ID :
37568
Fri, 12/26/2008 - 21:02
Auther :
Shortlink :
http://m.oananews.org//node/37568
The shortlink copeid
Gov't not planning to directly help Ssangyong Motor Co.
SEOUL, Dec. 26 (Yonhap) -- The South Korean government does not plan to directly help Ssangyong Motor Co. deal with its present liquidity crunch caused by a sharp drop in sales, a government official said Friday.
Lee Dong-geun, head of the growth development office at the Ministry of Knowledge
Economy, told reporters that although Shanghai Automotive Industry Corp. (SAIC)
Vice Chairman Cheng Siwei asked Seoul about possible assistance for the
beleaguered carmaker, the government's options are limited.
SAIC acquired a controlling stake in South Korea's Ssangyong for US$500 million
in 2004.
"Under WTO regulations, the government cannot interfere with specific industries
or companies, and Shanghai Automotive is aware of this," he said.
Existing global trading rules allow government support only in areas such as
research and development of eco-friendly cars, tax cuts to spur demand and help
parts suppliers, and support for financial institutions that can provide
necessary financing to help purchases.
Lee, however, said that if planned talks between the KDB, SAIC and Ssangyong find
middle ground, and an understanding is reached with the carmaker's union, the
government and creditors may review various options.
"If overall conditions improve, and there is an agreement on restructuring, the
creditors who have a vested interest in the company's well-being could opt to
provide necessary support." he said.
There has been speculation about layoffs of some of the company's 7,000 employees
and overall restructuring to improve competitiveness and efficiency. The company
delayed payment of 25.4 billion won in wages this month, with rumors circulating
about the company filing for bankruptcy in January.
Lee pointed out that while there has been speculation that the Chinese company
may "walk away" from Ssangyong altogether, SAIC said it is willing to do its part
to save its affiliate if a compromise can be reached with union workers.
"Ssangyong's parent company did not commit to specific support plans of its own,
but it alluded to the possibility of providing help to its local affiliate if an
understanding is reached with workers," he said.
Lee did not go into detail, but said that during the hour-long talks, Cheng
pointed out to Vice Knowledge Economy Minister Rim Che-min that the proportion of
labor cost to sales is higher for Ssangyong than Hyundai Motor Co. -- South
Korea's No. 1 carmaker.
Ssangyong, which mostly produces sports utility vehicles, has suffered serious
setbacks in sales as high fuel prices and the global economic slump affect both
domestic and overseas sales.
In the third quarter of this year, the company lost 28.2 billion won, marking its
fourth consecutive quarterly loss. Last month, the automaker's sales plunged 63
percent from a year earlier to 3,835 units. The company said it needs to sell at
least 10,000 units a month to stay afloat.
yonngong@yna.co.kr
(END)
Lee Dong-geun, head of the growth development office at the Ministry of Knowledge
Economy, told reporters that although Shanghai Automotive Industry Corp. (SAIC)
Vice Chairman Cheng Siwei asked Seoul about possible assistance for the
beleaguered carmaker, the government's options are limited.
SAIC acquired a controlling stake in South Korea's Ssangyong for US$500 million
in 2004.
"Under WTO regulations, the government cannot interfere with specific industries
or companies, and Shanghai Automotive is aware of this," he said.
Existing global trading rules allow government support only in areas such as
research and development of eco-friendly cars, tax cuts to spur demand and help
parts suppliers, and support for financial institutions that can provide
necessary financing to help purchases.
Lee, however, said that if planned talks between the KDB, SAIC and Ssangyong find
middle ground, and an understanding is reached with the carmaker's union, the
government and creditors may review various options.
"If overall conditions improve, and there is an agreement on restructuring, the
creditors who have a vested interest in the company's well-being could opt to
provide necessary support." he said.
There has been speculation about layoffs of some of the company's 7,000 employees
and overall restructuring to improve competitiveness and efficiency. The company
delayed payment of 25.4 billion won in wages this month, with rumors circulating
about the company filing for bankruptcy in January.
Lee pointed out that while there has been speculation that the Chinese company
may "walk away" from Ssangyong altogether, SAIC said it is willing to do its part
to save its affiliate if a compromise can be reached with union workers.
"Ssangyong's parent company did not commit to specific support plans of its own,
but it alluded to the possibility of providing help to its local affiliate if an
understanding is reached with workers," he said.
Lee did not go into detail, but said that during the hour-long talks, Cheng
pointed out to Vice Knowledge Economy Minister Rim Che-min that the proportion of
labor cost to sales is higher for Ssangyong than Hyundai Motor Co. -- South
Korea's No. 1 carmaker.
Ssangyong, which mostly produces sports utility vehicles, has suffered serious
setbacks in sales as high fuel prices and the global economic slump affect both
domestic and overseas sales.
In the third quarter of this year, the company lost 28.2 billion won, marking its
fourth consecutive quarterly loss. Last month, the automaker's sales plunged 63
percent from a year earlier to 3,835 units. The company said it needs to sell at
least 10,000 units a month to stay afloat.
yonngong@yna.co.kr
(END)
