Daewoo Shipbuilding & Marine Engineering (DSME) is cutting 3,000 employees from its workforce by end-2017 amid restructuring plans to raise liquidity.
According to media sources, the decision follows the South Korean shipbuilder’s plans to reduce its workforce by 20% by the end of 2017.
The company had announced earlier this year it was planning to keep the total workforce at below 10,000 employees, a decision justified by the lack of new orders and mounting debt.
Daewoo Shipbuilding to Lay Off 3,000 People
According to media sources, the company is expected to cut 1,000 employees this year and 2,000 more next year.
The original plan had been for DSME to gradually reduce its workforce by 2020, but the company had to accelerate with the implementation of the plan following a government ultimatum to stabilise its finances.
This comes as a result of a liquidity crisis (a net loss of US$1 billion in H1-2016), caused by the lack of orders and delays in ship deliveries, as well as the slump in oil prices and a global slowdown in the economy.
The company is also aiming to close some of its divisions, sell office buildings and property with a non-strategic relevance.
DSME to Dispose of Key Assets
As well as this, the company plans to dispose of 60% of its docks, which are considered as key infrastructure in the industry.
If the lack of orders continues until January next year, the company is expected to sell all of its three floating docks by the end of 2017.
In the meantime, it has already sold two of its five floating docks this year, following a decrease in the volume of shipbuilding orders.
However, DSME is not the only shipbuilder affected by the downturn. Hyundai Heavy Industries (HHI) and Samsung Heavy Industries are all cutting capacity, jobs and selling assets.