SsangYong Motor workers voted in favour of radical cost-cutting measures proposed by the company last week as the bankrupt South Korean automaker struggled to remain in business.
The automaker filed for bankruptcy in December 2020 after failing to gain creditor approval for the roll-over of KRW165bn (US$148m) of loans.
In April it entered court receivership after its majority shareholder, Indian carmaker Mahindra & Mahindra, failed to find a buyer for all or part of its stake in the company after almost two years of searching.
SsangYong’s management last week proposed half of the company’s 4,700-strong workforce take unpaid leave for a period of two years while the remainder accept substantial wage cuts, in the hope that the company can remain in business until market conditions improve.
The company also proposed a further 20% executive pay cut, in additional to a similar cut announced in April, and the suspension of welfare benefits to all employees for a period of two years.
Following the acceptance by union workers, the company this week will submit the cost-cutting plan to the Seoul Bankruptcy Court, which is overlooking the company’s debt rescheduling process.
Earlier this week the court approved a group of accounting firms led by Ernst & Young to handle the process of selling the automaker.
Since the end of last year production has been affected by a shortage of components for long periods, with a number of suppliers refusing deliveries due to significant payment backlogs. The company’s global sales declined by 19% to 31,660 units in the first five months of 2021 from 39,206 units in the same period of last year.