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.