Once Again Hampered by the Union... Hanwha "Will Legally Proceed with Stalking Horse"

"Autocratic Decision... Concerns Over Job Insecurity and Regional Economic Contraction"
Hanwha May Bear Daewoo Shipbuilding & Marine Engineering Union Risks

The Korean Metal Workers' Union held an emergency press conference on the 27th regarding Hanwha Group's push to acquire Daewoo Shipbuilding & Marine Engineering, stating, "Verification comes before speed," and insisted, "Hanwha must make a commitment to maintain total employment and promote the regional economy." Photo by Metal Workers' Union

[Asia Economy Reporter Choi Seoyoon] Hanwha Group has stepped forward to acquire Daewoo Shipbuilding & Marine Engineering (DSME), which had been drifting ownerless for 22 years, but has encountered another obstacle in the form of union opposition. While the union does not oppose the acquisition itself, they argue that proceeding with the deal excluding the key stakeholder?the union?is problematic, and that the company's unilateral decision could lead to job insecurity and regional economic decline. Hanwha Group plans to proceed with the deal according to the scheduled timeline, including the three-week stalking horse process.

Choi Sang-gyu, External Cooperation Officer of the Daewoo Shipbuilding Branch of the Korean Metal Workers' Union, stated on the 3rd, "We are not opposing Hanwha Group's acquisition, but raising issues with the unilateral sale excluding the involved parties," adding, "The sale of Daewoo Shipbuilding is directly linked to the survival of the regional economy, so employment stability must be the top priority."

Earlier, the Korea Development Bank, the major shareholder of DSME, selected Hanwha Group as the preferred bidder for the acquisition. The process is conducted under a stalking horse arrangement, allowing the existing contract to be terminated if an investor offers better terms than Hanwha Group. Although it is a competitive bidding process, Hanwha Group holds the priority right.

The branch insists that the sale process should be transparently disclosed to the involved parties and conducted with union participation. The branch has communicated five key sale policies to the Korea Development Bank and political circles: ▲Opposition to sale to competitors ▲Opposition to overseas sale ▲Opposition to split sale ▲Opposition to speculative capital participation ▲Guarantee of union participation.

On the 27th of last month, the Metal Workers' Union held a press conference regarding the sale of DSME, stating, "We can never agree to a hasty and preferential sale to the Hanwha conglomerate," and "Hanwha must present a promise to maintain total employment and develop the regional economy."

Jung Sang-heon, head of the DSME branch, also said in a press release following an emergency press briefing by the Korea Development Bank chairman, "It is a priority to create a development outlook for the shipbuilding industry through sufficient discussion and debate with the involved parties, and to prepare a plan where upstream and downstream businesses can grow together, including the survival of shipbuilding equipment companies, thereby presenting a development outlook for the shipbuilding industry," adding, "The government needs responsible policies regarding shipbuilding industry policy."

Although it is unlikely to significantly affect the acquisition deal itself, concerns are emerging that Hanwha may inherit the union risk at DSME. The union demands that Hanwha prove its sincerity by abandoning all claims for damages and provisional seizures against subcontracted workers. Currently, DSME has filed a lawsuit seeking approximately 47 billion KRW in damages against five executives of the Geoje-Tongyeong-Goseong Shipbuilding Subcontractors' Union (subcontractor union), citing damages caused by their occupation protest.

An industry insider said, "In Hanwha's case, it is contributing to the normalization of a key industry as part of national service, and Geoje City has officially welcomed the plan to sell the company as a whole to a domestic company rather than splitting or selling overseas, which raises concerns about the outflow of shipbuilding technology," adding, "We need to find a compromise, not opposition for the sake of opposition."