Shortsighted Daewoo Union

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Shortsighted Daewoo Union

With the union''s refusal to submit a restructuring agreement, Daewoo Motor Co. has been declared bankrupt. It is a regretful turn of events.

Even if it was difficult for the union to accept the loss of 3,500 jobs, in the public''s eyes it is unacceptable that the union was short-sighted, put its parochial interests first and did not hesitate to force the bankruptcy.

If the unionists believed that Daewoo Motor would not be allowed to go under, their judgment was very wide of the mark.

Of course, the company''s current difficulty is largely attributable to Daewoo management, including its former chairman, Kim Woo-choong, the government and creditor banks. No matter what was done, Daewoo''s survival might have been impossible once some managers promised "five years'' job guarantee" to employees even though the company was on the verge of collapse.

True, it was not fair for the government and creditors to push the union to submit to an agreement at the last minute after they had failed to sell the company because of their own swerving positions.

Nevertheless, even if all these facts are taken into consideration, the final responsibility lies with the union for driving the company to the worst-case scenario - bankruptcy - as it refused to accept job cuts to the very end. Daewoo Motor has 19,000 employees, and as many as 600,000 people work for cooperative firms and subcontractors.

The bankruptcy of Daewoo Motor affects the self-rescue efforts of Daewoo affiliates and the overall national economy. Did the union think that keeping 3,500 jobs was more important?

As the unionists clung to their shortsighted interests, they ended up creating a crisis that will shake the entire Daewoo Group and the entire nation.

Daewoo Motor has 11 trillion won ($9.7 billion) in debts, and because of sluggish sales, it recorded 1 trillion won in net losses for the first half of this year alone. Taxpayers have been filling these gaps.

In such a situation, everyone knows that the only option for Daewoo is to sell the company as soon as possible. If so, the wise choice for the unionists would have been to cooperate with the management to improve the company''s situation, raise its value, sell it to a foreign automaker and protect as many jobs as they could. Now the union has blocked this path.

This is what we regret most. In the current situation, with the national economy in a precarious state, the Daewoo case created a very bad precedent, even if the natural order of the day is liquidation of insolvent companies and downsized management. Ailing companies should learn from this lesson.

At this juncture, the task at hand is to minimize the aftermath of Daewoo Motor''s bankruptcy. The government says that no huge shockwaves are likely to result because Daewoo Motor was already in a precarious situation and was trying to work out its debt.

However, Daewoo Motor will stop opeating, and subcontractors are facing the crisis of chain bankruptcies. If the company is put under court receivership and its credits and debts are frozen, creditor banks will face a grim future. This in turn will have rippling effects on other areas.

The government must minimize the economic shock as much as possible. At the same time, Daewoo Motor should be revived in whatever form it takes and sold after better conditions are put in place.
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