SEOUL, Feb. 19 (Yonhap) – Workers at Daewoo Shipbuilding & Marine Engineering Co., a major shipyard in South Korea, voted on Tuesday to strike to oppose Hyundai Heavy Industries Co.’s proposed takeover, its labor union said.
The approval for the proposed strike heralds a bumpy road for a mega deal between Hyundai Heavy and the state-run Korea Development Bank (KDB).
Over 90 percent of the 5,600-member union voted for the walkout, according to the union.
The union said it will decide later when its members will go on a strike.
Early this month, Hyundai Heavy, the world’s largest shipyard by sales, and the policy lender KDB said they would sign a formal deal on Daewoo Shipbuilding early next month.
KDB is Daewoo Shipbuilding’s main creditor, with a 55.7 percent stake in the company.
The labor unions at Hyundai Heavy and Daewoo Shipbuilding fiercely opposed the deal, claiming it could lead to massive layoffs.
If the takeover goes ahead as planned, the South Korean shipbuilding industry is expected to be dominated by two major shipbuilders – Hyundai Heavy and Samsung Heavy.
South Korean shipbuilders, once a cornerstone of the country’s economic growth and job creation, have been reeling from mounting losses in the past few years, caused by an industrywide slump and a glut of vessels amid tough competition with Chinese rivals.
The government has been hoping that the local shipbuilding industry can be overhauled in such a way that two major players can dominate the sector to better compete against Chinese rivals and tackle sectoral ups and downs.
The combination of the two shipbuilders would create an unrivaled player in the sector. As of last year, Hyundai Heavy had an order backlog totaling 11.14 million compensated gross tons (CGTs), the largest among others in the sector. The comparable figure for Daewoo Shipbuilding was 5.84 million CGTs.
Their combined order backlog accounts for 21.2 percent of the total around the globe.