Intelligent Daewoo Solution NeededDaewoo Motor is at the crossroads again. With the breakdown of negotiations between labor and management, the firm is pressing ahead with laying off 1,750 workers. The union has balked and launched a strike. Although it was a predicted scenario when labor and management vaguely agreed to restructuring in November, it is pathetic that labor, management, the government and creditor banks have not solved anything in the meantime, allowing the situation to deteriorate to this point.
It will be desirable if Daewoo Motor is able to survive without the extreme measure of large-scale job cuts. We fully understand the unionists' pain at having been laid off after they attempted to revive the company at the same time they were not being paid.
Nevertheless, the Daewoo Motor situation should not be allowed to continue. The capital has been completely eroded and the more the company does business, the bigger grows the deficit. For the first half of last year alone, Daewoo Motor recorded 1 trillion won ($787 million) in deficit. Every month, 100 billion won is defaulted and creditors supply 5 billion won in fresh loans every day. Whoever looks at it, the layoffs are unavoidable.
Although job cuts are not the most essential or the only measure, it is clear that they amount to the first step toward recovery. In a situation where no other option exists except for selling the company to General Motors, the layoffs constitute preconditions for needed restructuring efforts. At such a juncture, the union's extremist strike is tantamount to a move geared for all parties to "go under together."
What the unionists must do is not strike, but prevent the firm's liquidation, because it would lead to a bigger loss of jobs.
The top managers of Daewoo Motor, for their part, should ask themselves whether they did their utmost to draw out the union's cooperation. They should examine whether they have shown a right vision for the company's recovery or whether they have remained idle waiting for GM's purchase.
The government also should not assume the attitude of a spectator, leaving the matter to labor, management and creditors.
If the Daewoo Motor case is not wrapped up well, a severe blow will be dealt to the troubled economy. An extreme struggle leading to the downfall of all the concerned parties should be avoided.