Daewoo workers vote to strike against acquisition by Hyundai shipyard

20, Feb. 2019

SEOUL, AJU - The labor union of Daewoo Shipbuilding & Marine Engineering (DSME) warned of a strike after workers voted against a deal to create a mega shipbuilder through the merger of South Korea's largest and second largest shipyards.

In a two-day vote involving 5,242 workers, 92.16 percent supported the union's proposal to oppose the proposed merger brokered by Korea Development Bank (KDB), a state policy lender which has a controlling 55.7 percent stake in the Daewoo shipyard. Hyundai Heavy Industries (HHI), the world's largest shipbuilder, has been selected as the sole bidder.

"We will launch a strike at the most effective time," DSME union leader Shin Sang-ki said in a statement on Tuesday, warning workers are ready to exercise their "physical" force and stop a formal contract between DSME and HHI. KDB hopes to sign an official deal in early March.

HHI workers have also opposed the integration of two major shipyards, fearing possible layoffs. A vote will be held on Wednesday in the Hyundai shipyard in the southeastern industrial city of Ulsan.

KDB and HHI think the two shipbuilders can acquire the world's best technology and know-how, achieve economies of scale, and increase productivity by sharing technology, design, parts and services.

"The acquisition of DSME will not sacrifice either side as it is an option for our shipbuilding industry," HHI's two co-presidents said Tuesday in a company newsletter. "There can be no sacrifice on either side."

Through a complicated process of equity conversion or transfer, the shipyards of HHI and DSME will be run under the same roof of a new corporation. KDB will provide 1.5 trillion won ($1.34 billion) in paid-in capital for third-party allocation of DSME and another one trillion won if needed, in return for acquiring new shares to be issued by HHI.