"Saving Ssangyong Motor" Total Effort from Local Communities to Partners... The Union's Choice

"Long-term Production Disruptions if Ssangyong Motor Suppliers Collapse"…Trade Creditors Appeal to National Assembly
Local Communities and Political Circles Unite to Save Ssangyong Motor
Ssangyong Motor Management Cuts 38% of Executives and Further Reduces Wages
"Labor Union Must Also Propose Proactive Measures"

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] As Ssangyong Motor's rehabilitation proceedings have commenced, small and medium-sized partner companies are being pushed into crisis. The unpaid delivery payments to these companies are tied up as rehabilitation claims, worsening their financial situation and credit ratings. Since the survival of partner companies is key to the operation of Ssangyong Motor’s factories, there are urgent calls for help from the government and political circles, as well as for Ssangyong Motor’s labor and management to prepare strong self-help measures.

According to industry and political sources on the 1st, the Ssangyong Motor trade creditors recently delivered an appeal to Hong Ki-won, a member of the Democratic Party of Korea (Pyeongtaek Gap), asking to prevent the collapse of Ssangyong Motor’s partner companies. The trade creditors requested that the National Assembly unite to allow loans secured by part of the claims, as 350 billion KRW in unpaid delivery payments have been tied up as rehabilitation claims due to the commencement of Ssangyong Motor’s rehabilitation proceedings, causing difficulties for small and medium-sized partner companies.

The trade creditors stated, "Due to the commencement of Ssangyong Motor’s rehabilitation proceedings, rehabilitation claims amounting to about 350 billion KRW have arisen, putting us in a difficult situation requiring many sacrifices. Moreover, due to the suspension of parts supply by some large corporations and foreign companies and semiconductor supply instability, Ssangyong Motor had a 14-day shutdown in February and has not been able to operate its production line for two consecutive weeks. As a result, we small and medium-sized partner companies are suffering unbearable pain." According to the trade creditors, among about 350 partner companies, around 50 are on the brink of bankruptcy.

The trade creditors further mentioned that although government and local government support measures were announced during the voluntary restructuring (ARS) period after Ssangyong Motor filed for rehabilitation in December last year, practical help was minimal. Therefore, they appealed to Representative Hong to have the Korea Credit Guarantee Fund provide special guarantees for about 200 to 300 billion KRW out of the 350 billion KRW in public claims related to Ssangyong Motor parts delivery, enabling loans to be made.

Kim Hyun-jung, the Democratic Party’s labor spokesperson, also said at a briefing held at the National Assembly the day before, "Despite difficult conditions, Ssangyong Motor’s labor and management have continued self-help efforts, reducing resources by 120 billion KRW, and on the 27th of last month, they pushed for a 38% reduction in executives and additional salary cuts. The Democratic Party will do its best to ensure that Ssangyong Motor’s labor and management’s self-help efforts are not wasted and to secure additional support from the government and the Korea Development Bank, including new funds before the sale."

In the industry, as the Pyeongtaek local community, which recently started a campaign to support the sale of Ssangyong Motor, along with partner companies and political circles, have begun efforts to save Ssangyong Motor and its partners, there are calls for Ssangyong Motor’s labor and management to continuously present strong self-help plans accordingly. First, Ssangyong Motor’s management reorganized the organization on the 27th of last month to improve efficiency and reduce fixed costs, cutting the number of full-time executives (excluding managers, registered directors, and outside directors) from about 26 to 16, a 38% reduction. They also plan to further cut the salaries of full-time executives, which have already been reduced by 20% compared to 2019. However, the labor union, while demanding total employment except for about a 20% wage cut last year, has not proposed proactive self-help measures. Regarding this, a Ssangyong Motor partner company official said, "The industry, local community, and political circles are coming up with measures for Ssangyong Motor. It is time for the labor union to create and present self-help plans through internal discussions first."

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