Hyundai Heavy Industries, one of South Korea’s largest offshore rig builders, is planning “intense” management reform plans, including the voluntary retirement of manager level employees in a move to enhance its competitiveness.
In a statement on Monday, 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 yards, HHI management proposed to the union to set up a management-labor joint emergency committee to improve the operation of human resource. Last week, HHI also implemented an organizational reshuffle by slimming down the number of departments from 391 to 305 by 22%.
At the same time, HHI said it started reviewing the efficiency of dry dock operations in a way to brace for the prolonged sluggish new orders. HHI set up a policy to gradually close docks which operate at the lower efficiency rate if low new orders trend persists.
HHI’s management rationalization plans also include the sell-off of non-core assets such as recreational facilities. HHI continues to make efforts to lower costs through the effective assignment of employees’ working hours and holidays.
HHI officer said, “With new orders drastically shrinking, we are now making our utmost efforts to steer our company toward new reforming measures that will address the current crisis. 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.
The unnamed officer also expressed hope South Korean government and creditor banks would review HHI’s management rationalization plans from “a more objective perspective” as “we have a stronger financial soundness compared to our shipbuilding competitors.”
Back in January 2016, reports emerged that HHI planned to temporarily shut down its rig construction yard in Onsan, South Korea due to scarce new orders.
According to reports from South Korea , Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding and Marine Engineering, failed to obtain a single ship order in April, and they reportedly only received three vessel orders during the first quarter of 2016.