from its unionized workforce for a six percent raise, plus an increase in paid vacation and a doubling of an incentive bonus – a proposal which would add $350 million annually to costs.
“Such unreasonable demands won't help the company's dreadful situation,” an unnamed HHI official told the Herald. He said that the union had looked to the wage levels of their peers at carmaker Hyundai Motors for comparison, but that the two firms were in different situations. "I understand HHI and Hyundai Motor are all from the pan-Hyundai incubator. But the two companies are separate now. The situation has changed."