Dear colleagues,

 

A New Year has dawned upon us. First of all, let me express my sincere gratitude and appreciation to you all for your dedication and hard work throughout the past year. I wish you and your family a hopeful and blissful New Year.

 

Even though we hoped to return to profitability last year, we were faced with significant losses following the contract cancellation of a semi-submersible rig and massive losses of the offshore business. New orders bagged on relaxed payment terms and cheaper pricing have taken their toll on the Shipbuilding, Offshore and Industrial Plant Business Division. Other divisions, namely Engine & Machinery, Electro-Electric Systems and Construction Equipment, have suffered as well: the work has reduced by 20-30%, and several construction equipment shops have even halted operations.

 

At this critical juncture, we cannot afford to blame the past or outside circumstances. It is up to us to ride out the headwinds, which would be impossible if we stay on with business as usual. We need to change. We need to upend the way we think and the way we act. We need to start all over from scratch.

 

Dear colleagues,

 

The business slogan for this year is “Change Together.” It is meant to instill changes and innovations in ourselves. The following objectives must be met at any cost, if we are to survive this tough time.

 

First, we must return to profitability.

 

On November 23, 2015, CEOs and presidents of the Hyundai Heavy Industries (HHI) Group resolved to return their salaries as part of an intensive cost-cutting program. Executives were also asked to return up to half of their salaries, and department heads 10% of their salaries. Moreover, the company made deep capex cuts to tighten its belt. The rigorous cost-cutting is intended solely for the goal of returning to profitability this year.

 

If we remain in the red this year however, the market will no longer wait for us. Productivity gains and cost control must be achieved to safeguard our workplace. Critics say that the yard is left mismanaged and we are bungling our job. Managers should do better to address this. An opportunity will not await a laggard. I believe that you all know what you need to do to shore up the company. If we bear in mind that nobody else but each and every one of us here at HHI can turn around this company, then we will definitely be able to erase losses and make profit.

 

After a series of grueling discussions at the end of last year, HHI set the full-year sales target at W21.6396 trillion and the new order target at $19.5 billion. These may seem lofty, but nothing would be impossible if we put in our best efforts. I would like to sincerely ask you to exert your utmost to make sure we turn a profit this year.

 

Second, we must establish the system of total responsibility management.

 

We have different business lines, thereby a different set of competitors, but everything had been managed under a uniform approach. Our competitors were racing hard out there, while we have remained complacent within our comfort zones. Has it made us any stronger?

 

Each of our business divisions needs to foster its own competitiveness, and this starts with the total responsibility management at the division level. In other words, it is important that division representatives have the highest level of authority and accountability as the CEO of their own organizations, with the management support function merged into each of the divisions. This will make sure that each business division has the right organizational and HR structure. Division representatives should also work to gather the invaluable insights and wisdom of their members so that HHI can truly become the undisputed frontrunner again. This should be the very basics.

 

The effort of business divisions alone will not suffice. The management support and research organizations should also provide services that are indispensable to other business divisions, or they will be given the cold shoulder. Taking this occasion, I would like to earnestly ask the management support and research staff to keep this in mind and lead by example.

 

Third, we should rekindle passion and rebuild trust. 

 

We have a passion in us. We also have earned a strong trust that is unique to HHI and coveted by many. The passion and the trust gave rise to Hyundai Spirit. Now, we need to be filled with Hyundai Spirit. Until when will we remain infatuated with our past glories? Let us admit that our complacency bred our sufferings of today. Let’s change our workplace with renewed passion and trust. Let’s have confidence that tough times can be overcome. Let’s confidently draw a picture of a radiant future.

 

Lastly, we should secure technological prowess.

 

While rebuilding the passion and trust is essential, it is equally important to attain technological prowess. We have to face the grueling reality of this moment, that without technology it would be difficult to survive. Although it may take some time, start with what we do best. Technological advancement does not come overnight: it requires unrelenting dedication and painstaking effort. Areas of improvement are not very difficult to find, if we look closely at every detail of the work we do. Let’s go back to the basics and inspire ourselves with a new thinking and a new spirit, in belief that a small change can turn into a path-breaking technology. Small changes, combined with R&D efforts, will yield world-class technologies.

 

Dear colleagues,

 

I believe in your passion and potential. Nothing can get in the way of a hardworking person. Your ideas and actions for small changes can turn this company around.

Now then, we should think about what we really need to do. Until when will we talk about the good old days and remain at odds with each other? What rewards will it bring? In 2016, HHI will be a different company. We have the power and the ability to do this, because we are the driving force of change and innovation. I would like to sincerely ask all of you to renew your commitment and dedication for the New Year.

 

Let me wrap up my remark by reiterating my gratitude once again for your hard work last year. May your life be full of bliss and happiness this year!

 

Thank you.

 

Kwon Oh-gap,

 

President & CEO of HHI