By Lee Hyo-sik
Hyundai Heavy Industries (HHI) is asking 5,000 workers to take unpaid leave beginning in September as it doesn't have enough ships to build until June of next year.
Korea's largest shipbuilder said Thursday it asked union leaders to help persuade 30 percent of its 17,000-strong workforce to take time off from work without pay, stressing it must reduce labor costs to stay afloat amid the prolonged industry slump.
The company said it cannot force employees to take leave, meaning each individual has to agree to it. If the number does not reach 5,000, management plans to suspend some production lines and subject workers to training.
As of June, HHI's backlog of orders stood at only 85, down from 110 the previous year. In the first six months of this year, the shipbuilder secured orders for only 17 ships. It hasn't won a single order for offshore plants since November 2014.
The ongoing shortage of work will likely continue until June of next year, according to HHI officials, because the shipbuilder failed to secure enough orders over the past two years.
"We have about 30 ships to work on in the second half of 2017. So about 5,000 workers have become idle," a HHI official said.
Normally, the shipbuilder works on more than 40 ships over the six month period.
"Management told the labor union that it will take the surplus manpower off from work beginning in September. The company will discuss with union leaders how long and under what conditions they will remain idle." he said.
The official said the shipbuilder has no other choice but to put 5,000 employees on either unpaid leave or subject them to training sessions because the union workers refused to accept a 20 percent cut in base pay.
HHI may have to place more workers on temporary leave in 2018 if it continues to struggle to win new orders in the coming months.
Early this month, the shipbuilder failed to sign a $1.44 billion container ship deal with CMA CGM, the French container transportation and shipping company. Instead the French company placed orders for nine container vessels with China's Hudong Zhounghua Shipbuilding and Shanghai Waigaoqiao Shipbuilding.
Hyundai Heavy was initially sure of winning the deal but it was outpaced by the Chinese shipbuilders, which offered to build the vessels for $160 million each. HHI offered to construct the ships for $175 million each.
Hyundai Heavy Industries (HHI) is asking 5,000 workers to take unpaid leave beginning in September as it doesn't have enough ships to build until June of next year.
Korea's largest shipbuilder said Thursday it asked union leaders to help persuade 30 percent of its 17,000-strong workforce to take time off from work without pay, stressing it must reduce labor costs to stay afloat amid the prolonged industry slump.
The company said it cannot force employees to take leave, meaning each individual has to agree to it. If the number does not reach 5,000, management plans to suspend some production lines and subject workers to training.
As of June, HHI's backlog of orders stood at only 85, down from 110 the previous year. In the first six months of this year, the shipbuilder secured orders for only 17 ships. It hasn't won a single order for offshore plants since November 2014.
The ongoing shortage of work will likely continue until June of next year, according to HHI officials, because the shipbuilder failed to secure enough orders over the past two years.
"We have about 30 ships to work on in the second half of 2017. So about 5,000 workers have become idle," a HHI official said.
Normally, the shipbuilder works on more than 40 ships over the six month period.
"Management told the labor union that it will take the surplus manpower off from work beginning in September. The company will discuss with union leaders how long and under what conditions they will remain idle." he said.
The official said the shipbuilder has no other choice but to put 5,000 employees on either unpaid leave or subject them to training sessions because the union workers refused to accept a 20 percent cut in base pay.
HHI may have to place more workers on temporary leave in 2018 if it continues to struggle to win new orders in the coming months.
Early this month, the shipbuilder failed to sign a $1.44 billion container ship deal with CMA CGM, the French container transportation and shipping company. Instead the French company placed orders for nine container vessels with China's Hudong Zhounghua Shipbuilding and Shanghai Waigaoqiao Shipbuilding.
Hyundai Heavy was initially sure of winning the deal but it was outpaced by the Chinese shipbuilders, which offered to build the vessels for $160 million each. HHI offered to construct the ships for $175 million each.
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