Daewoo sacks staff as company restructures
By : Magdalena Wierzchowska
The Daewoo-FSO Zeran-based factory is to lay off more than a quarter of its staff in a wide range of swinging cuts to stave off financial difficulties, the company said last week.
Company spokeswoman Krystyna Danilczyk said half the redundancies would be white-collar workers, but she couldn't say when contracts will be terminated.
Some 26% of employees 1,294 of the plant's 4,900 workers will lose their jobs.
Every employee made redundant will receive at least two job offers through an as-yet-unnamed company. However, sole breadwinners and people with more than 30 years' employment will not be sacked, the company said. Staff will also receive up to 15 months' worth of wage compensation, depending on how long they worked at the plant. Danilczyk would not reveal the full amount of compensation to be paid out by Daewoo-FSO.
The decision to lay off staff was taken at last Friday's extraordinary shareholders meeting. A press release stated that radical changes in the structure and methods of operations have to take place if the company is to survive the "deep crisis on the Polish automotive market." In addition to redundancies, the company said it plans to reduce costs and sell property not directly involved in production and merging dependent companies.
The Treasury Ministry also agreed to the layoffs. Daewoo-FSO representatives said the company's moves require government consent, according to a clause in the original contract when the Korean firm bought the Zeran plant in 1995.
Meanwhile, Jerzy Wozniak, head of the factory's General Committee of Solidarity Unions, denied reports that the union had agreed to the cuts. Wozniak said unions agreed to forms of protection such as retaining sole family breadwinners, but not to the number of staff sacked. The law obliges management to issue a formal request to unions before making mass redundancies, he said.
The layoffs are a result of acute financial problems at Daewoo's headquarters in South Korea combined with a drop in demand for cars on the domestic market and the government's slow reaction to finding solutions to the problem, Wozniak said. New-car sales fell by 25% last year compared to 1999 due to increased costs of new cars and rising fuel and insurance prices.
However, creditors of Daewoo Motor in Korea last week agreed to inject additional loans into the company to help with the restructuring process, which included staff layoffs of 1,550, according to the Korea Development Bank (KDB), Daewoo's main creditor. The money will be spent on materials, back salaries and pensions, the KDB said.
The decision followed South Korean Deputy Prime Minister Jin Nyum's announcement that his government will not rush the sale of Daewoo Motor, and that a sell-off will only be possible after the company breaks even, the KDB said. Nyum also said his government will not hold up layoffs at Daewoo Motor.
But news of optimism in Korea has had little effect on Poland's Daewoo plants. "What happens in Korea doesn't have a direct influence on us, so such optimistic information doesn't really influence us either," Danilczyk said. Events in Seoul also had little effect on Daewoo's plant at the Lublin-based van factory, Daewoo Motor Polska (DMP), said Beata Stopyra, press spokeswoman for DMP. But Jae Hyo Kim, the director of the Korea Trade Center at the Korean Embassy (KOTRA) said the creditors' moves would at least ensure supplies of auto parts for Polish factories.
But despite Daewoo's international financing woes, its Polish factories aren't doing too badly, said Wojciech Drzewiecki, head of Samar, an automobile research company. "Despite the problems at Daewoo, the drop in sales percentage-wise for this company is not the biggest," he said. "Daewoo's competitors, Fiat and General Motors (GM), noted bigger falls."
Sales of passenger cars in January fell 18.9% to 31,739 autos compared to 31,739 vehicles a year ago, according to Samar. Although Daewoo saw a 25.7% fall in year-on-year January sales, Fiat saw a 36.9% drop and GM's Opel sold 34.4% fewer cars.
