'KR Railroad to Slim Down Organization Amid Expected 1 Trillion Won Loss... Consolidation of 4 Regional Headquarters'

Expected 1 Trillion Operating Loss by Year-End Due to COVID-19
Son Byung-seok "Pain Will Follow, But Bold Innovation"
Consolidation of Headquarters in Eastern Seoul Metropolitan Area, Chungbuk, Gwangju, and Daegu

Regional Headquarters Reorganization (Source=Korea Railroad)

[Asia Economy Reporter Moon Jiwon] Korea Railroad Corporation (KORAIL) has carried out an organizational restructuring, including reducing one-third of its regional headquarters nationwide, to respond to the management crisis caused by the prolonged COVID-19 pandemic.

According to KORAIL on the 3rd, train demand sharply declined due to the COVID-19 pandemic, resulting in an operating loss of 600 billion KRW in the first half of the year alone. With the recent resurgence of COVID-19, an operating loss of about 1 trillion KRW is expected by the end of the year.

To overcome this crisis, KORAIL entered an emergency management system in March and formed a Management Improvement Task Force (TF) to prepare for financial structure improvement exceeding 200 billion KRW and organizational restructuring.

The main points of the organizational restructuring are ▲restructuring regional headquarters and optimizing field organizations for management efficiency ▲comprehensive reorganization of the vehicle maintenance organization to strengthen vehicle maintenance functions ▲simplification of management support tasks and workforce efficiency.

KORAIL will reduce the current 12 regional headquarters to 8 to improve the efficiency and productivity of railway operations and organizational management.

The four regional headquarters of Eastern Capital Region, Chungbuk, Gwangju, and Daegu will be integrated into Seoul, Daejeon Chungnam, Jeonnam, and Gyeongbuk headquarters, respectively.

The Capital Region Western Headquarters will be renamed 'Capital Region Metropolitan Headquarters,' Daejeon Chungnam Headquarters to 'Daejeon Chungcheong Headquarters,' Jeonnam Headquarters to 'Gwangju Jeonnam Headquarters,' and Gyeongbuk Headquarters to 'Daegu Gyeongbuk Headquarters,' with some jurisdictional lines adjusted.

To prevent safety issues due to the expanded jurisdiction of regional headquarters, management teams will be established in four areas: Daegu, Gwangju, Jecheon, and Eastern Capital Region for focused management.

The 81 management stations, which operate by grouping 655 stations nationwide, will also be reduced to 69.

Considering train operation frequency and the distance of the assigned areas, 66 small-scale field organizations will be reorganized, and a smart maintenance system will be established in the mid to long term.

Vehicle Maintenance Organization Restructuring (Source=Korea Railroad)

To improve vehicle maintenance capabilities and the operation of maintenance organizations, the 30 vehicle depots under the regional headquarters will be reorganized under four vehicle maintenance divisions.

The dualized vehicle maintenance functions under regional headquarters (vehicle depots) and vehicle maintenance divisions will be unified under the vehicle maintenance divisions to strengthen accountability and improve previously overlapping and confused functions. Accordingly, the vehicle management organization (vehicle department) of the regional headquarters will also be downsized and reorganized under the vehicle maintenance divisions.

The management support organization, including the headquarters, will also be streamlined. Unnecessary management support tasks will be boldly abolished, and similar or overlapping tasks will be unified.

Through workforce efficiency of about 600 personnel, operations and safety personnel for lines opening within the year, such as the Jungang Line and Suin Line, will be reassigned without additional increases. Due to the opening of 29 new lines from 2020 to 2024 and strengthened related laws, 2,700 safety personnel are required.

Current employees residing in areas such as Daegu, Gwangju, and Jecheon will be reassigned within their respective regions as much as possible to minimize the impact on the local economy, and opinions will be gathered from employees whose workplace relocation is unavoidable to minimize inconvenience.

This organizational restructuring will be implemented on the 21st after consultations with related agencies, upgrading computer systems, preparing office spaces, and internal personnel transfers.

Son Byung-seok, President of KORAIL, emphasized, "In this crisis where the future of the corporation is uncertain, organizational restructuring such as the integration of regional headquarters is an urgent task that can no longer be postponed," adding, "Although the restructuring process will involve much hardship, we will enhance the efficiency of railway operations through bold innovation."

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