Squeezing It Up Is Korea Inc.s Slogan
It's the 1997 economic crisis all over again.
Despite the differences between now and then, key members of Korea Inc. are tightening their collective belt, coping with a global economic crisis that is showing no signs of letup. Efforts to save money range from voluntary pay cuts and bonus returns to reductions in travel expenses.
Samsung Electronics, Korea's biggest economic engine, is leading the way after reporting a dismal performance in the fourth quarter.
Executives volunteered a 20 percent cut in annual pay, with top executives vowing to return all or a portion of their incentives. Non-executive employees are not affected.
Automakers are also on an emergency footing.
Executives of Hyundai-Kia Automotive Group, Korea's biggest carmaker, have decided to forgo 10 percent of their annual pay, with non-production line employees vowing to freeze their pay at last year's levels. SK Corp. and SK Energy also have seen their executives including outside directors giving up 10 percent of their pay.
Both Korean Air and Asiana Airlines have had their executives undergo the same pay cut.
Construction firms, one of the fields up for restructuring, are tightening their purse strings. GS has frozen employees' pay, while executives have given up 20 percent of their pay and bonuses, with Daewoo, Daelim and other big builders set to follow in its footsteps.
Smaller builders are also set to undergo restructuring, including job cuts.
Retailers are also saving. Hyundai Department Store executives volunteered to give up 10 percent of their pay.
Corporations don't stop at pay cuts. Some executives say that the spirit is like ``squeezing a dry tower drier,'' meaning a stepped-up belt-tightening effort at all levels.
From the company's perspective, efforts to save are reaching virtually every nook and cranny.
Samsung Electronics decided to cut expenses for air travel and accommodation, obviously considering a cut in employees' welfare accounts. Samsung virtually abolished its headquarters, reassigning 1,200 out of its main office employees to the ``field'' as part of its effort to put its workforce where production is.
Hynix is hoping to find a new owner by September, having already reduced its workforce by 1,000 employees in its overseas factories and idling four production lines.
Hyundai-Kia has decided to reduce its capital spending by 20 percent and is going all-out for a reduction in expenses. Hyundai Motor America, its U.S. subsidiary, has started a clever sales technique of allowing new buyers to return their cars in times of personal adversity, such as job losses. The effort, however, is feared to backfire, as the slump is going from bad to worse. If one in 10 new buyers returned their cars, it could translate to enormous losses on top of sagging sales in the U.S. market, critics say, adding that Hyundai may face trouble in paying back billions of dollars in maturing debt this year.
Hyundai executives are now required to travel coach for short-haul air travel, with the company planning to cut down on consultations, utility bills and overtime reduction.
SK Group is having executives share secretaries and company cars while being asked to reduce overseas travel. Hanwha, beset by its failure to takeover Daewoo Shipbuilding and Marine Engineering due to funding problems, has ordered its subsidiaries to cut their expenses by 30 to 40 percent, reassigning support personnel to marketing and sales positions.
Lotte Group, the biggest retailer, has gone as far as reducing the production of sales leaflets.