Ssangyong Motor workers ready to negotiate turnaround plan

(ATTN: RECASTS lead; UPDATES with court decision, quotes, government support for Ssangyong's subcontractors)
SEOUL, Jan. 12 (Yonhap) -- Unionized workers at Ssangyong Motor Co. said Monday
they were prepared to discuss a turnaround plan that would include wage cuts and
other measures as a Seoul court took an initial step towards sheltering the
ailing automaker from bankruptcy.
Ssangyong, the local unit of China's Shanghai Automotive Industry Corp. (SAIC),
applied for court receivership with the Seoul Central District Court last week
amid a deteriorating liquidity crisis.
The court has barred Ssangyong's creditors from selling its assets, the first
administrative step towards granting receivership.
Earlier in the day, Ssangyong's workers said they voted in favor of a full strike
against job cuts, but said they will not go on strike for the time being citing
"negative side effects on the overall economy."
But the union said it will file a lawsuit against SAIC to seek compensation,
accusing the Chinese parent of stealing car-manufacturing technology and failing
to honor its investment pledge.
"We have no immediate plan to go on strike," union leader Han Sang-kyun said at a
press conference held in the city of Pyeongtaek, about 70 kilometers south of
Seoul, the home of Ssangyong's sole plant.
"If we go on strike right now, the plant will be halted and subcontractors will
collapse," Han said. "Instead, we will wage a legal battle against SAIC."
Some observers have called Ssangyong the first high-profile casualty of the
global economic crisis. Like the United States' Big Three, the automaker has
suffered from low demand due in part to a line-up that is dominated by
gas-guzzling sport-utility vehicles.
It will take a month for the court to accept the receivership. If the court
accepts it, SAIC will be forced to give up its management control at Ssangyong.
Creditor banks and a court-appointed manager will then decide whether to keep
Ssangyong afloat or liquidate it.
Ssangyong employs about 7,100 workers. About 5,200 of them are union members.
Even if the court fully approves Ssangyong's application, the company's future
will remain unsure due to a deepening global economic crisis that has severely
impacted the auto market, analysts say.
Creditor banks, led by state-run Korea Development Bank, expect Ssangyong to stay
afloat for no more than a month without financial assistance.
Ssangyong owes a total of 600 billion won (US$440 million) to creditors and 150
billion worth of convertible bonds maturing in April, analysts say.
South Korea's financial regulator urged SAIC to help Ssangyong.
"The main shareholder, creditors and the court should make efforts to revive
Ssangyong Motor," Rhee Chang-yong, vice chairman of the Financial Services
Commission, said on a local radio show Monday morning.
Rhee added that the financial regulator was considering giving financial support
to Ssangyong's subcontractors.
The automaker has an annual production capacity of 200,000 vehicles. It reported
a net loss of 98 billion won in the January-September period last year, hit by
slumping sales.
Analysts say the company is burning through 25 billion won in cash every month.
SAIC bought a 51 percent stake in Ssangyong for $500 million in 2004.
(END)