Doosan Heavy Industries Considers Temporary Shutdown...Union Says "Management Responsible for Financial Difficulties, Unacceptable" (Comprehensive)

Jeong Yeonin President "100 Trillion Won Order Loss Due to Cancellation of Nuclear and Coal Power Projects... Passive Measures Have Reached Their Limit"
Union "Owner and Management Apology, Private Fund Contribution, and Introduction of Professional Management Are Priorities"

[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 layoffs after receiving voluntary retirement applications from employees. The labor union stated that the management difficulties are the responsibility of the management, not the workers, and that they cannot accept this.

According to Doosan Heavy Industries & Construction on the 11th, CEO Jeong Yeon-in sent a request for labor-management consultation for ‘management-related layoffs’ to the union the day before, saying, “Passive measures alone have reached their limit, and ultimately more effective emergency management measures are needed.”

In the request, CEO Jeong stated, “As an urgent measure to reduce fixed costs, we intend to implement layoffs due to business 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 and is expected to continue for some time.”

CEO Jeong cited the global power market slump and the cancellation of nuclear and coal-fired power projects as causes of the astronomical decrease in order volume leading to ‘emergency management.’ 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, and we are facing a life-or-death crisis due to debt repayment pressure.”

Doosan Heavy Industries & Construction plans to decide on specific layoff implementation measures through consultation with the union to minimize employee disadvantages and production disruptions. In particular, when selecting employees for layoffs, they intend to consider employees’ household circumstances and number of dependents as much as possible. According to the Labor Standards Act, if layoffs occur due to the employer’s fault, employees subject to layoffs must be paid at least 70% of their average wages.

On the other hand, the labor union has stated that it cannot accept the layoffs. The Doosan Heavy Industries branch under the Gyeongnam branch of the Korean Metal Workers’ Union sent an official letter to the company on the 11th expressing the branch’s position on the labor-management consultation request. The union said, “The company’s management crisis is entirely the responsibility of the owners and management, not the union members,” and pointed out, “If emergency management measures are to be taken, the owners and management must first apologize, and measures acceptable to employees must be presented.”

They continued, “The company’s so-called passive self-help efforts and unmentioned efforts are efforts made by employees enduring the pain of cutting into their own flesh,” and claimed, “The effective emergency management measures employees think of are for the owners to contribute their private assets, step down from management, and introduce professional managers to operate the company.”

Regarding the labor-management consultation request, they also added, “Since it concerns important matters related to wages and working conditions based on the collective agreement, it is appropriate to discuss it in a special collective bargaining session with representatives from both sides or in this year’s collective agreement negotiations.”

Earlier, Doosan Heavy Industries & Construction began workforce restructuring by accepting voluntary retirement applications from about 2,600 employees aged 45 and older (born in 1975 or earlier) from the 20th of last month to the 4th of this month. According to industry sources, Doosan Heavy Industries & Construction is currently conducting interviews with executives for those who applied for voluntary retirement.

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