Ssangyong Motor Forms "Baesoo's Jin," Employees Begin Unpaid Leave... "Will Build Foundation for Survival"

[Asia Economy Reporter Ki-min Lee] Ssangyong Motor, which has taken a 'do-or-die' step by selling even its Pyeongtaek plant to graduate from corporate rehabilitation and successfully complete mergers and acquisitions (M&A), will begin implementing unpaid leave for employees included in its self-rescue plan starting on the 12th.

Ssangyong Motor announced that, following the approval of its unpaid leave application submitted to the Gyeonggi Regional Labor Relations Commission on the same day, it will enter a one-year period of unpaid leave for its employees. Last month, the Ssangyong Motor labor union approved a self-rescue plan under which 50% of production workers and 30% of office workers would take unpaid leave for one year, with the possibility of extending the unpaid leave for another year depending on sales conditions.

Accordingly, the production line at the Pyeongtaek plant, which had been operating on a two-shift system during the day, will switch to a single-shift system starting today. All technical staff will be divided into two groups of 50% each, and office workers into three groups of 30% each, with one group rotating into unpaid leave each month. Ssangyong Motor explained that through flexible line operations such as inter-line reassignment to respond to production volume changes and efficient workforce management during unpaid leave, it can respond flexibly to market demand, thereby achieving improved productivity. In particular, Line 3, which produces the The New Rexton Sports & Khan with about 4,000 units still undelivered, will increase production, while Line 1 will reduce production through inter-line reassignment, improving production efficiency by more than 4%.

Additionally, Ssangyong Motor has agreed not to hire new employees for the natural attrition of about 150 employees annually (a natural reduction rate of 17%) due to retirement over the next five years starting this year, alongside the unpaid leave. As a result, Ssangyong Motor expects not only a real restructuring effect without artificial workforce adjustments but also an annual production efficiency improvement of 4-6%. The self-rescue plan also includes numerous measures to improve labor-management relations and productivity, such as extending the collective bargaining cycle from two to three years, suspending labor disputes until normalization, and implementing reassignment.

Following the M&A announcement for sale on the 28th of last month, Ssangyong Motor is accelerating its management normalization efforts this month by signing a joint cooperation memorandum of understanding (MOU) with Pyeongtaek City for the relocation of the Pyeongtaek plant and development of the current site as part of its self-rescue plan.

In particular, if the sale and relocation of the Pyeongtaek headquarters plant are successfully completed, it is expected to secure liquidity and gain momentum for future vehicle production. The Pyeongtaek plant site (850,000㎡) has a book value of 681.4 billion KRW and was recently revalued at about 900 billion KRW. Since Pyeongtaek City plans to change the site’s use to develop a large-scale residential complex, the actual sale price is expected to increase significantly. Ssangyong Motor also plans to equip the relocated plant with electric vehicle production facilities and produce six types of eco-friendly vehicles, including dedicated electric vehicles, by 2026.

Jung Yong-won, Ssangyong Motor’s administrator, said, "Through the flawless implementation of the self-rescue plan, we have not only reduced costs but also enhanced corporate competitiveness through improved productivity." He added, "As we have increased the possibility of attracting investment, we will expedite the M&A to firmly establish the long-term survival foundation of Ssangyong Motor."