Crisis management the new normalOver 90 percent of major conglomerates in the country are either considering carrying out emergency management plans or have already set off down this route as they try to minimize the fallout of the drawn-out economic downturn, a report showed yesterday.
According to the survey by the Federation of Korean Industries (FKI) on 25 businesses, including Samsung Electronics, Hyundai Motor Group, SK Group, Lotte Group and Hanwha Group, the big caps are battening down the hatches as they wrestle with economic trials and tribulations that are in many cases more severe than in 2008, when the global credit crunch erupted.
While 8 percent of respondents said they have no plans to switch to emergency management, the remaining 92 percent, or 16 companies, said they are preparing contingency plans. KT, Lotte and Posco have already publicly declared as much.
“Conglomerates traditionally like to slide quietly into emergency mode, because when their plans are publicly revealed, they might face risks,” said an FKI official.
Lotte Department Store has been operating under an intense contingency program from early this year as consumer sentiment worsens and spending drops.
“Internally, efforts are being made to cut costs, including saving energy and resources,” said a Lotte employee. She said staff have been told to refrain from discussing internal matters on social networking sites as secrecy is at a premium.
Posco has its own emergency scenarios that are classified into five stages in accordance with global economic growth patterns. Until the first half of this year, the steelmaker’s management plan was based on the third-stage scenario, which is based on forecasts that the global economy will grow 2.8 percent this year amid sluggish U.S. demand and faltering exports to China.
However, the company switched gears to the more severe fourth stage recently. This is based on an analysis that global economic growth will slide to below 1 percent in the second half as Korea’s exports to China plunge and the U.S. economy hits another downturn.
When Samsung Group Chairman Lee Kun-hee returned from London last week, much attention was paid to what news he brought from Europe and how it would shape Samsung’s management plans for 2013.
Samsung prefers to avoid using the word “emergency” when discussing management strategies, but the market predicts its future plans will reflect a newfound sense of urgency to combat threats to its sales. The group’s high-ranking officials have already extended their morning meetings by an hour to devise suitable measures to respond to growing challenges.
According to one employee, the group asked Samsung Economic Research Institute to forecast foreign exchange rates, oil prices and global economic growth in June so it could start setting up next year’s plan from the middle of this month.
The group began preparing for the next year a month earlier than usual in light of the growing severity of business conditions, the source added.
Meanwhile, Hyundai Motor Group Chairman Chung Mong-koo flew to the United States on Monday to conduct an emergency review of the U.S. market.
According to sources, Chung decided to visit the carmaker’s sales branch in Los Angeles and factories in Alabama and Georgia because of poor sales growth compared to its Japanese rivals. The rapidly rising sales of Toyota, Honda and Nissan outstripped those of Hyundai in the U.S. last month.
Hanwha Group, which is still reeling from the recent four-year prison term handed down to its chairman, Kim Seung-youn, on graft charges, said it is already in emergency mode. All employees and executives are now required be at the office an hour earlier than usual for daily meetings.
By Song Su-hyun [email@example.com]
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