STX Self-Rescue Plan / KBS뉴스(News)

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The government and other creditors have accepted struggling shipbuilder STX’s self-rescue plan. While it managed to avoid the worst-case scenario of being liquidated and going into court receivership, STX still faces rough waters ahead.
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The heart of STX Offshore and Shipbuilding’s self-rescue plan is a reduction in labor costs. All production workers have agreed to take a six-month non-paid leave annually for five years, instead of layoffs. They will also accept wage cuts and return incentives. Other measures were also presented, like winning more orders and selling some assets. The government and the main creditor Korea Development Bank have decided to save the company and keep it afloat, instead of placing it under court receivership. They noted that the shipbuilder’s plan has met the most crucial precondition for its recovery: a more than 75 percent cut in wages. The company aims to normalize its management and stand on its own feet within two years through restructuring. However, it remains uncertain if the company will be able to secure stable production capability, as its production workers have to take a leave of absence for half a year annually under the self-rescue plan. It will also have to fiercely vie to win orders among Chinese and Japanese rivals, which are now armed with a greater competitive edge. This is why observers still predict that the shipbuilder could again face a managerial crisis while undergoing a harsh restructuring longer than expected.

STX Self-Rescue Plan / KBS뉴스(News)

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Kane Dane