First Strike in 20 Years?
Labor Union of Hyundai Heavy Industries Poised to Go on Strike



24 September 2014

The labor union of Hyundai Heavy Industries is expected to take its first strike in 20 years. The union will vote on the strike from Sept. 23 to 26.

The National Labor Relations Commission recently decided on an extension of mediation in response to the union’s request for mediation. The management and the union are to have negotiations until Sept. 25, but have failed to make a breakthrough. Once the union goes on strike, it will be the first walkout in 20 years.

Under the circumstances, the company is expected to face an even more severe crisis in the wake of the record loss of the second quarter.

“It is true that Korea is still the number one in the global shipbuilding industry, but China is emerging rapidly and Japan is recovering itself on the back of the weak yen,” said an industry expert, adding, “The strike in Hyundai Heavy Industries will have a negative impact on the entire shipbuilding industry of Korea, as well as the company itself.”

Shipbuilding Industry Crisis
15 Trillion Won Evaporated This Year



24 September 2014

The aggregate market value of Korean shipbuilders, which are struggling in the middle of the recent decline in the number of new orders, has decreased by close to 15 trillion won (US$14.4 billion) in 2014 alone.

According to the Korea Exchange, the stock prices of the four major Korean shipbuilders – Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding & Marine Engineering, and Hyundai Mipo Dockyard – have dropped by an average of 35.9 percent between Jan. 1 and Sept. 22 this year.

The price plummeted by 44.4 percent, from 253,500 won (US$243) to 141,000 won (US$135), for Hyundai Heavy Industries. The decrements reached 36.2 percent for Daewoo Shipbuilding & Marine Engineering, 33.5 percent for Samsung Heavy Industries, and 29.5 percent for Hyundai Mipo Dockyard. During the period, their combined market capitalization dropped from 38.2903 trillion won (US$36.7900 billion) to 23.3255 trillion won (US$22.4116 billion).

Under the circumstances, foreign investors are continuing to dispose of their shares in these companies. According to financial information provider FnGuide, Samsung Heavy Industries and Hyundai Heavy Industries ranked first and fourth on this year’s foreign investor net selling list, respectively. The net selling value amounted to 674.5 billion won (US$648.6 million) and 462.1 billion won (US$444.3 million) each.

Morgan Stanley’s recent report shows that the order backlog has continued to recover for Chinese and Japanese shipbuilders during the past year while their Korean rivals are still in stagnation. The backlog increased by 26 percent for Chinese and 17 percent for Japanese companies in August but remained still for Korean shipbuilders.