Doosan Heavy Industries Facing Management Crisis from Nuclear Phase-Out and Coal Power Phase-Out... Signs of Labor-Management Conflict Emerging

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] As Doosan Heavy Industries faces management difficulties due to policies of nuclear phase-out and coal-fired power plant phase-out, labor-management conflicts appear to be deepening.

According to industry sources on the 13th, Doosan Heavy Industries recently sent a proposal for a temporary shutdown to the Doosan Heavy Industries branch under the Gyeongnam branch of the Korean Metal Workers' Union due to worsening management conditions, but the union rejected it. Amid a global power generation market downturn, coal-fired power projects have been canceled, and the government has rapidly implemented nuclear phase-out policies, causing management difficulties and making some temporary shutdowns unavoidable. Prior to this, from last month to the 4th of this month, Doosan Heavy Industries accepted applications for voluntary retirement from employees born in 1975 or earlier. According to the union, about 500 employees have applied for voluntary retirement so far.

Doosan Heavy Industries' management situation continues to deteriorate. According to the electronic disclosure system, except for 2017, Doosan Heavy Industries has recorded consistent net losses from 2015 through last year on its individual financial statements. In particular, net losses of 725.1 billion KRW and 495.2 billion KRW were recorded in 2018 and last year, respectively. Sales decreased from 4.1017 trillion KRW in 2018 to 3.7086 trillion KRW last year. Operating profit also sharply declined from 184.6 billion KRW to 87.7 billion KRW during the same period. Furthermore, nuclear and coal-fired power projects included in the 7th Basic Plan for Electricity Supply and Demand were canceled, resulting in the loss of nearly 10 trillion KRW in order volume. Consequently, in 2024, Doosan Heavy Industries will see no new domestic nuclear power orders, with only maintenance sales remaining. The worsening management has also affected the company's credit rating. In May last year, Korea Ratings downgraded Doosan Heavy Industries' unsecured bond credit rating from 'BBB+/under review for downgrade' to 'BBB/negative.'

As management difficulties persist, cracks are appearing in the labor-management relations of Doosan Heavy Industries, which had cooperatively conducted collective agreements and wage negotiations for over a decade. The union opposes the temporary shutdown, stating that "the management must take responsibility first." Recently, the union stated, "If emergency management measures are to be taken, the owners and management must apologize first, and measures acceptable to employees must be presented," adding that "owners should contribute personal funds, step down from management, and bring in professional managers to operate the company." The union also criticized the unilateral notification, with one union official expressing regret, saying, "Voluntary retirement or temporary shutdown could have been decided after consultation with the union during the wage and collective agreement negotiations scheduled for May this year, but the company unilaterally notified the union."

Industry insiders speculate that, considering Doosan Heavy Industries' management situation and legal aspects, a temporary shutdown may proceed soon. Doosan Heavy Industries initially stated that when selecting employees for temporary shutdown, they will thoroughly consider household circumstances and number of dependents, and pay at least 70% of the average wage according to the Labor Standards Act. Legally, temporary shutdowns can proceed without union agreement. Meanwhile, rumors about specific temporary shutdown dates, voluntary retirement plans, and additional restructuring have been circulating among Doosan Heavy Industries' on-site workers and on the anonymous workplace forum Blind app, creating an unsettled atmosphere. Doosan Heavy Industries responded by saying, "We do not know where these rumors started, but they are baseless."

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