Hyundai Engineering & Construction Co. said it will spin off some of its design and building operations to cut debt.

The restructuring will shed 2,000 employees from Hyundai Engineering, which currently has 7,200 workers, said Park Jong-kil, a company spokesman.

The plan called for Hyundai Engineering to spin off its department that designs electric-power and chemical plants. Also to be shed was an operation erecting steel frames for buildings.

Hyundai Engineering was in financial trouble throughout last year, and government-controlled creditor banks bailed out the company four times.

Creditor banks warned late last year that the builder will face liquidation if it fails to cut its debts to $3.8 billion from $5 billion.

The company later announced a rescue plan that included raising $1.1 billion in new funds through the sale of assets, stocks and bonds.

Separately last week, management and labor at Daewoo Motor Co., South Korea’s third largest carmaker, began discussions on laying off 6,500 of its 18,000 workers.

Daewoo was declared bankrupt in November after its union rejected a restructuring plan that included layoffs. The union later agreed to layoffs.

Troubles at Hyundai Engineering and Daewoo Motor have raised concerns about South Korea’s economy and critics have accused South Korea of delaying its badly needed reforms.

Amid concerns and criticism, President Kim Dae-jung pledged to complete promised corporate and banking reforms in 2001.

The government expects the economy to grow 5 percent to 6 percent in 2001 as the restructuring begins to bear fruit in the second half of the year.

South Korea currently is pushing for a restructuring of the banking industry through mergers among major commercial banks, which workers fear would cause mass layoffs.

The nation promised to restructure its outdated corporate and financial sectors in late 1997 in return for a $58 billion bailout fund from the International Monetary Fund.