Seven HHI executives give back their salaries

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Seven HHI executives give back their salaries

The seven presidents and CEOs of the financially troubled Hyundai Heavy Industries (HHI) have volunteered not to take any salary from the company starting next year, while 300 other executives have opted to receive only half of their wages.

While the company declined to divulge the amount of salaries that would be saved, it said the wage cuts will remain until the shipbuilder turns a profit.

The world’s biggest shipbuilder said its executives made the decision at an emergency meeting on Friday and Monday, and agreed to form an emergency management committee headed by HHI’s chairman, Choi Kil-sun.

As well as the executives, about 450 managerial-level workers at HHI and its subsidiary units have volunteered to take a 10 percent cut in their salaries.

The company said events such as overseas education programs will be halted, and investment on facilities will be curtailed. Additionally, all executives, including the chairman himself, will fly economy class on business trips.

HHI said the emergency measures will be followed in other affiliates and business sectors. Hyundai Oilbank, which has reported relatively good finances during the year, will also be part of the campaign.

A series of restructuring plans were introduced last year after the company reported more than 3 trillion won ($2.6 billion) in losses.

This year, the company also reported about 1.26 trillion won in additional operating losses through the third quarter, mainly due to a struggling offshore plant business and low international oil prices.

The company had to cut more than 50 executives last year and has been receiving voluntary resignations from employees.

“Today is the 100th anniversary of the birth of Hyundai founder Chung Ju-yung, and I feel a heavy responsibility that we couldn’t truly inherit the founder’s entrepreneurship,” HHI Chairman Choi said.

“We should try to overcome the recent hardships, and these special measures that reflect our next year’s goal of escaping from the red will strengthen our mindset. We should try harder to make the nation, customers and shareholders happy.”

It is still questionable whether HHI can bounce back since the company isn’t the only shipbuilder suffering financial hardships due to the poor economy in the industry.

Daewoo Shipbuilding & Marine Engineering is predicted to report nearly 5 trillion won in losses this year, and Samsung Heavy Industries also reported about 1.5 trillion won in losses through the third quarter.

There is concern that the nation’s overall competitiveness in the manufacturing business is weakening and the gap between China, the biggest rival in the sector, is getting too narrow.

According to a report by the Korea Institute for Industrial Economics & Trade (KIET) on Monday, the gap of the technology level with China in the manufacturing businesses for this year is 3.3 years, down by 0.4 years from its 2011 report.

The KIET said it conducted a survey with a total of 708 companies in the world from Oct. 15 to Nov. 10 and studied their tech levels and tech invention trends.

Companies in the manufacturing businesses facing strong challenges from China are suffering financial hardship and are preparing to launch a series of restructuring programs.

Samsung Engineering, which reported about 1.5127 trillion won of operating losses in the third quarter, said on Monday that all of its employees will take a mandatory, unpaid one month off starting next month to November next year.

“The company decided to carry out the unpaid vacation measure as part of its normalization plans,” a spokesman of the company said.


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