Koo Ja-young
SK Innovation CEO |
By Kang Seung-woo
SK Innovation recently agreed to set up a joint venture with German automotive parts supplier Continental to develop batteries for electric vehicles, with its headquarters to be based in the European country.
Critics have questioned SK’s plan to tap into growing demands for next generation vehicles. They worry it may turn out to be an investment without employment, as the nation’s leading oil refiner and battery manufacturer ships jobs out of the country amid the government’s aggressive efforts to create positions and increase domestic investment as part of efforts to overcome an economic downturn.
SK Innovation CEO Koo Ja-young told
Elmar Degenhart
Continental CEO |
reporters last week that the head office of the joint venture will be in Germany, mainly due to a sizable market there and the European partner’s broader network. Continental, which last year celebrated its 140th anniversary, is among the world’s leading automotive suppliers.
Under an agreement with Continental, SK Innovation, a flagship unit of SK Group, will hold a 51 percent stake in the joint venture expected to be established in the second quarter of this year, while the German side will hold the rest.
“I wonder why Continental signed up with SK Innovation, which is a latecomer in the industry compared with other competitive rivals including Samsung SDI, LG Chem or Japanese entities. The German company may have teamed up with SK in order to gain an upper hand in terms of hosting the headquarters or other benefits,” a government official said on condition of anonymity.
The location of a research and development (R&D) center and plant has yet to be decided.
The government official said that SK may yield other facilities to the Hanover-based auto parts manufacturer, running counter to the Korean government’s urge for major firms to help create jobs.
Knowledge Economy Minister Hong Suk-woo asked the energy industry last week to make domestic investments toward job creation to boost the local economy, stressing the importance of employment for young people and high-school graduates.
However, SK Innovation said that criticism of its decision is premature.
“Although the headquarters of the auto parts joint venture will be established in Germany, its R&D center and plant can be built in Korea after discussions with Continental,” said an SK Innovation official.
The company also said that SK Group and its affiliates have made efforts to create jobs to contribute to the local economy.
“SK Innovation has constructed many of its plants here and last year, we agreed with Japan’s JX Nippon Oil and Energy Corp. to build joint paraxylene and lubricant plants in Ulsan,” the official said.
He added that the two sides reached the agreement to put the main office in Germany because the European country has a long history of electric vehicles and for marketing convenience.
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