The main gate of Ssangyong Motor’s production plant located in Pyeongtaek, Gyeonggi-do. yunhap news
Ssangyong Motor’s labor-management, which has been running parallel with the Korea Development Bank over the’pain sharing’ such as labor cost cuts, has been detecting changes in airflow. After the meeting with the head of the Industrial Bank of Korea, Lee Dong-geol, there is a voice that the labor union must also make sacrifices to save the company.
According to the industry on the 18th, both labor and management are reported to be considering cutting labor costs internally to reduce fixed costs. This is because it is inevitable that a certain portion of the members are sacrificed to attract new investments from HAAH Automotive (hereinafter referred to as HAAH) during this month.
Ssangyong Motor’s reduction in fixed costs is an area that the Korea Development Bank, the main creditor bank, has been constantly emphasizing. In a meeting with Ssangyong Motor CEO Ye Byung-tae and Ssangyong Motor Union Chairman Jeong Il-kwon on the 17th, Sangeun Lee, chairman Lee Dong-geul, said, “Please let Ssangyong Motor put everything down with the resolution of’immediate death death’, and proactively suggest the best plan to attract investment. “If the objective validity of the potential investor’s (HAAH) investment decision, financing ability, and business plan is verified, we will review financial support to normalize Ssangyong Motor.”
Until now, Ssangyong Motor has been in a position to avoid artificial manpower reduction. In particular, the union has strongly opposed the recurrence of the’Ssangyong Motor Incident’, in which 2,600 of all employees were laid off in 2009. However, the salaries of 5,000 people, which amounted to an average of 86 million won, created a’high cost structure’ with a cost ratio of 98.6%, and eventually Ssangyong Motors suffered a deficit for four consecutive years from 2017, standing at the threshold of legal management. The high cost structure is also an obstacle to attracting new investments by HAAH.
An official familiar with Ssangyong Motor said, “Both labor and management, who have watched the rehabilitation process for dismissed and hoped retirees sequentially proceeding from the reinstatement of all unpaid leavers in 2013 to the beginning of this year, have a deep trauma over restructuring.” It seems that the cuts will inevitably be chosen,” he said.
Some believe that it will not be easy to attract new investments even if Ssangyong Motors finishes improving its constitution. In Ssangyong Motor’s P plan (pre-rehabilitation plan), the majority shareholder, Mahindra, India, lowered its stake from 75% to 25%, and HAAH participated in a capital increase of $250 million (approximately 280 billion won) to the largest shareholder (51%). It is known that there is a plan to become ). However, HAAH is delaying the final investment decision. It is known that this is because the public interest bonds (370 billion won) that must be paid at the time of acquisition are burdensome. Ssangyong Motor has requested the investment intention to HAAH until the 20th.
An industry insider said, “HAAH wants to take over at a minimum cost, so it is important to keep in mind that investment will be changed even at the sacrifice of Ssangyong Motor’s labor and management such as high-cost structure improvement.” It is also very likely that HAAH will attempt to take over after entering into court management.”
Ryu Jong-eun reporter [email protected]
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