Kwak Yeon-soo is a digital editor at The Korea Times creating, editing and curating digital content for the newspaper’s website, mobile app and social media. She previously covered a diverse array of cultural, political and business topics.
Renault Samsung, SsangYong, GM Korea face 'painful' restructuring
By Kwak Yeon-soo
By Kwak Yeon-soo
Renault Samsung Motors, SsangYong Motor and GM Korea are about to undergo drastic restructuring to cope with falling car demand, rising production costs and other unfavorable business conditions, according to industry officials, Monday.
According to Renault Samsung, it told the union recently that it will be difficult to maintain the current workforce as the production of the Nissan Rogue and other models is expected to fall sharply next year.
The number of Nissan Rogues ordered was slashed to 60,000 from last year's 100,000 due to production losses caused by the union's strikes. The car model accounted for half of the plant's total output last year.
“Although we realize it's necessary to downsize the workforce, the exact size or method hasn't been decided yet,” a Renault Samsung Motor official said, citing that it would either offer a voluntary retirement program or circular leaves of absence.
“The management will make several suggestions when it begins wage negotiations with the union next month.”
However, the company asserted that the units per hour (UPH) production at the Busan plant is expected to decline to 45 from the existing 60 in the second half of this year on decreased Nissan Rogue volume.
To offset the discontinuation of Nissan Rogue production, Renault Samsung has been in talks to secure production volume for the XM3 compact SUV for export to Europe.
But the company is still in talks with its parent Renault SA, and no decision has been made yet, the official said.
From January to July, Renault Samsung's sales plunged 41 percent to 56,904 vehicles from 96,061 a year earlier.
Likewise, SsangYong Motor has reduced 20 percent of senior positions and cut 10 percent of their wages to ensure stability.
In the first half of 2019, SsangYong's operating loss nearly doubled to 78 billion won from the previous year, hit by increased marketing costs and sluggish exports.
In a memo to employees on Aug. 19, CEO Yea Byung-tae said the company will continue to see a winding road ahead, and so the company needs to consolidate to ensure stability.
“To survive in our competitive industry, and position SsangYong to win in a fast-changing future, we must cut costs and focus on the most valuable work,” Yea said. “We must work together to make sure that massive layoffs in 2009 do not occur again.”
GM Korea management has been in a feud with the union over wages. Due to a low utilization rate, the company shut down a plant in Gunsan in May last year.
In March, GM Korea proposed suspending a second shift at its plant in Changwon to save on costs.
Regarding the issue, management and the union are on a collision course. Union workers at the Changwon plant expressed fear, saying “subcontracted workers can be put in danger of massive layoffs if the company suspends a second shift.”