South Korean shipyards are still struggling to cut costs through unpaid leave for their workers and shutting down dry docks idled amid a lack of orders, Yonhap reported quoting industry sources.
The report said that for decades, the shipbuilding sector has been one of the key growth drivers for Asia's fourth-largest economy.
The top three shipyards in the country - Hyundai Heavy Industries Co (HHI), Samsung Heavy Industries Co. (SHI) and Daewoo Shipbuilding & Marine Engineering Co. (DSME) - suffered a steep fall in new orders and faced cancellations for the past few years due to low oil prices and a downturn in the global economy, forcing them to cut costs through workforce reductions and asset sales.
HHI has recently told its labor union that unpaid leave and training programs for idled workers are necessary to tide over a slump in orders, said the report citing inside sources.
SHI, another shipyard, is also in talks with its workers to cut costs. The measures include one-month unpaid leave, a return of part of their salaries and an early retirement scheme.
DSME, is also tinkering with a move to sell an additional dry dock. Last year, it sold two of them.
Meanwhile, the shipbuilding industry in the country is in shock after it has lost the world’s largest container ship deals to Chinese companies. The loss of the world's largest containership deals to two Chinese rivals has rocked the South Korean shipbuilding industry, after CMA CGM signed a letter of intent (LOI) with Hudong-Zhonghua Shipyard and Shanghai Waigaoqiao Shipbuilding to build nine 22,000 TEU container ships, according to shipbuilding industry sources.
Hyundai Heavy competed for the deal until the last minute but Chinese shipbuilders won the contract.