Struggling RSM might slash 80% of work force

Renault Samsung Motors’ voluntary job cut plan could affect 80 percent of its staff, Renault Group said over the weekend.

The French automaker announced earlier on Friday that the Korean unit will offer some of its workers voluntary retirement in a bid to shore up its bottom line after years of sluggish sales.

Renault said about 80 percent of the RSM staff, or 4,700 workers, could be affected. Its work force had grown to 5,667 by the end of last year.

Renault’s spokeswoman told Agence France-Presse that the program “concerns all salaried staff at Renault Samsung Motors, except for the 1,000 in research and development, and design.”

RSM said it will receive the retirement applications from today until Sept. 7. Departing employees will be entitled to a severance package equivalent to up to two years of their salary, depending on their position and time spent with the company.

They can also receive other allowances such as education fees for their children.

This is the first time RSM, Korea’s fourth-largest carmaker, is cutting personnel on such a scale since it launched in 2000.

It posted a loss of 215 billion won ($186 million) last year as overall sales plunged to 246,959 units, a drop of more than 20,000 from 2010.

This has been another tough year for RSM, which saw sales drop 34 percent on-year in the first seven months as local consumers snapped up just 93,919 vehicles, causing the carmaker to idle its Busan plant for up to three days a week.

The factory, which has an annual production capacity of 300,000 vehicles, is expected to churn out just 180,000 this year.

RSM has been criticized by industry pundits for lacking diversity in its lineup. The company has four models - the SM3, SM5, SM7 and QM5 - currently on the market and is expected to release a small SUV next year.

The decision came when Carlos Ghosn, CEO and president of the Renault-Nissan Alliance, visited Korea last month and promised to inject $160 million to build Nissan’s Rogue, a crossover utility vehicle, at RSM’s Busan plant to boost its operations.

During his press conference, Ghosn said the company was suffering from a lack of competitiveness.

Meanwhile, GM Korea, the nation’s third-largest automaker, said on Friday it is also offering staff the option of voluntary early retirement.

Some 100 senior mangers applied for the program from May to last month, it said, adding that they will also receive compensation of up to two years of their earnings, among other allowances.

GM Korea, which has 17,000 employees, sold 469,870 vehicles in the first seven months, a 2.1 percent drop from the same period one year earlier.

By Joo Kyung-don [kjoo@joongang.co.kr]