South Korea’s top three shipbuilders are expected to log their worst ever combined operating loss this year ― over 7 trillion won ($6.2 billion) ― due to mounting losses from offshore projects and falling global demand for ships, according to industry data Sunday.

Industry data forecast a 7.4 trillion won deficit from the three leading firms ― Daewoo Shipbuilding and Marine Engineering, Hyundai Heavy Industries and Samsung Heavy Industries ― by predicting an operating loss of 3 trillion won in the second half of 2015.

If the estimate is right, it will be the largest annual deficit in the history of Korea’s shipbuilding industry, which accounted for 6.9 percent of the country’s exports in 2014.

The big three firms posted 4.7 trillion won in losses during the first half, as their offshore oil rig orders faced cancellations or postponements as the sharp fall in crude prices hampered oil companies from carrying out their offshore projects.

The gloomy outlook mainly stems from the country’s second-largest shipyard Daewoo Shipbuilding’s 2015 deficit, which is expected to account for over 71 percent, or 5.3 trillion won, of the combined losses of the three shipyards.

“The shipbuilders are inevitably facing the largest losses in their history due to DSME’s snowballing deficits,” an industry source said.

To make the situation worse, Daewoo Shipbuilding suffers from a conflict between employees and management amid deteriorating financial conditions.

On Oct. 22, the country’s financial authority and DSME’s creditors said they would put off their rescue plan until the firm’s unionized workers signed a consent form on intensive self-help measures including a wage freeze and a moratorium on strike activities until the company’s business is normalized.

Hyundai Heavy Industries, the nation’s top shipbuilder, is expected to post its second consecutive yearly loss for the first time with shortfalls of some 100 billion won and 150 billion won forecast for the third and fourth quarters, respectively.

The firm’s unionized workers also have been in conflict with management, demanding higher wages, better working conditions and other benefits, with strikes in August and September.

Experts expect that Samsung Heavy Industries will log an operating loss of 1.5 trillion won this year, surpassing the firm’s own outlook of 1.37 trillion won.

In a bid to improve its financial health, Samsung went into a retrenchment by selling off an office in Suwon, Gyeonggi Province, and reducing the number of executive-level officials.

Despite suffering from their worst-ever combined deficit, the country’s leading shipbuilding companies have the five largest order backlogs.

Daewoo Shipbuilding and Marine Engineering’s Okpo shipyard had the world’s largest backlog with 131 ships waiting to be built as of the end of September, according to Clarkson Research Services, a U.K. maritime market researcher.

The shipyard had the largest backlog of ships in November 2014 and has remained in the top spot since.

Hyundai Heavy Industries’ shipyard in Ulsan ranked second, followed by Samsung Heavy Industries’ shipyard in Geoje.

Chinese shipbuilders placed between sixth and ninth, but were closing in on South Korean firms.

By Park Han-na (hnpark@heraldcorp.com)