Blog: Dave LeggettSsangyong - action needed, quick

Dave Leggett | 18 June 2009

It's a right old mess over at Ssangyong. The beleaguered firm is in Korea's equivalent of Chapter 11 and having a tough time of it. Market conditions aren't fine and dandy and Ssangyong's model line-up is short on recession busting fuel-sippers; it's a niche offering concentrated in no-frills but good value for money SUVs with some reliable Mercedes heritage technology under the skin.

Ssangyong was, however, thrown an important lifeline with the Korean bankruptcy court administrator's decision last month to allow it to restructure rather than enter liquidation.

And there are some significant plusses in the outlook for Ssangyong. A big one is an attractive looking crossover - the C200 - just around the corner as well as an international distribution set-up. There could also be financial sweeteners for anyone prepared to invest. Overall, Ssangyong looks like a brand with potential that could actually be attractive to outside investors (another OEM, for example, just has to figure that it can do better than SAIC did). 

But the new business plan includes many job losses and that has led to a dispute with the union that has quickly paralysed production.

While some union resistance was to be expected, it has dragged on - to the detriment of those still left who want to take the business forward. It won't be long before parts and vehicle supply lines start to run dry.

Korean labour unions aren't to be taken lightly and the sit-in at the Pyeongtaek plant has reportedly attracted some extreme elements. The police are, by all accounts, standing off and prefering not to risk further violence by forcing the strikers out. Nipping it in the bud early on might have been the thing to do, but hindsight is a wonderful thing, of course.

The danger is that the whole thing gets more difficult to resolve the longer it goes on, positions entrenched, along with a growing siege mentality. Meanwhile, Ssangyong racks up accumulated revenue losses and confidence in the brand erodes further. And potential investors are turned off.

Decisive action immediately to end the dispute might well get the best outcomes for all concerned.

SOUTH KOREA: Ssangyong dispute rumbles along


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