Aju Business Daily

SEOUL -- Unionized workers at South Korea's debt-stricken STX Offshore & Shipbuilding launched an indefinite strike Monday in protest at a painful restructuring program forced by creditors that included cuts in spending on labor.

About 700 workers downed tools at the shipyard, insisting they would not endorse layoffs. The shipyard has proposed a 75 percent cut in spending on labor.

On March 8, creditors led by the state-run Korea Development Bank (KDB) decided to keep afloat STX Shipbuilding with a continued injection of liquidity, saying South Korea needs a shipyard capable of building small and mid-sized tankers.

However, KDB head Lee Dong-gull warned STX Shipbuilding should file for court receivership unless it presents a sweeping self-rescue plan endorsed by workers. He said that if restructuring is successful, the shipyard should change its structure to focus on high value-added vessels.

STX Shipbuilding, which used to be the country's fourth-largest shipbuilder, began falling apart in 2008 when a financial crisis battered the global shipbuilding industry, forcing the shipyard to grab orders at lower prices.

STX Shipbuilding filed for court receivership in May 2016 and resumed normal operations in August last year. Despite efforts to reduce its debt through the sale of non-core assets, the shipyard has failed to ease a liquidy crisis.