The head of Hyundai Heavy Industries Co. called on employees on Friday to make sacrifices and concessions to keep afloat the troubled offshore facilities business.
The world's biggest shipbuilder by sales suspended work at its offshore facilities in August as orders have dried up.
The company has begun voluntary retirement programs and is pushing to introduce unpaid leave for idle employees of its offshore division.
Hyundai Heavy has 15,795 employees, and among them, some 2,400 belong to the offshore division.
"It may be impossible to maintain the offshore business unless employees make sacrifices and concessions," Hyundai Heavy President and CEO Kang Hwan-goo said in a written statement, in an apparent reference to voluntary retirement programs and unpaid leave.
The union has called on the management to introduce paid vacations for employees.
Kang said labor costs of the offshore division come to roughly 192 billion won (US$171 million) a year and the costs could go up to about 600 billion won if the company fails to win any new offshore orders in the next three years.
Hyundai Heavy has lost out to Chinese and Singaporean rivals in offshore projects in recent years due to higher costs.
Labor costs of Chinese and Singaporean companies are roughly 32 percent and 15 percent of Hyundai Heavy's costs, respectively.
Hyundai Heavy has two major shipyards in the industrial city of Ulsan, about 410 kilometers southeast of Seoul. One is for the construction of commercial vessels, such as container carriers and liquefied natural gas tankers, and the other is for building high-end offshore facilities, such as floating production storage and offloading units.
Hyundai Heavy has undergone a drastic restructuring process in recent years by cutting its workforce and selling noncore assets to revive its financial status. (Yonhap)
