대한조선주식회사

How this company, which said it would go bankrupt, came back to life. Learn from Daehan Shipbuilding, example for restructuring
 

Daehan Shipbuilding in Haenam-gun, Jeollanam-do, around 11:00 a.m. on June 6. A tanker 250 meters long and 20 meters high was being built in a dock on a four-footed shipyard. Dozens of workers were busy walking up and down the ship, and sparks of welding were scattered all over the hull. The whole shipyard buzzed with metal grinding. Park Yong-Deok, CEO of Daehan Shipbuilding, pointed to the jar. "It depends on the livelihood of 10,000 local people. It's hard to fasten our belt now, but I think we'll have to endure it until the end, so we are working together."
 
With annual sales of about 500 billion won, Daehan Shipbuilding is a representative medium-sized shipbuilding company that has succeeded in restructuring. Originally a subsidiary of Daeju Group, it has been undergoing a series of legal management since 2009 due to the global financial crisis and the sluggish shipbuilding industry. However, he succeeded in improving the industrial structure after graduating from legal management at the end of 2015.
 
This is in contrast to Sungdong Shipbuilding and STX Shipbuilding & Marine Corporation, which are considered medium-sized shipbuilders with Daehan Shipbuilding, which is deficient and in court management crisis. Daehan Shipbuilding has turned into profit-making for the second consecutive year from 2016 to 2017.
 
Due to a series of orders to build ships, the company will be busy until the end of next year. News of order has continued since the beginning of this year.
 
◇ Preemptive restructuring and flexible employment
 
The core of the transformation of Daehan Shipbuilding is preemptive restructuring. In late 2015, when the shipbuilding industry was in a slump and ship prices dropped by about 20 percent, management began to tighten their belts. The government believes that it will inevitably deficit without reducing costs due to reduced sales, so it will tighten its belt faster and stronger than other companies.
 
First of all, more than 100 management employees retire voluntarily to minimize welfare benefits. Employees and executives agreed to reduce costs by paying back an average of 10 percent of their annual salaries and 20-40 percent of their salaries. Fixed costs, including labor costs, fell 18 percent from 93 billion won in 2015 to 76 billion won last year.
 
Choi Sung-Kwon, chairman of the labor union, said, "As many of our colleagues left the company, the benefits decreased, the atmosphere was harsh, but we experienced two fears that the company would close down."
 
The flexibility of employment from the time it was established was brilliant in times of crisis. About 90 percent of Daehan Shipbuilding's personnel are subcontractors. When new orders came hard in 2016, the company was able to flexibly adjust and endure the situation by reducing the number of employees. Other shipbuilders employ 30-40 percent of the total number of shipbuilders, and even if jobs were reduced due to the recession, they are not able to reduce fixed costs such as labor costs.
 
The company also restructured its products. They simplify the type of ship. In the past, various ships such as bulk ships were built. But after the crisis, they almost build 10,000 tons of tankers.  Park Young-Deok, CEO of the company, said, "Since we concentrate on making only one type ship, the number of mistakes is decreases and productivity increases as employees become more skilled," adding, "Most shipowners who buy our ship contact us directly to sign contracts instead of bidding." "It is not a big and flashy management, but our goal is to create a company that can survive for a long time," said Park.
 
◇ Timely and decisive restructuring is the core
The daring factor behind the successful normalization of Daehan Shipbuilding and the STX, which is at the crossroads of court receivership, was whether to take the anticipative restructuring. Some point out that the management and creditors of STX Shipbuilding did not boldly restructure between 2014 and 2016, causing a crisis. STX Shipbuilding was involved in restructuring politics at that time.