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Staff cuts are not option for restructuring: DSME

Daewoo Shipbuilding & Marine Engineering said Tuesday that its restructuring will focus on selling noncore properties and stock assets, dismissing news reports of workforce reduction.

Rumors about DSME’s possible job cuts emerged after company CEO Jung Sung-leep announced over the weekend that the shipbuilder would launch a restructuring program aimed at cutting costs, including relocating manpower and job rotation.

DSME CEO Jung Sung-leep     Yonhap
DSME CEO Jung Sung-leep     Yonhap

The CEO fanned speculation of massive layoffs when he said at the company’s workshop that “a full-fledged restructuring is inevitable for higher work efficiency, while keeping job instability under control.”

The company has been suffering a financial squeeze as the protracted global economic slowdown hit the shipbuilding industry.

It is expected to post an operating loss of up to 3 trillion won in the second quarter, according to analysts.

The shipbuilder has also become the target of public criticism after it was found to have concealed a cumulative loss of some 2 trillion won ($1.72 billion) from its balance sheet last year.

“The Korea Development Bank’s inspection over the alleged accounting fraud is underway and we have yet to announce our second quarter earnings, so nothing has been discussed about slashing the workforce,” a company official said.

The state-run bank, DSME’s largest shareholder with a 31.46 percent stake, decided on Sunday to launch a large-scale debt restructuring process to normalize the company without resorting to extreme measures such as a workout program.

DSME’s largest creditor Eximbank Korea also vowed to support KDB in securing liquidity for the ailing shipbuilder.

By Suk Ji-hyun (monicasuk@heraldcorp.com)
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