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January 13, 2009
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The decision comes prior to the court deciding whether or not to grant court receivership to Ssangyong and whether to keep the company afloat or liquidate it. Ssangyong, Korea’s fifth-largest automaker, filed for court receivership last Friday, following a liquidity crisis. For months, it had asked its mother company, China-based Shanghai Automotive Industry Corp., for a cash injection. In 2004, SAIC bought a 49 percent stake in Pyeongtaek-based Ssangyong and has since added 2 percent. Through January to September of last year, Ssangyong saw a net loss of 98 billion won ($72.4 million) due to falling demand following high oil prices and the global economic slowdown. In a SAIC board meeting last Thursday, the group’s Chinese management expressed fury over what it said it considered the Korean government’s uncooperative stance toward Ssangyong. Last December, SAIC director Jiang Zhiwei met with the Vice Minister of the Ministry of Knowledge Economy, Rim Che-min, and officials at the state-run Korea Development Bank to request the Korean government’s financial assistance to rescue Ssangyong Motor. Rim commented at the time that in trying to abide by World Trade Organization standards, the Korean government was not able to give financial assistance to any one private company. Meanwhile, the government is looking into ways to support ailing Ssangyong subcontractors. “It’s hard for us to take concrete action at the moment but we are planning on protecting Ssangyong’s subcontractors so that they do not suffer further losses,” said Rhee Chang-yong, Financial Services Commission vice president during a radio program yesterday. Rhee added that the financial regulator was considering providing liquidity to Ssangyong’s subcontractors. The government estimates that Ssangyong owes subcontractors 300 billion won to 400 billion won. “Ssangyong’s main shareholder [SAIC], its creditors and the court must all make efforts to revive Ssangyong Motor,” Rhee said. Additionally, through the “fast-track” system (which was made to protect SMEs from emergency liquidation), the government is looking to find alternative distribution channels for Ssangyong’s subcontractors who still have relatively robust businesses. Also yesterday, unionized workers of Ssangyong Motor held a press conference and said they would prepare a lawsuit against SAIC for damages. Though Ssangyong’s workers voted in favor of a strike early last week to protest expected job cuts, the union will not go on strike for the time being, they said. “The labor union is prepared to discuss measures to revive Ssangyong Motor with the management,” union leader Han Sang-kyun said at the press conference held in Pyeongtaek, Gyeonggi, home to Ssangyong’s sole plant. “On the other hand, we will call SAIC to account for technology transfer, breach of trust, failure to honor the pledge to attract investment and other issues.” The labor union said it will collect signatures from the public supporting legal action against SAIC. And the union urged the Korean government to guarantee the survival of Ssangyong Motor, blaming it for selling the automaker to SAIC in 2004. Ssangyong now has about 7,100 workers including 5,200 union members. By Moon So-young, Cho Jae-eun Staff Reporters [jainnie@joongang.co.kr] |
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