Hyundai Rotem Enters Emergency Management System... "Will Pursue Rigorous Internal Management"

On the 15th, the emergency management declaration ceremony held at Hyundai Rotem Changwon Plant

[Photo by Hyundai Rotem]

[Asia Economy Reporter Ki-min Lee] Hyundai Rotem, struggling with operational deficits, has declared an emergency management system and embarked on strengthening risk management and securing profitability.

On the 15th, Hyundai Rotem announced on the 16th that about 300 executives and employees, including company-wide executives and team leaders from major departments, gathered at the Changwon plant to hold an emergency management declaration ceremony for business innovation.

At the declaration ceremony, Hyundai Rotem President Lee Yong-bae said, “We will transform the company’s work processes into a proactive management-oriented virtuous cycle structure to maximize efficiency, operate the company with a focus on profitability, and promote intensive internal management to establish a foundation for sustainable management.”

Hyundai Rotem plans to establish and implement a self-help plan to improve its financial structure and overcome the management crisis, starting from the declaration ceremony. Hyundai Rotem has been suffering operational deficits from 2017 through the third quarter of 2018. Due to continuous deterioration of the financial structure and a downgrade in credit ratings, Hyundai Rotem is evaluated as needing to prepare self-help measures for management normalization. Credit rating agencies such as Korea Credit Rating and NICE Investors Service downgraded Hyundai Rotem’s credit rating from an A level in 2018 to an A- level in the second half of 2019.

To overcome the management crisis, Hyundai Rotem intends to establish a virtuous cycle structure for management normalization through ▲building trust in management ▲reforming employee awareness ▲consolidating organizational capabilities. First, an emergency management committee, including the CEO, will be formed to establish emergency measures in each area such as profitability improvement, idle asset sales, organizational culture improvement, and business capability enhancement, and will work on improving the company’s condition through continuous monitoring.

Additionally, self-help measures such as organizational consolidation, workforce adjustment, and cost reduction will be implemented. Furthermore, unprofitable business divisions will be reorganized, and voluntary retirement will be promoted for managerial staff from section chiefs to department heads. Plans also include cost reduction through high-intensity business management, management efficiency, and reduction of unnecessary events. In particular, the 2020 management policy, “Securing profitability, establishing a foundation for sustainable management, and profit-centered internal management through dedication and collaboration,” will be distributed to all employees to build a profit-focused management system. Moreover, President Lee plans to visit the Changwon plant weekly to inspect production sites and communicate with employees.

A Hyundai Rotem official said, “Due to the domestic and international economic downturn, the company’s performance has deteriorated over the past few years, leading to the implementation of high-intensity self-help plans. This declaration ceremony is the first step toward the company’s leap forward amid the management crisis, and we will plan and execute more specific high-intensity self-help measures such as strengthening competitiveness in each business division.”

Meanwhile, after the emergency management declaration ceremony, Hyundai Rotem plans to hold a company-wide management briefing session to explain the company’s management performance, outlook, and major business directions to employees, sharing the current crisis situation and strengthening communication among members.

This content was produced with the assistance of AI translation services.