Illegal Strike by Hacheong Branch Enters 4th Week... Daewoo Shipbuilding & Marine Engineering Declares Emergency Management

"Prolonged Strike Dashes Hopes for Business Normalization"

[Image source=Yonhap News]

[Asia Economy Reporter Jeong Dong-hoon] "With the recent recovery in orders, we had hoped to resolve the long-standing issue of production shortages and restore normal management, but the illegal strike by the subcontractors' union has prolonged, shaking these expectations to the core."

Daewoo Shipbuilding & Marine Engineering (DSME) President Park Doo-sun stated this in an emergency management declaration on the morning of the 6th. President Park announced the emergency management to overcome the current crisis and achieve a new leap forward, urging the participation of all employees, saying, "All executives, including myself, will operate a 24-hour emergency system to quickly resolve the current crisis and lead the company to sustainable growth."

The subcontractors' union of the shipbuilding industry, composed of workers from subcontracting companies, known as the Federation of Korean Metalworkers' Unions (FKMU) Geoje-Tongyeong-Goseong Shipbuilding Subcontractors' Branch, has been striking since the 2nd of last month, demanding a 30% wage increase and occupying the ships under construction. The unprecedented delay in launching due to the unauthorized dock occupation by the subcontractors' union has entered its fourth week. The company explained, "Due to the delay in processes, the production volume of preceding and subsequent processes has been drastically reduced, leading to concerns about the company's survival."

DSME's emergency management declaration is a measure to overcome the crisis triggered by recent large-scale losses, ship contract cancellations due to the Russia-Ukraine war, raw material price increases, severe manpower shortages caused by large-scale workforce departures, and the recent illegal occupation by the subcontractors' union amid challenging internal and external environments.

The company had previously recorded large-scale losses due to a lack of capabilities in the offshore plant business and failure to respond swiftly to environmental changes such as low oil prices. It has steadily implemented restructuring with the help of major shareholders including the government and the Korea Development Bank, as well as shared sacrifices by executives and employees.

Although the order market recently revived, signaling an end to the recession, rapid raw material price increases and the Russia-Ukraine conflict caused consecutive large-scale losses last year and in the first quarter of this year. By the end of the first quarter, the debt ratio rose to 547%. Accordingly, DSME was preparing to establish future strategies based on consulting from external professional institutions to lay the foundation for a new leap forward.

To overcome the crisis, DSME held an executive workshop on the 21st of last month, where all executives resolved to participate in emergency management. The company is entering a company-wide emergency management system for recovery and crisis overcoming, including the declaration of emergency management participation by the Field Managers' Association, composed of workplace supervisors and team leaders at production sites.

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