Eventually Claims 'Temporary Public Corporation'... Ssangyong Motor in Fog

[Image source=Yonhap News]

[Asia Economy Reporter Kiho Sung] Some employees of Ssangyong Motor, which is experiencing a management crisis, have gone so far as to propose a 'temporary nationalization.' Although the Korea Development Bank has agreed to extend the maturity of the loan due this month by six months, a series of critical challenges are approaching, making the future still difficult. However, the government and political circles are initially skeptical about the 'temporary nationalization' proposal.

According to the automotive industry on the 9th, some Ssangyong Motor employees released a newsletter titled 'Proposing Temporary Nationalization' on the 6th. They argued that the government should make some investment in Ssangyong Motor, acquire shares, and intervene in management. They explained that once normalization is achieved, discussions on share sales and long-term blueprints could follow.

Currently, Samsung Securities and Rothschild, the lead managers of Ssangyong Motor's sale, conducted an on-site inspection at the Pyeongtaek plant on the 7th. Although the inspection took place, it remains uncertain whether Ssangyong Motor will be sold. The proposal for temporary nationalization by some Ssangyong Motor employees is interpreted as emerging from this background.

During the 2009 'Ssangyong Incident,' the union also proposed temporary nationalization, but no discussions were held. At the beginning of the current crisis, the 'Pyeongtaek-type job' plan, where the government or local governments would purchase some shares, was mentioned but remained only an idea.

This time as well, the temporary nationalization plan for Ssangyong Motor seems difficult to realize. A government official stated that "there has never been any discussion" about Ssangyong Motor's temporary nationalization. A Pyeongtaek city official also explained that the 'Pyeongtaek-type job' plan "has never been mentioned."

There is also a negative atmosphere in the political circles that hold decision-making power. A ruling party official pointed out, "If Ssangyong Motor's temporary nationalization is realized, other companies struggling with management might also demand nationalization," adding, "Since even the injection of public funds has not been decided, the possibility of temporary nationalization is low."

There are also calls to redraw strategies for the entire automotive industry rather than short-term measures like temporary nationalization. Senior Research Fellow Hanggu Lee of the Korea Institute for Industrial Economics & Trade explained, "In the case of GM, which was once a U.S. public enterprise, it took more than a year of preparation to implement nationalization." He continued, "What is most urgent is to reestablish a comprehensive automotive industry plan that has been absent since 2003," emphasizing, "Since risks are already imminent for other automakers and major parts suppliers, a comprehensive review of government policies is necessary."