Hyundai Heavy Industries (HHI) shareholders decided to vote in favour of the merger with Daewoo Shipbuilding & Marine Engineering (DSME), despite strong workforce opposition this week. The merger will create a Korean megayard, which will be responsible for 21.2% of the global orderbook.
Workers at both companies strongly oppose to the merger, as they worry about wide job losses. Namely, about 30,000 workers have been laid off from both yards over the last four years.
In fact, the shareholder vote took place under heavy police protection, as violent scenes were occurring all week between workers and top management at HHI’s headquarters in Ulsan.
In order for the merger to be completed it must pass anti-monopoly reviews at Korea and worldwide, with China and the EU raising concerns.
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In January 2019, Hyundai Heavy Industries, the biggest shipbuilding group globally, signed a conditional deal with Korea Development Bank (KDB), the biggest shareholder of DSME, on buying the company. Yet, from the beginning, the plans rose a wave of protests from the workers of both companies, who demanded job guarantees in light of potential layoffs.
HHI’s split up is the first step to be taken, placing it closer to the merger with DSME. In addition, in March the two shipbuilders signed the deal of about US$1.6 billion with KDB, as the Korea Development Bank is the largest stakeholder of Daewoo Shipbuilding, as it holds a 55.7% stake of the company.
The deal states that the shipbuilder is to be divided into a subholding company and a reorganized Hyundai Heavy Industries, which will carry out its shipbuilding and offshore businesses.
This merger has faced many strikes, as the union in opposed to this proposal, supporting that the split forces the newly born Hyundai Heavy to inherit massive debts, which will lead to job cuts.
Since May 16, the shipyard’s unionized workers have been launching partial and full-scale strikes.
