Down and out on LCD Road as LG Display shutters plant

Economy

Published: 24 Dec. 2022, 07:00 Updated: 25 Dec. 2022, 11:54

Down and out on LCD Road as LG Display shutters plant

A banner notifying the factory is up for sale is up at Namdong Industrial Complex in Incheon on Dec. 20. [KO SUK-HYUN]

It's all quiet on LCD Road, in Paju, Gyeonggi, these days, sort of like a ghost town. Restaurants are empty and nearby apartment buildings are looking run down.

“I recently put my store up for sale, I’m quitting,” said one restaurant owner with a location nearby.

The problem is simple. LG Display is shutting the P7 factory, the last remaining manufacturing site in Korea for large liquid-crystal display (LCD) panels.

Total employment at the plant plus subcontractors once stood at 18,000. Today, the numbers are down and the morale of those remaining is low. Soon, the total will be zero, or near zero.

There was a time when a shift change was characterized by the hustle and bustle of after-work dinners and maybe a drink or two. Those days are gone. Now the few workers remaining just quietly make their way to the factory or straight back to their dormitories.

To-let signs are hung here and there like flags of surrender.

“The vacancies are thrice as much compared to when the factory and LCD panel production was at its peak,” a local landlord said. “As end-of-the-year bonuses disappeared a few years back, all the karaoke places and pubs disappeared with them.”

In a four-story building, only seven businesses are up and running. When the industry was booming a decade ago, the building was fully packed with about 20 establishments, ranging from Japanese spots to premium beef eateries.

Now, its just convenience stores and cheap restaurants where a meal can be had for 7,000 won.

LG Display says that Covid may be a factor in the state of business in the area, though the company could not put a figure on how many jobs have been lost so far.

A nearby glass-cutting business is open but getting no orders.

“They say organic light-emitting diode panel production will take the place of LCDs, but we are not sure if we can maintain workforce,” said a worker at the business.

LG Display lost a total of 1.2 trillion won ($936.3 million) on an operating basis in the second and third quarters combined as competition increased, especially from China, and as demand for large LCDs dropped.

Employees will leave voluntarily or be transferred to related companies.

“There will be no forced restructuring or offering of voluntary retirement,” CEO Jeong Ho-young said last month.

LCD Road has been buzzing in recent months about "quiet firing." "Quiet quitting" is when workers do the minimum to get paid but don't quit. Quiet firing is when a company makes conditions so bad that is it better to quit.

Quiet firing can trickle down, as head count reductions at a large company can have a disproportionate effect on suppliers.

A vacant restaurant for lease near LG Display’s factory in Paju, Gyeonggi [LEE HEE-KWON]

At Incheon’s Namdong Industrial Complex, as the sun set, cars pulled out of the lot and the lights of the factories shut one by one, the area going pitch black.

“You can say all the factories with their lights out are now closed,” a real estate agent said. “All transactions were cut off from summer because interest rates kept climbing."

He added that since most small factories were built with credit, they are tough to sell.

Still-active factories within the complex are barely holding on, let alone maintaining jobs.

“We are not even thinking of hiring when we are barely able to make ends meet and do repairs,” said a source at a small manufacturer. “When there’s less work, then there’s less pay, so even if we are looking for hire, people don’t come.”

“The shutdown of one of GM Korea’s Bupyeong plants last month took a toll here,” said another factory manager. “I believe there will be more successive shutdowns among the factories in the complex early next year.”

Workers who’ve experienced multiple voluntary resignations in each recession after the Asian Financial Crisis of 1997 are dreading a wave of “quiet firing.”

“There’s no guarantee that there won’t be voluntary resignations if the management goes sour,” said one employee of a small company.

“There’s a dual system within labor market in Korea,” Professor Lee Young-myon of Department of Business Administration at Dongguk University said. “For large companies with labor unions, it’s hard to fire workers, while for small enterprises, it’s too easy. Conglomerates opt for ‘quiet firing’ to induce workers to resign, or they avoid hiring new people. For small-and-middle enterprises, a much bigger side effect may take a toll.”

BY LEE DONG-HYUN, KO SUK-HYUN, LEE HEE-KWON [lee.jaelim@joongang.co.kr]