

IT, shipbuilding, tire companies take pre-emptive steps to brace for deteriorating business conditions



By Nam Hyun-woo



Downsizing has been sweeping Korea Inc. as IT firms, shipbuilders, tiremakers and other manufacturers struggle to cope with worsening business conditions, company officials said Monday.



Some companies are dismissing larger numbers of executives and senior employees to save on salaries, while others implement an across-the-board retirement scheme also targeting junior workers.



The analysts said the move is in line with the gloomy outlook for next year's business environment as Korean companies face rising global trade protectionism, enhanced regulations and stronger labor rules such as the minimum wage hike and working hour cap.



Heavy industry firms are carrying out harsh downsizing.



According to industry officials, Samsung Heavy Industries received applications recently for voluntary retirement among employees who worked longer than seven years, to cut fixed costs and cope with its fourth consecutive quarter of losses.



In the retirement scheme, received from Nov. 19 to Dec. 7, however, only 240 decided to leave the company, which is nearly half the number of employees that Samsung Heavy was supposed to cut according to the self-rescue plan it submitted to creditors in 2016.



The shipbuilder then planned to cut its workforce by 30 to 40 percent, or 4,200 to 5,600 employees, from the total of 14,000. 3,700 have left the company as of September this year.



A Samsung Heavy official said there is no "fixed plan" for extra downsizing, but added there can be one depending on the company's performance.



Hyundai Heavy Industries has also carried out a voluntary retirement scheme in September, and 145 left the company. The shipbuilder, which has been carrying out downsizing for years, cut the number of employees by 1,533 as of September, down from 16,504 at the end of last year.



Voluntary retirement and other downsizing moves are also sweeping the car industry.



Nearly 3,000 employees at GM Korea left this year, in the wake of a massive voluntary retirement scheme earlier this month at its now-closed plant in Gunsan, North Jeolla Province.



Kumho Tire also received applications for voluntary resignations among manufacturing employees last week. This is the second time the tiremaker carried out such a retirement scheme this year.



Chemicals firm OCI launched a retirement program in October for the first time in three years due to its declining profits. Builders including Samsung C&T, Daewoo E&C and Daelim are also in the process of downsizing through voluntary retirement.



Panel giant LG Display also received applications for voluntary retirement recently among its manufacturing employees of over five years. The company has seen severe profit drops stemming from Chinese competitors flooding the market.



Not only companies suffering from deteriorating bottom lines but also those logging handsome numbers this year are making efforts to downsize their workforces.



Samsung Electronics cut the number of executives by 10 percent to 900 in its regular personnel reshuffle earlier this month, while SK Group promoted fewer senior employees to executive positions than in 2017 and 2016, despite the group setting records in earnings this year.



"The trend of downsizing is interpreted as companies' pre-emptive response to expected economic downturn and uncertainties next year," a conglomerate official said. "Given that Korea's main industrial sectors have to embrace respective burdens such as price downcycle and trade uncertainties, cutting fixed costs is the most effective way for them to stay profitable."



