Layoffs loom large over DSME’s managerial staff

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Layoffs loom large over DSME’s managerial staff

Daewoo Shipbuilding and Marine Engineering (DSME), which reported over 3 trillion won ($2.5 billion) in operating losses in the second quarter, has decided to carry out the biggest restructuring and cost-cutting in its history.

According to sources Monday, DSME will cut 30 percent of administrative workers managerial level or above and will reduce the number of business divisions by 30 percent, or from 100 to about 70.

In order to complete the plan by the end of September, the company will accept voluntary resignations from 1,300 administrative workers in managerial positions or higher starting today.

There are a total of 13,000 employees at DSME and about 6,000 of them are administrative workers.

Company CEO Jung Sung-leep said earlier in the year that he wasn’t considering reducing the workforce, though it’s been surmised he must have found no other way to reverse the company’s fortunes, seriously impacted by struggles in the offshore plant business over the past decade.

This is the first time DSME has gotten rid of so many people. The company refrained from cutting workers during the Asian financial crisis in the late 1990s. Reportedly, the company is using performance evaluations to cut executives and workers.

Jung and other executives have also reportedly decided not to take their salaries for September, maybe longer, as part of efforts to overcome the current crisis.

Considering that bonuses are out of the question this year, the annual salary for the average worker will be reduced by more than 35 percent from a year ago, according to the company.

“The reorganization process begins on Sept. 1,” a DSME spokesman said. “If the company is to slim down, executives working in similar jobs will be asked to leave.”

The company also decided to sell about 400 billion won worth of properties to build up its cash.

The company wants to sell its headquarters building in Euljiro, central Seoul, for 160 billion won, the Dangsan-dong office building in western Seoul for 40 billion won and a golf course for 180 billion won. It also wants to sell about 20 billion won worth of cashable assets like stock.

“What we are trying to do is to sell unnecessary properties,” a DSME spokesman said. “We will keep the core parts in order to secure our business competitiveness for the future.”

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