Daewoo's operations abroad face major revamp

Daewoo's operations abroad face major revamp

SEOUL (AFP): South Korea will drastically revamp the overseas
operations of bankrupt Daewoo Motor Co., a top government
official said Monday, as the company's main domestic plant began
a three-week shutdown.

The debt-stricken carmaker has been under mounting pressure to
restructure itself to stay afloat on its own or to be sold.

Minister of Commerce, Industry and Energy Shin Kook-Hwan
stressed the reorganization of overseas operations is crucial to
streamlining Daewoo Motor's business and boosting its
competitiveness, officials said.

"Minister Shin expressed a need to drastically revamp Daewoo
Motor's overseas operations," ministry spokeswoman Janet Lee told
AFP.

"In consultations with host countries, he said, the overseas
businesses will be either restructured to stay afloat, sold out
or liquidated."

She added the government and creditors will soon launch a due
diligence survey into Daewoo Motors' overseas operations,
covering 31 sales firms and 15 factories.

The company is in trouble at home as well.

Daewoo Motor started a three-week closure of its main plant
Monday to reduce inventories amid slumping sales, as management
and unions wrestled over massive job cuts as part of
restructuring.

"Operations at the Lanos sedan assembly lines in Pupyong, west
of Seoul, have stopped today and will be halted until March 6 as
earlier announced," Daewoo Motor spokesman Kim Sang-Won told AFP.

Other assembly lines for Leganza and Magnus sedans at the
Pupyong plant had stopped as well due to a strike by unions,
ahead of a planned temporary closure starting on Thursday, he
added.

The failed South Korean carmaker has been under pressure to
reduce costs through wage cuts and layoffs, which unions have
strongly protested.

Management plans to lay off another 1,918 production workers,
as part of a program to slash a total of 6,884 jobs or a third of
its workforce, during the three-week-long temporary closure at
the Pupyong plant.

But unions threatened to hold daily rallies at the plant as
part of a strike against the proposed job cuts.

Since Daewoo Motor went bankrupt three months ago, creditors
and the government have pushed for drastic cost-cutting, which
they said would be crucial for selling the carmaker.

Since U.S. auto giant Ford Motor Co. pulled out of a US$6.9
billion takeover bid last September, General Motors has
investigated Daewoo Motor's finances but has since made no
further announcement.

Daewoo Motor, once the country's second largest auto company,
has been under a debt-restructuring program since the Daewoo
Group collapsed in August 1999 under $80 billion of debt.

The firm's annual production capacity includes 1.06 million
vehicles in South Korea and another 875,000 in overseas plants in
Poland, Rumania, the Czech Republic, Uzbekistan, Ukraine, India,
Iran, Libya, Vietnam, China and Egypt.