Polish mission heads to Seoul for Daewoo talks
A Polish delegation left for Seoul on Friday to talk with the South Korean government about how to save Daewoo's faltering Polish operations, the Economy Ministry said last week.
Deputy Economy Minister Edward Nowak, who is heading the delegation, said the mission would talk to the company about its current investment obligations in Poland as well as its restructuring plans. "We want to set the rules of engagement with the Korean authorities, especially the full amount of (committed) investment and the location of the (planned) car components plant in Poland," he said. Nowak added that inter-governmental talks would focus on how Poland can support Daewoo's restructuring.
The Polish delegation includes Deputy Finance Minister Rafal Zagorny; Ryszard Lawniczak, President Aleksander Kwasniewski's representative; Janusz Wozniak, vice president of Daewoo-FSO; and Zbigniew Prus, head of the management board of the Lublin-based Daewoo Motor Polska.
Daewoo is the largest single investor in Poland, with $1.55 billion invested in more than 30 production units and $632 million in planned investment, according to the Polish Foreign Investment Agency (PAIZ).
The 19% drop in car sales over the last year as estimated by independent automobile research company Samar has hit Daewoo particularly hard. The 89,000 vehicles the carmaker sold in September represents a 32% plunge from 1999.
Two weeks ago, the company announced that it would halt production at its zeran factory for three weeks and lay off 188 employees as the first step in restructuring its Polish operations.
But Daewoo received a setback last week when the Korean Development Bank (KDB), the company's main creditor, rejected its restructuring plans, Reuters news agency reported. This threw the company's future operations into even more doubt. "Daewoo Motor is increasingly sinking into a 'comatose' state due to a serious shortage of operating funds," KDB said.
While in Korea, the Polish delegation will meet with Keun-Yong Chung, vice chairman of the South Korean government's financial supervisory committee; Duck-soo Han, the trade minister in the Foreign Affairs and Trade Ministry; and Chung-jae Lee, the finance and economy vice minister. The visiting delegation will also meet Jong Dae Lee, the chairman of Daewoo Motors, and KDB Governor Rak-Yong Uhm.
During the talks, the delegation also hopes to minimize the possibility of a shortage of car parts from Daewoo. "We'd like to receive assurances that we'll have continuing supplies because although we have increasingly localized production, many car parts are still supplied from Korea," Wozniak said.
