DSME Denounces McKinsey Report
The report by Global consulting company McKinsey & Company that Daewoo Shipbuilding & Marine Engineering (DSME) is least likely to survive among the big three shipbuilding companies has brought about strong opposition from DSME.
McKinsey Korea has issued its preliminary report on the state of South Korea's shipbuilding industry, and its conclusions are dire: McKinsey believes that Daewoo Shipbuilding and Marine Engineering may not survive past 2020, due to a forecast negative operating margin and a liquidity shortfall reaching as much as $3 billion.
"Due to the global downturn in the shipbuilding industry, it's inevitable that Korea's three shipbuilders will face harsh losses. Of them, DSME has the weakest financial structure and without a responsible management group is least likely to survive by 2020," McKinsey wrote.
DSME said in a press release that the McKinsey review was nonsense. "We made a thorough review of McKinsey's ongoing report, which was found to be based on completely false assumptions about DSME's situation," it said.
"It does not include the big three shipbuilders' future strategies and self-rescue efforts. We made our position clear with the Korea Offshore & Shipbuilding Association that the report is unacceptable."
Despite the DSME’s discontent, McKinsey is expected to submit the study report.
DSME, Hyundai Heavy Industries, and Samsung Heavy Industries retained McKinsey as a consultant back in June, to be primarily used for the government’s yet-announced restructuring measures for the dwindling Korean shipbuilding industry.
Meanwhile, DSME plans to cut its workforce by about 20 percent before the end of the year in a bid to tide over a deepening industrywide slump. According to the shipyard, it plans to cut its workforce to below 10,000 by the end of the year from 12,699 at the end of June.
