23-05-2016

Shipbuilders may sell off floating docks in restructuring move

Shipb

South Korean shipbuilders struggling to cut costs and secure liquidity to survive an industrywide slump are planning to sell off parts of their floating docks, industry sources said Sunday.

The nation’s three largest shipbuilders — Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries — currently have a total of 25 docks. Hyundai has 11, followed by Samsung with eight and Daewoo with six.

Nine of the docks are floating docks — large, barge-type structures where ships can be built on the sea. Samsung owns five of them with Daewoo having the other four.

The three shipbuilders last week submitted their restructuring plans valued at 6 trillion won (US$5.04 billion) to their creditors, which reportedly include additional layoffs, sales of noncore assets, reduction of personnel expenses and downsizing of facility investments.

“In compliance with the government’s restructuring demands, the top shipbuilders have vowed to expand layoffs to all ranks of employees and increase the value of asset sales and operating expense reduction to about 6 trillion won in their self-rehabilitation plans presented to main creditor banks,” said an industry official.

The sources said Samsung and Daewoo have included a plan to sell off parts of their floating docks in their restructuring plans, citing shrinking orders as the reason.

Hyundai Heavy doesn’t have any floating docks but is reportedly planning to stop operations at some of its dry docks if the drought in new ship orders continues for the time being.

“The current shipyard facilities are said to be excessive compared with order inventory. Individual shipbuilders are in the midst of reorganizing their dock operations. The sale of floating docks is also linked to the order drought and planned layoffs,” said the official.

Source: Yonhap

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