South Korean Daewoo shipbuilding draws up self-rescue package

Loss-making Daewoo Shipbuilding & Marine Engineering Co. has mapped out self-rescue measures worth over 3 trillion won (US$2.52 billion) in total which include an employee wage cut and asset sales, industry sources said Tuesday.

    Last year the shipyard drew up a 1.85 trillion won self-rehabilitation plan in return for 4 trillion won in financial aid. Recently, the shipyard presented an additional step estimated to save 1.5 trillion won, according to the sources. The latest measures include a cut of up to 20 % in wages to its employees and a further reduction in the number of executives.

    Daewoo Shipbuilding plans to advance the timetable for workforce reduction. Earlier the company said it would slash its workforce by 2,300 by 2019. Last month, the shipyard named a preferred bidder to sell its headquarters building in downtown Seoul for 180 billion won.

    The sources also said the shipyard is mulling over an option to sell off more affiliates. Previously, Daewoo Shipbuilding planned to put non-core assets up for sale. Among others, its defense-related unit will be spun off, it said earlier.

    Its creditors, led by state-run Korea Development Bank, will review the additional self-rescue plans and decide whether to approve them by the end of next month. The second batch of self-rehabilitation steps comes as a drop in new orders is expected to continue down the road.  Other local rivals, such as Hyundai Heavy Industries Co., promised to implement stronger self-rescue schemes to stay afloat. 

    Hyundai Heavy is moving to cut 10 % of its workforce and sell non-core assets, and Samsung Heavy Industries Co. also submitted its own self-rescue plan to its creditors.

    The country's top three shipyards suffered a combined operating loss of 8.5 trillion won last year due largely to increased costs stemming from a delay in the construction of offshore facilities and an industrywide slump. But a huge chunk of the loss, some 5.5 trillion won, came from Daewoo Shipbuilding.