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`We Support Restructuring -- If We Aren`t Affected`

Posted April. 15, 2009 07:49,   


Companies from the 10 industries subject to a newly announced government restructuring plan as reported by The Dong-A Ilbo yesterday are expected to oppose the plan.

Experts and companies from the 10 industries have generally expressed sympathy with the need and direction of the restructuring plan. They say, however, that the plan should be considered a long-term project and suggest minimizing the negative impact of restructuring and pursuing the plan smoothly, warning that artificial restructuring led by the government could produce side effects.

Certain experts say the government will face difficulty pursuing its restructuring plan due to strong resistance from targeted companies.

On the proposal to cut the number of domestic car manufacturers from five to three or four, car experts agree on the government’s policy, citing economy of scale is critical to the competitiveness of carmakers.

Lee Hang-ku of the Korea Institute for Industrial Economics and Trade said, “Even Chrysler, which produces 1.5 million vehicles each year, has difficulty surviving without external support. Brand value and efficiency are also significant issues. But smaller carmakers cannot survive.”

Many car industry experts say the government will let the sector pursue restructuring under market principles since it suggested the principle of “market-based restructuring.”

Ssangyong Motor, which is under court receivership, cannot receive state support since its union has rejected measures to normalize management, including major layoffs.

Many industry experts say Ssangyong should be acquired by another carmaker since it has little chance to become a viable brand due to weak competitiveness in scale and products.

That prospect is dismal, however, since even large carmakers have begun their own restructuring.

The petrochemical industry is no different. Industry experts agree on the sector’s restructuring but companies likely to be subject to the streamlining have resisted.

Korea Petrochemical Industry Association executive P.J. Kim said, “The overall direction of the government’s restructuring plan will help Korea’s petrochemical industry evade the pursuit of the emerging petrochemical industry in the Middle East.”

Mirae Industrial Research Institute director Park Hun said, “Unless domestic petrochemical companies are restructured as suggested by the government’s policy, Korea’s petrochemical companies will face mounting difficulty in surviving.”

A source at a company set for restructuring under the government’s plan for the terephthalic acid industry questioned the plan. “The government’s restructuring plan is associated with the so-called Big Deal between large corporations that appeared in the wake of the Asian currency crisis in the late 1990s. I want to know why the government is suggesting such a policy,” he said.

A member of another terephthalic acid company said, “I don’t think we need this kind of restructuring under which companies should exchange their business lines.”

A researcher at a securities company, however, said, “Companies subject to restructuring will strongly resist, but the government’s restructuring plan is desirable. Given recent economic conditions, the restructuring plan is highly likely to succeed. But what’s more important is to show tangible results instead of just coming up with ideas.”

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