|(by Jeong Ki-hoon/Korea Daily Labor News)|
The Moon Jae-in administration decided to stop financial support to cash-strapped medium-sized shipyards in order to push them to come up with turnaround plans through court receivership or business downsizing and restructuring, which is not in line with the pledge that President Moon made during his election campaign last year. The decision happened to be made amidst the recovery trend in the shipbuilding industry from the slump. The labor circle reacted strongly against the government decision as "a policy to wipe out few remaining medium-sized shipyards". Resistance is anticipated in a situation that the government is demanding a labor-management confirmation to agree to high intensity restructuring.
On March 8, Finance Minister Kim Dong-yeon announced that "Filing for court-led restructuring of Sungdong Shipbuilding and Marine Engineering is inevitable" which means that the government will not give any additional financial aid and enter into the proceedings of court receivership.
On the other hand, the government decided to give a chance to STX Ocean and Shipbuilding under the condition of high intensity restructuring to reach a level of business survival without government aid. The government demanded STX Shipbuilding to come up with a high intensity turnaround plan and restructuring agreed with labor by April 9. It means that if labor and management do not agree to cut costs including labor force, STX Shipbuilding will also be pushed into court receivership.
Concerns are growing that Sungdong Shipbuilding would be liquidated, as the Export-Import Bank of Korea, a major creditor to Sungdong Shipbuilding, insisted that the liquidation would be more profitable than the value of survival, based on a consulting firm report commissioned by the Exim Bank.
reported by Yang Ou-ram
translated by Kim Sung-jin
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