[Exclusive] Dongkuk Steel Enters Emergency Management Mode: "Arrive at Work One Hour Early"

Order to Refrain from Business Trips and Hold Company-wide Meetings Twice a Week
First Quarter Operating Profit Plunges 90% Year-on-Year
'Reorganization' Movement Spreads Across the Steel Industry

Dongkuk Steel has entered an emergency management mode, instructing employees to arrive at work earlier, refrain from business trips, and expanding company-wide meetings, as the company struggles with a downturn in the construction market and oversupply. Operating profit in the first quarter plummeted by more than 90% compared to the same period last year, prompting the company to implement austerity measures across the organization.

According to industry sources on the 28th, Dongkuk Steel has been operating under this emergency management system since last month. Headquarters and major business sites have issued guidelines for employees to arrive earlier: executives are recommended to arrive one hour earlier than usual, and regular staff 30 minutes earlier. In addition, business trips have been restricted, and regular headquarters meetings have been increased to at least twice a week.This measure is being implemented to foster a sense of crisis among all members and to reinforce an atmosphere of vigilance, based on the recognition that internal management efficiency needs to be improved.A Dongkuk Steel representative explained, "These are voluntary measures taken in consideration of the current internal and external situation, including poor performance."

On the ground, employees interpret the move as an informal increase in work intensity, saying, "When managers start coming in early, it naturally creates an atmosphere where others must follow." Within the company, this measure is seen as "Phase 1 Emergency Management." There is also awareness that, if the business slump continues, the company may need to move to Phase 2 or 3, which would involve physical and personnel restructuring.

Some analysts see this as a preemptive response to a structural crisis, rather than just a matter of management control. Dongkuk Steel recorded an operating profit of 4.3 billion won and an operating margin of 0.6% in the first quarter of this year. This represents a drop of more than 90% from 52.5 billion won (5.7%) in the same period last year. The decision to halt operations at the Incheon electric furnace and rolling lines for a month in July and August is also aimed at addressing deteriorating profitability and controlling supply. This is the first "plant shutdown" in the company's history. Considering the Incheon plant's annual production capacity of 2.2 million tons, rebar production is expected to decrease by about 200,000 tons.

Dongkuk Steel's move to emergency management is not just an isolated issue. The sharp decline in rebar demand due to the construction market slowdown has had a direct impact, and the structural burden of higher industrial electricity rates has compounded the difficulties, making it hard for electric furnace-based companies to maintain profitability. A steel industry official commented, "The current crisis in the steel industry is not a short-term cyclical issue, but a structural phenomenon arising from differences in energy and resource procurement capabilities." He added, "In particular, China has effectively established non-tariff barriers based on favorable conditions in terms of energy costs and environmental regulations." The Korea Iron and Steel Association recently submitted a set of steel industry policy proposals to the National Assembly, focusing on easing the burden of electricity costs.

Steel products piled up at Pyeongtaek Port, Gyeonggi Province. Photo by Yonhap News

The steel industry is responding on all fronts, working to improve cost structures, strengthen product competitiveness, and shift business portfolios. Dongkuk Steel is focusing on strengthening its fundamentals by reducing fixed costs and improving operational efficiency, while POSCO is pursuing the sale of its Zhangjiagang stainless steel subsidiary in China, where profitability has declined. This subsidiary, established in 2003 as POSCO's largest overseas stainless steel production base, is seen as a signal for future global production restructuring. Hyundai BNG Steel, a Hyundai Steel subsidiary, is also considering selling its Dangjin plant as it seeks to divest non-core businesses. In addition, POSCO and Hyundai Steel are partnering with Hanwha Ocean and HD Hyundai, respectively, to explore entry into high-strength specialty steel sectors such as high-manganese steel.

Experts analyze that the steel industry has entered a phase where it must accelerate the shift from a "commodity-centered" structure to one focused on "high value-added products." Lee Jaeyoon, head of the Carbon Neutral Industry Transition Research Office at the Industrial Transition Strategy Research Division of the Korea Institute for Industrial Economics and Trade, said, "The steel industry is now at the beginning of a structural transition, not just facing a short-term demand contraction," and added, "It is inevitable to review excess capacity and reorganize around profitability." He emphasized that more than just declarations, a legal foundation and an actionable transition strategy are needed.