[Focus] Daewoo Motor, union reach deal

The ailing Daewoo Motor Co. has gained momentum for survival, as its trade union Monday reached an agreement with management on a broad range of restructuring plan issues, which includes a manpower reduction.

The district court is expected to approve Daewoo's application for court receivership, and its creditors will provide fresh loans to the company. So Daewoo is likely to begin its own restructuring program, while studying ways for overseas sale of the company as part of its survival strategy.

It is believed that the union must have made such a decision because it has no choice. The court has been squeezing Daewoo by threatening to begin the procedure for liquidation unless Daewoo shows a will for self-rescue.

Workers at Daewoo's Changwon and Kunsan plants have been asking the union to accept the consent for layoff, saying that even their plants would suspend operation because of the union. What is more, 5,700 white-collar workers tendered their resignations in the Monday morning in order to save the company.

Korea Development Bank (KDB) said that creditor banks would resume financial aid to Daewoo even before the court takes action for court receivership. It is expected that the Inchon district court will take procedures for the company's court receivership.

Daewoo's management is expected to release a diverse plan to reduce production costs, along with Arthur Anderson, a consulting firm.

Recently, Arthur Andersen proposed a layoff of about 6,500 workers and production cut by 30 percent. However, the company management is rescheduling the plan, saying that it is a too radical one.

Currently, Daewoo is negotiating with General Motors (GM) for sale of the company. However, it is not optimistic. First, court receivership has to be finalized, and then GM should be able to negotiate with someone who is responsible for sale of the ill-fated company.