Doosan Heavy Industries Facing 'Management Crisis', Considering Layoffs Following Voluntary Retirement Applications

"Accelerated Management Difficulties Due to Nuclear Phase-Out Policy and Cancellation of Coal Power Projects Amid Global Power Market Slump"

[Asia Economy Reporter Ki-min Lee] Doosan Heavy Industries & Construction, which has been experiencing management difficulties due to the government's nuclear phase-out policy, cancellation of coal-fired power projects, and a global power generation market slump, is considering partial temporary shutdowns after receiving voluntary retirement applications from employees.

On the 10th, Jeong Yeon-in, CEO of Doosan Heavy Industries & Construction, stated, "We have reached the limit of passive measures, and ultimately, more effective emergency management measures are necessary," and sent a request for labor-management consultation regarding a "management-related temporary shutdown" to the labor union.

In the request, CEO Jeong said, "As an urgent measure to reduce fixed costs, we intend to implement a temporary shutdown due to management reasons based on Article 46 of the Labor Standards Act and Article 37 of the collective agreement," adding, "Due to a continuous decrease in order volume over the past three years, the entire Changwon plant is currently under low load, and in 2021, the load rate sharply dropped to a critical level, which is expected to continue for a certain period."

CEO Jeong cited the global power generation market slump and the cancellation of nuclear and coal-fired power projects as causes of the astronomical decrease in order volume, leading to the "emergency management" situation. He explained, "The cancellation of nuclear and coal-fired power projects included in the 7th Basic Plan for Electricity Supply and Demand caused about 10 trillion KRW worth of orders to evaporate, accelerating the management crisis. Compared to the peak in 2012, current sales have fallen below 50%, operating profit is only about 17%, and net losses over the past five years have exceeded 1 trillion KRW, making it impossible to cover even financial costs through operating activities alone." He added, "To make matters worse, a vicious cycle of credit rating downgrades continues, leading to an existential crisis due to debt repayment pressure."

Doosan Heavy Industries & Construction plans to decide on specific temporary shutdown measures through consultation with the labor union to minimize disadvantages to employees and production disruptions. In particular, when selecting employees subject to the shutdown, the company intends to consider employees' household financial situations and the number of dependents as much as possible. According to the Labor Standards Act, when a temporary shutdown occurs due to reasons attributable to the employer, employees subject to the shutdown must be paid at least 70% of their average wages.

Previously, from the 20th of last month to the 4th of this month, Doosan Heavy Industries & Construction received voluntary retirement applications from about 2,600 employees aged 45 and older (born in 1975 or earlier) as part of workforce restructuring. According to industry sources, Doosan Heavy Industries & Construction is currently conducting interviews between executives and the voluntary retirement applicants.

This content was produced with the assistance of AI translation services.