Top S. Korea Shipyards Brace for More Job Cuts

South Korea’s shipbuilding industry—home to the world’s top three manufacturers—has eliminated more than 20,000 jobs this year. They may not even be halfway through.

Hyundai Heavy Industries Co., Daewoo Shipbuilding & Marine Engineering Co. and Samsung Heavy Industries Co. are among builders that have sent workers home and the industry could lose as many as 40,000 more positions by the end of this year, the Korea Labor Institute estimated. The sector employed 163,000 people at the end of June, down from 183,000 at the end of December, according to the Korea Offshore & Shipbuilding Association, Bloomberg reported.

The “Big Three” yards have lost a combined 6.6 trillion won ($5.8 billion) in the last six quarters amid delivery delays and a plunge in demand for new vessels and shipping platforms used for drilling oil in deep sea. Once South Korea’s biggest export, shipbuilding has now slipped down the ranks of the top 10, prompting a state-led support package.

Hyundai Heavy reported on Wednesday a net income of 295.5 billion won for the three months through September, its third consecutive quarterly profit on the back of cost cuts.

Shipbuilders and oil-rig makers like Singapore-based Keppel Corp. and Sembcorp Marine Ltd. have eliminated thousands of workers in the past two years amid weak demand for equipment to explore and transport oil. Keppel said last week that it slashed 8,000 jobs at its offshore and marine business in the nine months through September, while Sembcorp said it scrapped as many as well, without elaborating.

Companies in the oil and natural gas sector have cut more than 350,000 jobs since crude prices started to fall in 2014 and explorers reduced hundreds of billions of dollars in investment to weather the rout.

Samsung Heavy also cut about 1,500 jobs and is seeking to raise more than one trillion won (almost $880 million) by selling 159.1 million new shares next month. The company is executing a restructuring plan that includes reducing its headcount by as much as 40% by 2018, a spokesman said.

Daewoo Shipbuilding, which reported its biggest annual loss in 2015 after missing delivery schedules of offshore projects, is looking at reducing its headcount by about 1,000 workers through a voluntary retirement program by the end of 2016 and another 2,000 by transferring operations that support the company’s main business into a separate company.  

Daewoo may consider further job cuts if the slump in orders continues, a company spokesman said.