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Hyundai Heavy Industries Faces Union Trouble

HHI
HHI

By MarEx 2018-01-09 09:51:55

Workers at South Korean shipbuilder Hyundai Heavy Industries have voted against a tentative wage deal.

Yonhap news agency reports that the union said 56.1 percent of its 8,804 members who cast ballots voted against the agreement signed by the union and the company in December. The union said some voters were unhappy about the performance-related bonuses proposed. Wage negotiations are now expected to resume. 

Last week, Hyundai Heavy President and CEO Kang Hwan-goo warned the company was in crisis as a result of its declining order book. “This year, we could face a grave situation that we have never gone through before,” he said. 

The company, the world's second-largest shipbuilder in terms of order book, aims to achieve about 7.99 trillion won ($7.52 billion) in sales this year. The company said in a regulatory filing that this target compared to 2017 sales of about 10 trillion won ($9.34 billion).

In December, the company announced plans to list its refining subsidiary Hyundai Oilbank in an IPO to raise about $1.2. The group also plans to issue 12.5 million rights shares, worth about $1.21 billion, by March. 

The two moves are designed to boost finances after switching to a holding company structure earlier last year. The group's holding company is Hyundai Robotics which has a 91.1 percent stake in Hyundai Oilbank. Hyundai Robotics has 27.8 percent interest in Hyundai Heavy Industries, which holds an 80.5 percent stake in Hyundai Samho Heavy Industries. Hyundai Samho Heavy has a 42.3 percent share in Hyundai Mipo Dockyard, which holds a 4.8 percent share in Hyundai Heavy Industries.

Earlier last year, Hyundai Heavy Industries divested non-core businesses and split into four independent entities: shipbuilding, electronics, construction equipment and robotics.

South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis, forcing the “Big Three” shipbuilders, Hyundai Heavy Industries, DSME and Samsung Heavy Industries, to cut jobs and sell assets.