A view of the Ulsan Shipyard at Hyundai Heavy Industries headquarters. (Photos: HHI)

Chairman Kwon Oh-gap of Hyundai Heavy Industries (HHI) Group.

“(We have to) accomplish the acquisition of Daewoo Shipbuilding & Marine Engineering (DSME), and I believe in it. The acquisition is designed for our survival and then for the prevention of the co-destruction of the Korean shipbuilding industry, not enough power to spare.”

“I believe that this is a responsibility and a mission entrusted to us. I urge you to redouble efforts, and I set my mind to the success of the Korean shipbuilding industry as my last mission.”

These messages are contained in a letter to executives of HHI Group companies and their families, sent by then Vice Chairman Kwon Oh-gap of Hyundai Heavy Industries (HHI) Group in July.

At that time, Vice Chairman Kwon gave thanks for their determination and pledged to resurrect the Korean shipbuilding industry.

In that context, the group conducted a reshuffle on Nov. 19, promoting Kwon to chairman of the group, a job that had been vacated for two years when former chairman Choi Kil-sun stepped down in 2017.

Chairman Kwon has now been entrusted with the mission of accomplishing HHI’s acquisition of DSME, but its outlook is not rosy.

Two big stumbling blocks stand in the way. One is about whether EU, Japan and four other countries will give the go-ahead to HHI’s acquisition. In particular, chances are high that Japan might be opposed to the acquisition as an additional economic retaliation against Korea.

In the case of any country’s opposition, a combination of enterprises would be impossible.

The other stumbling block is related to the two labor unions of the shipbuilders. They have staged vehement protests against the merger.

They have resorted to such struggles as an eight-hour strike.
HHI Group needs stronger leadership to tackle the pending issues, and Chairman Kwon is expected to play a role in the accomplishing the tasks, a group official said.

Chairman Kwon is not just another executive who reads the mind of Chairman Chung Mong-joon of the Asan Foundation, the group’s largest shareholder, but he has served as a seasoned manager to steer the group out of a variety of difficulties.

Chairman Kwon entered HHI in 1978. At that time, the shipbuilder was in its infancy. He has been climbing up the corporate hierarchy, reaching the top manager position as the company has grown into the world’s No. 1 shipbuilder.

Chairman Kwon demonstrated his strong management leadership as he took office as president of Hyundai Oilbank, which was struggling with business uncertainties.

He set an example by making inspection tours to sites and giving words of encouragement to employees. Under the stewardship of CEO Kwon, Hyundai Oilbank made a streak of consecutive profits, in contrast with other struggling refinery companies.

Hyundai Oilbank posted 594.7 billion won in operating profit in 2011, one year after CEO Kwon took office. The company made a habit of achieving profitability in the ensuing three years. In 1978, Kwon played the role of relief pitcher in steering HHI out of management difficulties.

At that time, he focused on communications with a recalcitrant trade union. He demonstrated his decisiveness in action and execution whenever dramatic steps were badly needed.

Kwon set an example by normalizing management through massive restructuring in 2014 when HHI Group was in a crisis due to a recession in the shipbuilding industry.

Kwon, less than two years in office, cut payroll by 4,500 employees. HHI suffered a setback of posting about 2 trillion won in losses, but two years later, the shipbuilder succeeded in turning around to profits in 2016 despite of three unfavorable factors: a plunge in winning orders, declining crude oil prices, and a jump in raw material prices.