Hyundai Steel, a major player in the South Korean steel industry, has declared an emergency management system in response to a confluence of challenges, including domestic demand slump, low-priced Chinese imports, and the imposition of U.S. steel tariffs. Adding to the company's woes, prolonged labor union strikes have disrupted production, prompting Hyundai Steel to implement extraordinary measures for survival.
Cost-Cutting and Restructuring Measures:
20% Salary Reduction for Executives: Hyundai Steel will cut executive salaries by 20% to tighten its belt.
Streamlining Overseas Business Trips: Unnecessary overseas trips will be reduced to conserve expenses.
Voluntary Retirement Program for All Employees: The company is considering a voluntary retirement program to enhance management efficiency through workforce reduction.
Reduced Operation at Pohang Plant 2: Operation at the less profitable Pohang Plant 2 will be scaled back to adjust production volume.
Technical Staff Reassignment: Technical staff at the Pohang plant will be offered voluntary retirement or reassignment to the Dangjin or Incheon plants.
Deteriorating Business Environment:
Weak Domestic Construction Market: The domestic construction market slowdown has led to decreased demand for steel products, such as thick plates.
Low-Priced Chinese Imports: Increased imports of low-priced Chinese steel products are eroding domestic market share.
U.S. Steel Tariffs: The 25% U.S. steel tariff is raising concerns about weakened export competitiveness.
Escalating Labor-Management Conflict:
Deadlocked Wage Negotiations: The Hyundai Steel labor union has rejected the company's proposed average performance bonus of 26.5 million won and continues its strike.
Union Demands for Additional Bonuses: The union is demanding additional bonuses on par with those of the Hyundai Motor Group, but the company argues that its financial situation, with a net loss of 65 billion won last year, makes further payments difficult.
Hyundai Steel is making company-wide efforts to overcome the current crisis and plans to normalize operations as soon as possible through amicable labor-management agreements.
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