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Nam Yong, center, CEO of LG Electronics, answers a question during a press conference at the company’s headquarters in Yeouido, Seoul. With Nam are Jung Do-hyun, left, the company’s chief financial officer and Dermot Boden, chief marketing officer. / Korea Times |
By Kim Yoo-chul
Staff Reporter
LG Electronics said Monday that it may downsize its payroll in the process of reorganizing its overseas operations.
"LG may have to cut down on the number of jobs in our overseas affiliates," Chief Executive Nam Yong said at a press conference held in its headquarters in Yeouido, Seoul.
However, he didn't specify the size of any cut that will be implemented.
"LG is forecast to suffer a 20 percent sales decline in dollar terms this year," Nam said, adding his company needs to reorganize its global operations.
LG saw sales decline 17 percent in January, down from 20 percent in November, last year.
In a follow-up measure, LG is also pushing ahead with steps to cut costs by about three trillion won or some $2.2 billion in 2009.
LG has some 82,000 employees ― 30,000 in South Korea and 52,000 overseas. It has 82 overseas affiliates.
In 2008, some 60 percent of last year's 49.33 trillion won in sales based on a consolidated basis came from overseas markets, according to the company.
LG's Japanese competitors ― Sony, Panasonic, Toshiba and NEC ― are downsizing their payrolls to cope with the downturn in demand for consumer electronic products
LG, which produces air-conditioners, handsets and flat-screen TV sets, has been enjoying the effects of the weaker local currency against the greenback, which gave it a key advantage to compete with its Japanese rivals.
"I hope the weaker won will continue further. But LG must prepare more composite plans for when the 'currency effect' diminishes," the top company official said.
LG tentatively fixed its business plan for the whole of this year on the basis of an exchange rate of 1,100 won to the dollar.
Since the end of last year, LG has been operating a "War Room" to cope with the effects from the global credit crisis.
LG's five business units, eight regional headquarters and executives take full responsibility for managing cost-saving initiatives there, its spokeswoman Judy Pae said.
Over a possible cut of the workforce in Korea, Nam just said the company will relocate 20 percent of its workers here, to seek growth in promising business segments.
But he declined to comment about the number of new recruitments.
"LG is looking for chances in healthcare and eco-related businesses," Nam said.
Regarding Hynix Semiconductor, whose 36 percent controlling stake was now on sale by its creditors, Nam said his company has learned how to survive without buying the world's second-biggest memory chipmaker.
"Although LG is reviewing a variety of M&A chances for next-engines, the semiconductor sector is not the right segment," he added.
Asked about handset strategies in emerging markets, Nam said the world's No. 3 mobile phone maker will market consumer-based premium and low-end mixing line-ups.
"Again, we will not stick with market share by hurting profits," he said.
In line with a "profit-saving strategy," its money-losing plasma panel business is to be completely phased out after the cash flow of the unit turned to red.
"But we will continue to invest in new projects and research and development (R&Ds) that eventually would increase profitability," Nam said.
He said his company is seeing some positive cultural changes after hiring foreign executives to higher ― C-level ― positions.
"I'm not going for propaganda in hiring foreign executives. Personally, I hope to transform LG into one of the world's leading companies, such as General Electric and Toyota, in real terms," he said.
During the fourth quarter LG posted a record quarterly net loss hit by a big shortfall at its LCD affiliate, LG Display.
Profits from its mobile phones are also tumbling due to weaker demand and intensified competition.
yckim@koreatimes.co.kr
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