South Korean conglomerate Hanwha Group’s impending buyout of Daewoo Shipbuilding & Marine Engineering is poised to usher sweeping changes to the world’s fourth-biggest shipbuilder when it is finally completed at the end of May.
As the first details emerged about DSME’s proposed new name — Hanwha Ocean — and a top management team ahead of a general shareholder meeting on 23 May, insiders close to the shipbuilder told TradeWinds that more than 35 of the yard’s top management team are set to be laid off.
One explained that this would cover most of those at senior executive vice president level, along with half of the rank below them. “The new boys will be replacing the old boys,” he said.
Senior staff engaged in marketing, production and procurement are expected to be replaced while technical and engineering staff may remain, particularly amid the skill shortages in South Korean shipbuilding at present, others said.
“It is like some kind of cultural revolution,” one veteran Korean shipbuilding expert commented. He declared himself “very worried” about Hanwha’s lack of shipbuilding experience and replacing experienced staff with young “overly confident” employees, expressing his concerns for the future of the yard.
DSME’s nine overseas offices — located in London, Oslo, Athens, Houston, Singapore, Tokyo, Abu Dhabi, Luanda and Jakarta — are also said to be coming under scrutiny from Hanwha’s 100-person merger integration team, which has been at the yard since December.
While their future is still to be decided, those following DSME said they would expect the closure of two to three offices.
Questions are also said to have been raised about the practice of staffing overseas offices with Korean employees.
Shipowners who work closely with the yard described the mood at the shipbuilder as “gloomy”.
Others working there said that the younger employees are “hopeful” of promotions and more secure jobs once the acquisition is complete. The incoming owners are said to be putting a new pay structure in place, which it is believed will be an improvement on the situation under existing lead shareholder Korea Development Bank (KDB).
Others are in a state of “questioning” what the new owners will do with the company.
There has been speculation that energy and defence specialist Hanwha will make a shift to do more naval construction business but South Korean sources said that while this provides stable revenue there is not enough military work.
The incoming group is said to be keen to continue with LNG carrier and container ship construction.
The yard is currently full with orders until the end of 2026 but shipowners are said to have been reluctant to move on fresh business with the yard this year until the acquisition has been completed.
On Monday, a DSME board meeting approved the planned name change and new top management for the shipbuilder after Hanwha Group’s buyout was green-lighted by South Korea’s Fair Trade Commission.
These are expected to be confirmed at the shareholder meeting scheduled for 23 May.
Hanwha’s support division vice president Hyek-woong Kwon, who has been heading up the DSME acquisition team since September 2022, is due to be named as the shipbuilder’s new chief executive.
Hanwha — now the country’s seventh-largest conglomerate — said it and its affiliates will then take part in a KRW 2trn ($1.5bn) rights offering in May to acquire its planned 49.3% stake in DSME and will assume control of the shipbuilder.
Following this, KDB’s 55.7% stake in DSME will be cut to 28.2%.
- 1973: Okpo shipyard built by Korea Shipbuilding & Engineering Corp
- 1978: Company becomes Daewoo Shipbuilding & Marine Engineering
- 1991: Daewoo Shipbuilding posts its first-ever profit
- 1999: Enters into workout programme after Asian crisis, Korea Development Bank (KDB) emerges as major shareholder.
- 2000: Daewoo Shipbuilding spun off from Daewoo Group
- 2001: Workout programme completed
- 2002: European Commission makes complaint to World Trade Organization (WTO) over corporate restructuring subsidies
- 2008: Hanwha Group bids for the company as KDB looks for buyer
- 2020: Japan complains to WTO over subsidies after second restructuring
- 2021: Proposed merger with Hyundai Heavy Industries blocked by European Union
- 2022: Strike disrupts production for more than 50 days
- 2022: Second Hanwha $1.4bn bid accepted
- 2023: South Korea's Fair Trade Commission approves Hanwha's acquisition of DSME
