As part of the continuing downward trend in South Korean shipbuilding industry, Hyundai Heavy Industries, the world’s largest shipbuilder, announced that it has cut its workforce in the offshore sector by one third, claiming lack of orders.
These news came about a month before the shipbuilder is due to suspend work at its offshore facilities shipyard, as announced last week. The shipbuilder said it will have no offshore project after the last part of an offshore module leaves the Ulsan shipyard in late July.
The company has lost out to Chinese and Singaporean rivals in offshore projects in recent years, as the labor costs of Chinese and Singaporean shipbuilders are roughly a third of Hyundai Heavy’s. The suspension, scheduled for August, is the first in 35 years, and will bring a large number of idle workforce, Yonhap news agency reported.
Hyundai Heavy employs 15,795 people, 2,300 of whom are assigned to the offshore and engineering division.
The shipbuilder said it has created a task force with its labor union to discuss what to do about the idle workers. The union demands paid leave for workers in rotation, but the company is considering various options and no decision has been made yet, according to a company spokesman as cited by Yonhap.
Around 4,000 employees left Hyundai Heavy under voluntary retirement programs in 2015-2017.
Meanwhile, major South Korean shipbuilder Samsung Heavy Industries has also announced earlier this year that it would cut the number of its executives, due to declining orders.
Meanwhile, Daewoo Shipbuilding Marine & Engineering (DSME), the world’s second-largest shipbuilder, seems to lead its two rivals in terms of quality and the ratio of the orders received, as it has $22.4 billion worth of orders in its order backlog as of the end of May, which would keep its shipyard busy until the third quarter of 2020.
In the last decade, South Korean shipbuilding industry is hit by a decrease in new orders and an oversupply of vessels, as a result from global economic downturn in 2008 and Chinese competition.