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Hyundai Heavy workers to go on strike, casting cloud over Daewoo Shipbuilding takeover

All News 19:10 February 20, 2019

SEOUL, Feb. 20 (Yonhap) -- Unionized workers at Hyundai Heavy Industries Co., the world's largest shipyard by sales, voted on Wednesday to strike in opposition to the planned takeover of Daewoo Shipbuilding & Marine Engineering Co., heralding a bumpy road for the mega deal between the two shipyards.

Earlier this week, workers at Daewoo Shipbuilding also OK'd a strike against the proposed deal, though its union did not say when they will walk out.

Hyundai Heavy's labor union said over half of those that took part in the vote approved the proposed strike.

Early this month, the state-run Korea Development Bank (KDB) said it would sign a formal deal with Hyundai Heavy early next month to sell its controlling stake in Daewoo Shipbuilding.

Hyundai Heavy workers to go on strike, casting cloud over Daewoo Shipbuilding takeover - 1

The KDB is Daewoo Shipbuilding's main creditor and has a 55.7 percent stake in the company.

The labor unions at Hyundai Heavy and Daewoo Shipbuilding fiercely oppose the deal, claiming it could lead to massive layoffs.

The passage of the vote by Hyundai union may result in workers from the two shipyards joining forces to thwart the purchase.

If the takeover goes ahead as planned, the South Korean shipbuilding industry is expected to be dominated by two major shipbuilders -- Hyundai Heavy and Samsung Heavy.

South Korean shipbuilders, once a cornerstone of the country's economic growth and job creation, have been reeling from mounting losses in the past few years, caused by an industrywide slump and a glut of vessels amid tough competition from Chinese rivals.

The government has been hoping that the local shipbuilding industry can be overhauled in such a way that two major players can dominate the sector to better compete against Chinese rivals and tackle sectoral ups and downs.

The combination of the two shipbuilders would create an unrivaled player in the sector. As of last year, Hyundai Heavy had an order backlog totaling 11.14 million compensated gross tons (CGTs), the largest in the sector. The comparable figure for Daewoo Shipbuilding was 5.84 million CGTs.

Their combined order backlog accounts for 21.2 percent of the global total.

Besides the vote to go on strike, Hyundai Heavy's union said 50.9 percent of workers approved last year's collective bargaining agreement that outlines a 45,000-won (US$40) rise in basic pay per month and hefty bonuses. On average, each worker is expected to receive 8.75 million won from the company.


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