Hyundai Heavy cuts management jobs, may close dry docks

MAY 9, 2016 — Shipbuilder Hyundai Heavy Industries (HHI) says it will "spur the efforts to enhance its competitiveness by implementing intense management reform plans including the voluntary retirement of manager-level employees."

An HHI officer said, "Along with the 25 percent cut of senior managers last month, the voluntary retirement plan we announced today is essential for our management rationalization measures in preparation for rapidly decreasing orders."

In the face of shrinking shipbuilding work at its shipyards, says HHI, management has proposed to the union that a management-labor joint emergency committee be set up to improve the operation of human resource.

Last week, HHI also implemented an organizational reshuffle that slimmed down the number of departments from 391 to 305 by 22%.

HHI has also started reviewing the efficiency of dry dock operations as its braces for a prolonged period of reduced orders. It has set up a plan to gradually close docks that operate at lower efficiency levels should order levels remain low.

HHI's management rationalization plans also include the sell-off of non-core assets, such as recreational facilities.

HHI says it also continues to make efforts to lower costs through the effective assignment of employees' working hours and holidays.

"With new orders drastically shrinking, we are now making our utmost efforts to steer our company toward new reform measures that will address the current crisis," said the officer. "However, HHI's business portfolio is well diversified with various businesses such as engine and machinery, electro electric systems and construction equipment. As our shipbuilding and offshore plant businesses accounts for less than 50 percent of our entire revenue, HHI is less exposed to risks related to the shipbuilding business. Moreover, since we have a stronger financial soundness compared to our shipbuilding competitors, we hope that the government and creditor banks will review our management rationalization plans from a more objective perspective."

Want more? Subscribe now!

News from NASDAQ