[Deputy Manager Column] The Paradox of the First COVID Support by a Major Corporation, the 'Eldest Brother' of the Nuclear Power Industry

[Asia Economy Reporter Jo Gang-wook] Doosan Heavy Industries & Construction is a key company that transformed Doosan Group from a consumer goods-focused business into a global industrial goods-centered enterprise. Just over a decade ago, it ranked within the top 50 in sales among large corporations, but now it has been listed in the dishonorable roster as the first large corporation to receive support due to the COVID-19 pandemic. Doosan Heavy Industries recorded a net loss exceeding 500 billion KRW last year. Of the 4.9 trillion KRW in bank borrowings, more than 4 trillion KRW is due this year.

The downfall of Doosan Heavy Industries, once the "big brother" of the nuclear power industry, began with the government's push for eco-friendly energy transition policies. The core profit source, the nuclear power business, collapsed, and to make matters worse, global orders continued to decline. Additionally, a large-scale failed support for its subsidiary Doosan Construction further destabilized its financial structure.

Recently, state-run banks, Korea Development Bank and Export-Import Bank of Korea, have stepped in with an emergency capital injection of around 1 trillion KRW into Doosan Heavy Industries. Initially, creditors demanded a stringent restructuring plan including the sale of affiliates at the Doosan Group level. Even with the emergency support of 1 trillion KRW, it is far from sufficient to normalize Doosan Heavy Industries' management situation. However, immediately after the government’s meeting on strengthening industrial competitiveness, the emergency financial support was announced, citing the inevitability of policy support decisions.

The government hopes for participation from commercial banks in supporting Doosan Heavy Industries. However, it remains uncertain whether commercial banks will join. The abrupt "nuclear phase-out" policy, pushed forward without sufficient discussion among stakeholders and rational future forecasting, has already collapsed the entire nuclear power ecosystem, not only affecting Doosan Heavy Industries but also its partner companies. Although the government has pledged to strengthen activities for exporting Korean-style nuclear power plants, industry insiders express skepticism about the expectation that nuclear technology, which is being effectively abandoned domestically, will be utilized in other countries.

Lee Dong-gull, chairman of Korea Development Bank, stated, "If Doosan Heavy Industries' management normalization fails, we will hold the major shareholders fully accountable." In that case, I want to ask what responsibility the government will take for this ironic situation where it has stepped in to provide emergency funds for the revival of a company inevitably damaged by government policy.

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