Doosan Heavy Industries, Idle Workforce to Take Leave as Early as the 21st... "Decision to Be Made After Reporting Voluntary Retirement Results"

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] Doosan Heavy Industries & Construction, struggling with management difficulties and focusing on self-rescue plans, will begin temporary layoffs for some personnel starting from the 21st of this month. Since the sale of assets and affiliate shares will take considerable time, the company appears to be tightening its grip on workforce restructuring.

According to the Metal Workers' Union Gyeongnam Branch Doosan Heavy Industries Chapter (the union) and Doosan Heavy Industries on the 15th, Doosan Heavy Industries plans to start temporary layoffs for idle personnel from the 21st. A union official said, "We heard today from the company that, depending on the results of voluntary retirement applications, an order to implement temporary layoffs for idle personnel as of the 21st will be issued on the 18th."

In response, a Doosan Heavy Industries official explained, "It is true that we are considering some temporary layoffs, but the specific implementation will be decided after reviewing the results of the voluntary retirement applications."

Currently, a total of 261 technical staff members born in 1960 or later, who are under the wage peak system, are mentioned as temporary layoff candidates. However, Doosan Heavy Industries states that it does not distinguish between technical and office staff among those subject to temporary layoffs.

The temporary layoff period for these employees is known to be from the 21st of this month until December 31 of this year. Doosan Heavy Industries plans to pay 70% of the average wage to those subject to temporary layoffs. However, both inside and outside the company, considering the on-site operational status and the age of the temporary layoff candidates, the possibility of reinstatement is considered low. Therefore, it is expected that they will proceed to retirement once the temporary layoff period ends.

Earlier, from February to March this year, Doosan Heavy Industries accepted voluntary retirement applications from about 2,600 employees born in 1975 or earlier (aged 45 or older). About 650 employees who applied for voluntary retirement left the company. Doosan Heavy Industries judged that additional workforce restructuring is necessary to reduce fixed costs and has been accepting a second round of voluntary retirement applications from the 11th to the 15th. The company estimates that to save about 150 billion to 200 billion KRW through workforce restructuring, a total of 1,200 to 1,500 employees need to retire. Once the voluntary retirement application period closes, the list of temporary layoff candidates is also expected to be finalized.

Meanwhile, conflicts between labor and management over workforce reduction are intensifying. This is because the self-rescue plan was prepared under pressure from creditors without sufficient consultation with the union. On the 13th, the union formed the "Doosan Group Restructuring Prevention Struggle Committee" together with unions from Doosan Group affiliates such as Doosan Motrol Chapter, Doosan Mecatec Chapter, and Doosan Infracore Chapter (Gunsan branch). The union also held a press conference in front of Doosan Tower in Seoul on the 14th, stating, "We will jointly respond to the implementation of self-rescue plans demanding worker sacrifices and hold Doosan Group management accountable."

Upon hearing the news about the temporary layoffs, the union expressed the position that the schedule for the next wage and collective bargaining agreement (wage and labor agreement) plenary session should be moved up. Doosan Heavy Industries, which began collective bargaining at the end of last month with an introductory meeting, has been holding plenary sessions every Tuesday and Thursday. The union requested the company to hold a plenary session on Monday, the 18th.

Separately from workforce restructuring, Doosan Group is proceeding with procedures to sell assets such as Doosan Tower, Doosan Solus shares, and the golf course Club Mow CC, a subsidiary of Doosan Heavy Industries, to secure 3 trillion KRW in liquidity as announced in its self-rescue plan. In the industry, Doosan Co., Ltd.'s prime business units such as the Industrial Vehicle BG (Business Group), Motrol BG, and Electronics BG are also mentioned as potential sale targets. However, due to the impact of the COVID-19 pandemic, the investment market has tightened, making sales difficult.

Meanwhile, Doosan Heavy Industries announced its first-quarter earnings by submitting its quarterly report on the same day. Doosan Co., Ltd. announced its consolidated first-quarter results the day before but unusually did not disclose Doosan Heavy Industries' individual results. This is analyzed to be due to Doosan Heavy Industries' massive deficit. Based on the results of Doosan Co., Ltd. and its affiliates such as Doosan Infracore and Doosan Bobcat, Doosan Heavy Industries' estimated first-quarter standalone performance is analyzed to be sales of 1.7 to 1.8 trillion KRW with an operating loss in the 100 billion KRW range. It appears that non-operating losses were significant in the first quarter. An industry insider said, "Restructuring costs were reflected as operating losses, and there seems to have been a large-scale valuation loss related to Doosan Bobcat shares."

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