Proposed strike wins support from majority of Hyundai shipyard workers

[Yonhap Photo]

SEOUL -- A proposed strike against a deal to create a mega shipbuilder through the merger of two top shipyards in South Korea won support from a majority of workers at Hyundai Heavy Industries. A timetable for union action was not disclosed.

The labor union of Hyundai Heavy Industries (HHI), the world's largest shipbuilder, said that 51.58 percent of unionized workers endorsed a strike in a vote on Wednesday after 92.16 percent of unionized workers at Daewoo Shipbuilding & Marine Engineering (DSME) voted for a strike.

Korea Development Bank (KDB), a state policy lender which has a controlling 55.7 percent stake in the Daewoo shipyard, plans to sign an official deal in March.

Workers fearing layoffs in overlapping business sectors have opposed the integration of HHI and DSME. The two shipyards have already lost more than 30,000 jobs in a government-initiated campaign that began four years ago to restructure South Korea's shipbuilding industry.

Through a complicated process of equity conversion or transfer, the shipyards of HHI and DSME will be run under the same roof of a new corporation. Policymakers and KDB officials think the two shipbuilders can acquire the world's best technology and know-how, achieve economies of scale, and increase productivity by sharing technology, design, parts and services.

"The consolidation of yards in a soft market will help improve pricing power overall and should reduce loss-making projects that the yards undertook in the past five years or so," VesselsValue, a maritime market and ship evaluator, said, citing competition from Chinese builders, who are becoming increasingly competitive on high spec ships.

The merger will have "reverberations" in the newbuild market, VesselsValue said, adding the growing importance of liquefied natural gas (LNG) vessels makes engineering expertise in this highly complex construction even more important.

VesselsValue said the LNG segment has attracted a large amount of interest following a rate surge in 2018 and continued investment in midstream and downstream investment, which will expand usage. "Natural gas will become an increasingly important part of the global energy mix for decades to come and maintaining a market leading position in the construction of these vessels will be important for the world’s largest yards."

Lim Chang-won cwlim34@ajunews.com

Proposed strike wins support from majority of Hyundai shipyard workers

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