The falling car demand is forcing three large Korean car manufacturers to shuffle and downsize their workforce. These companies include GM Korea, Renault Samsung Motors, and SsangYong Motor. Representatives from the manufacturers also blamed unfavorable business conditions for the restructuring.
Reports said that Renault Samsung has already communicated the decision to its union leaders. It cited the expected further drop in the sales of their Nissan Rogue and other automotive models. Data from the company showed that the sales of Nissan Rogue, the company’s most sold product, dropped by 40% from 100,000 from last year to 60,000 this year. The drop was said to be due to the production losses that the company incurred during union-led strikes.
A Renault Samsung Motor official said, “Although we realize it’s necessary to downsize the workforce, the exact size or method hasn’t been decided yet.” He also cited that employees will be offered to choose between a voluntary retirement program or circular leaves of absence.
“The management will make several suggestions when it begins wage negotiations with the union next month.” Renault’s Busan plant will also decrease their production rate of Nissan Rogues from 60 units per hour to 45. To combat the drop in the Nissan Rogue’s sales, the company plans to increase its production of their XM3 compact SUV which they would then sell to European markets. Talks are still on the way on whether Samsung will be able to acquire production rights from Renault SA.
SsangYong Motors Layoff Officials
SsangYong Motors reportedly reduced the number of senior officers in their payroll by 20%. A 10% cut on the employees’ salaries accompanied the layoff in hopes of stabilizing the company’s finances. The company has been under immense pressure to up their sales after they reported a 78 billion loss on the first half of 2019. This loss is almost double of their loss from the previous year.
In a memo to employees on Aug. 19, CEO Yea Byung-tae said the company would continue to see a winding road ahead. So, the company needs to consolidate to ensure stability.
“To survive in our competitive industry, and position SsangYong to win in a fast-changing future, we must cut costs and focus on the most valuable work,” SsangYong’s CEO, Yea Byung-tae, said. “We must work together to make sure that massive layoffs in 2009 do not occur again.”
General Motors Korea has reported low utilization rates due to the sluggish market. The issue has forced them to shut down their Gunsan plant and cut their employees’ wages. Company officials have also been suggesting the discontinuance of second shifts to reduce costs.
Featured image grabbed on Renault’s website.