Korean firms brace for restructuring

Korean firms brace for restructuring

By Kim Yon-se and Park Min-young in Seoul/The Korea Herald/16 November 2012 =

Seoul (The Korea Herald/ANN) - About 15 percent of South Korea's 600 major enterprises said they plan to conduct corporate restructuring amid growing uncertainties at home and abroad next year, a poll showed Thursday.

According to a survey on the 600 largest firms - in terms of sales scale - by the Federation of Korean Industries, 62 percent of the respondents said the business environment was projected to worsen next year.

The FKI, a business lobby, said it has found that 15 percent of the respondents are mapping out plans for restructuring such as reduction of its payroll, sales of some assets and scrapping some business sectors.

The poll showed that 46 percent of the 600 firms picked weaker domestic demand as the key negative factor, 28 percent with worsening conditions for exports and 15 percent with rising cost burdens for raw materials.

As for corporate investments next year, 40 percent said their investments next year would remain at a level similar to this year's, while 27 percent said they will cut down on investments by a small margin and 9 percent by a large margin.

This shows that companies have conservative investment plans due to bad economic conditions at home and abroad.

In particular, a growing number of firms in the business and financial sectors recently launched a manpower restructuring scheme.

Samsung Card, a financial unit of Korea's biggest conglomerate Samsung Group, will receive about 100 voluntary redundancy applications starting next week.

More than 3 percent of total employment will be slashed.

Executives as well as regular employees will be subject to the restructuring plan, reports said, and retirees are expected to receive a retirement allowance worth two years' salary.

"It is true that we are examining the voluntary retirement program, but the exact number of employees to be withdrawn or retirement conditions are not yet decided," said a Samsung Card spokesperson.

Industry insiders say that the worsened profitability of the company resulted in the restructuring plan. Its operating profit for 2013 is expected to be down by about 169.6 billion won, according to Taurus Investment Securities, due to various reasons including the new credit card commission fee system, decline of credit card users and the sluggish economy.

Speculation is growing that other financial units of Samsung Group may begin restructuring plans as well. Samsung Fire and Marine Insurance is receiving voluntary retirement applications until this month from employees who served at the company for more than 12 years.

While Citigroup Korea is moving to join the manpower restructuring mode, SK Communications carried out an early-retirement program last month amid declining profitability.

According to a poll by the Korea Institute for Industrial Economics & Trade on 557 firms, 162 of them responded that they have been under contingency mode in their management.

Another 178 firms of the respondents said they are likely to follow suit within six months, the institute's data showed.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Philippines calls on ASEAN to urge China to halt land reclamation
    Philippines calls on ASEAN to urge China to halt land reclamation

    The Philippines called on its Southeast Asian neighbours to unite in urging China to halt reclamation of land in the South China Sea, but the call failed to raise widespread support ahead of a regional summit. China claims 90 percent of the South China Sea, which is believed to be rich in oil and gas. Its claims overlap with those of Brunei, Malaysia, the Philippines, Vietnam and Taiwan. Recent satellite images suggest China has made rapid progress in filling in land in contested territory …

  • Indonesia defiant as UN leads condemnation of looming executions
    Indonesia defiant as UN leads condemnation of looming executions

    Indonesia on Sunday signalled it was determined to push ahead with the execution of eight foreign drug convicts, despite a growing wave of global condemnation led by United Nations chief Ban Ki-moon. Authorities on Saturday gave formal notice to the eight -- from Australia, Brazil, Nigeria and the Philippines -- that they would be executed by firing squad imminently, along with an Indonesian prisoner. The group have been moved to the high-security prison island of Nusakambangan, where …

  • Philippines urges ASEAN to stop China in South China Sea
    Philippines urges ASEAN to stop China in South China Sea

    KUALA LUMPUR, Malaysia (AP) — The Philippines on Sunday urged its fellow Southeast Asian countries to take immediate steps to halt land reclamation by China in the disputed waters of the South China Sea, warning that failure to do so will see Beijing take "de facto control" of the area. …

  • Philippines urges Southeast Asia to rally to halt China reclamation in disputed waters
    Philippines urges Southeast Asia to rally to halt China reclamation in disputed waters

    The Philippines on Sunday called on neighbouring Southeast Asian nations to push for an immediate halt to China's reclamation in the disputed South China Sea ahead of a regional summit. China claims 90 percent of the South China Sea, which is believed to be rich in oil and gas, with overlapping claims from Brunei, Malaysia, the Philippines, Vietnam and Taiwan. Recent satellite images suggest China has made rapid progress in building an airstrip suitable for military use in contested …

  • President to appeal for Filipina's life at Malaysia summit
    President to appeal for Filipina's life at Malaysia summit

    The Philippine president said Sunday he would appeal for mercy for a Filipina who is due to be executed in Indonesia in two days' time. President Benigno Aquino said he would take the opportunity to seek clemency for Mary Jane Veloso, who is due to be put to death on Tuesday, while in Malaysia for a regional summit Monday. "Once I am there, I will try to speak to President Joko Widodo of Indonesia to appeal once more for her case," Aquino said. She was arrested in 2009 with 2.6 kilograms …

  • U.N. chief appeals to Indonesia not to carry out executions
    U.N. chief appeals to Indonesia not to carry out executions

    United Nations Secretary-General Ban Ki-moon appealed to Indonesia on Saturday not to execute 10 prisoners, including two Australians, for drug-related crimes. Indonesia has so far informed seven of the 10 death row inmates, including the Australians and one Nigerian, that they will be executed in a matter of days, possibly as soon as Tuesday. Nationals from Brazil, Ghana and the Philippines are also on Indonesia's death row. A temporary reprieve was granted to a French citizen who will not …

  • Beijing 'poised to take de facto control' of S. China Sea'
    Beijing 'poised to take de facto control' of S. China Sea'

    Beijing is poised to take "de facto control" of the South China Sea, the Philippines warned Sunday, but its call for a robust Southeast Asian response at a regional summit was shot down. Vietnam, the Philippines, Malaysia and Brunei claim parts of the strategic body of water, but Beijing claims nearly all of it, and its increasingly strident territorial assertions have caused concern in the region and beyond. "(China) is poised to consolidate de facto control of the South China Sea," …

  • US eyes access to Phl bases in 8 locations
    US eyes access to Phl bases in 8 locations

    The United States has asked for access to Philippine military bases in eight locations to rotate troops, aircraft and ships as Washington shifts its forces to Asia and as China expands its military presence in the South China Sea. US Defense Secretary Ash Carter, in a speech in Arizona, has outlined Washington’s next phase in its Asia “pivot,” deploying its most sophisticated destroyers, bombers and fighters to the region. The Asia “pivot” has already seen US Marines rotating through the …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options