The world’s largest shipbuilder announced plans to streamline its business amid shrunken demand and mounting market challenges stemming from the coronavirus pandemic.
Facing reduced contracting activity, South Korea’s Hyundai Heavy Industries announced Tuesday that it will combine its shipbuilding and offshore units in a move aimed at consolidating related businesses while also decreasing its number of executives. The company said it intends to integrate certain departments within the units while eliminating others, ultimately trimming the total organization by 20%. The measures will take effect July 1.
“Since overcoming the crisis for survival is the top priority, we will put all our capabilities and focus on achieving our management goals this year,” a company official said in the shipbuilder’s statement.
“This reorganization is an important opportunity to start a new company in the second half of the coming year,” the company said.
Shipbuilding orders have slowed dramatically amid the economic fallout from the coronavirus pandemic, with order totals for all vessel types expected to continue sliding due to weakened global trade and an increasingly uncertain outlook for shipping.
South Korea’s shipbuilding sector in April was included as one of seven core industries set to receive funding from the government’s $33.2 billion coronavirus emergency relief fund.
In May, Korea’s Export-Import Bank said it would increase financial support to the nation’s shipbuilding industry by $1.2 billion to $4.3 billion to help shipyards and suppliers through the crisis.