Hyundai Heavy Industries Group is facing protest from Ulsan City over its plan to establish the headquarters of Korea Shipbuilding & Offshore Engineering, the newly merged company of Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering (DSME), in Seoul.
Hyundai Heavy Industries Group plans to approve the plan at an extraordinary meeting of shareholders scheduled for May 31. Once the plan is approved, Hyundai Heavy Industries and DSME will become subsidiaries of Korea Shipbuilding & Offshore Engineering.
Ulsan, home to the world’s biggest shipbuilder, claimed the new company is a genuine head office of Hyundai Heavy Industries, thus the new firm should be headquartered in Ulsan, not Seoul.
The nation’s southeastern industrial city is protesting, apparently mindful of concerns that the plan would hurt the local economy.
“For the last 46 years, Hyundai Heavy Industries has been headquartered in Ulsan and has grown into a world-class company in various fields, including shipbuilding and robotics,” Ulsan Mayor Song Chul-ho said during a press conference, Tuesday. “Hyundai Heavy should stay in Ulsan in order to fulfill its corporate social responsibility and take part in fostering balanced regional development.”
The shipbuilder said earlier that steps will be taken to restructure its operations once the extraordinary meeting of shareholders passes the company’s physical division proposal.
Under the restructuring plan, the new merged company will be in charge of engineering and investments in the shipbuilding business, affiliating Hyundai Heavy and DSME.
The plan comes as Hyundai Heavy signed a formal deal with the state-run Korea Development Bank (KDB) in March to buy DSME.
The new company is expected to have around 500 employees, according to Hyundai Heavy.
Hyundai Group founder Chung Ju-yung established Hyundai Heavy in Ulsan in 1973, turning the small fishing village into a giant company town.
For decades, jobseekers flocked to the city, drawn by high wages and housing benefits.
Mayor Song noted that the possible moving of Korea Shipbuilding & Offshore Engineering’s headquarters to Seoul can trigger anxiety among Ulsan citizens, who are still in the midst of overcoming the sluggish progress of the shipbuilding industry.
Hyundai Heavy denied Song’s claim, saying even after the physical division, the company will continue operating without transferring factories or workplaces to other cities.
“It is unreasonable to say that Hyundai Heavy is reviewing relocation when it is actually our parent company that is looking for a new headquarters spot,” a Hyundai Heavy official said.
The world’s largest shipbuilder said it is highly efficient for the new merged company to be headquartered in Seoul in order to serve as a control tower, attracting R&D personnel and strengthening expertise and competitiveness in the shipbuilding industry.
“We will focus on creating synergy with affiliates and building competitiveness in businesses ranging from shipbuilding to oil refining in the global market,” the official said.
Source: Korea Times