What is the real reason behind the split-up of Hyundai Heavy Industries?
What is the real reason behind the split-up of Hyundai Heavy Industries?
  • Jung Jun-ho
  • 승인 2019.06.03 13:40
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Why is the conflict between labor and management at Hyundai Heavy Industries (HHI) so great over the split-up plan?

Under the plan, Korea's largest shipbuilder will be divided into Korea Shipbuilding & Offshore Engineering, a sub-holding company merging parts of HHI with Daewoo Shipbuilding & Marine Engineering (DSME), which will carry out shipbuilding and offshore businesses, and a reorganized HHI. 

The management says it is aimed at acquiring DSME, but the labor union is concerned about the possible "restructuring" and some say, "Isn't it part of the chaebol succession process?'

In fact, it seems that there are many mountains to go before the HHI's acquisition of DSME.

Under the plan, into Korea Shipbuilding & Offshore Engineering is in charge of investment, research and development, and controls HHI's production sector. And it plans to take over DSME as a subsidiary.

The problem is that in the process, the real assets go to Korea Shipbuilding & Offshore Engineering, and the debt of 7 trillion won is owed to HHI.

Korea Shipbuilding & Offshore Engineering will become a blue-chip company and HHI will have a debt ratio of 115 percent.

The management has promised job security, but the union is concerned about restructuring.

Kim Hyung-kyun, director of policy planning at HHI branch of the Korean Metal Workers` Union (KMWU) said, "The debt has been passed on to a new company (HHI), so there is bound to be instability. We have no choice but to restructure again just because the company is getting harder.."

In addition, a 30 percent stake in HHI is owned by Chung Mong-joon, chairman of the board, and his son Chung Ki-sun, vice president of the company. 

Some point out that Korea Shipbuilding & Offshore Engineering is a complicated structure to increase shareholder dividends or to ask for the responsibility of the owner's family.

The management says it has nothing to do with the succession, saying that the split is just a procedure to take over DSME as promised.

 


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