Carmakers here are mulling job cuts and restructuring as they enter the fog of uncertainties over a sharp drop in sales, continued confrontations with labor and the delayed launches of some new vehicles.
Renault Samsung Motors, the Korean unit of the French carmaker, said Sunday that it may consider slashing jobs in response to declining production volume at its plant in Busan and sluggish sales.
Renault Samsung`s Busan plant (Renault Samsung)
The management met union representatives last week to notify the union of its plan to reduce production volume by 25 percent and that it might have to cut its workforce by 20 percent -- amounting to some 400 people -- starting in October. Its Busan plant currently has 1,800 workers producing 60 vehicles per hour.
The plan came after Nissan cut its output allocation of Rogue SUVs at the Busan plant to 60,000 from 100,000 this year, blaming the union’s sit-in protests for causing production losses.
The company has proposed a voluntary retirement program and workers taking turns in leaves of absence, but it is likely to face fierce opposition from labor as they begin wage negotiations next month, according to local reports.
It is the first restructuring plan proposed by the Korean unit of the French carmaker in seven years.
The carmaker has been in a slump for years. Its sales this year alone nose-dived 41 percent to 56,904 vehicles from 96,061 in the same period last year.
In a desperate effort to sustain its production volume in Busan, the company has been asking its head office in Paris to allocate production volume for the XM3 compact SUV.
Renault has not yet made a decision.
Not only Renault, but also other automakers in Korea are considering ways to minimize costs.
SsangYong Motor, a local SUV maker, may consider delaying its plans to develop new cars, according to local reports, citing operational difficulties. The carmaker, owned by Indian conglomerate Mahindra and Mahindra, has posted operating losses for 10 consecutive quarters. The company had planned to start mass production of a minivan, codenamed the A200, and a midsized SUV, the D300, early next year.
In an email to employees, SsangYong’s new CEO Yea Byung-tae said the company may consider additional measures to revive its business as it suffers dwindling sales and liquidity woes.
The company has already cut senior executives, by 20 percent, and has slashed their salaries as part of its cost-cutting measures.
The plans are “preemptive measures” for the company’s survival, said an official, adding that nothing has been confirmed in regard to delaying new vehicle projects.
SsangYong sold 81,063 vehicles between January and July, a 1.3 percent increase from last year. It unveiled two new cars this year, the face-lifted Tivoli and the all-new Korando.
GM Korea is also considering restructuring its workforce by turning its double-shift operation system to a single shift. Pointing out the falling sales of compact cars Spark and Damas, it said the production rate at its plant in Changwon, South Gyeongsang Province, has been held under 60 percent for nearly two years. The US carmaker shut down its plant in Gunsan, North Jeolla Province, last year.
The company posted a net loss of 859 billion won last year after reporting 3.13 trillion won in accumulated net losses between 2014 and 2017.
By Cho Chung-un (firstname.lastname@example.org)