Cash-poor SsangYong inks wage dealSsangYong Motor is the first of five automakers in the country to finalize a wage agreement with its workers.
The Pyeongtaek, Gyeonggi-based automaker said Monday that the deal was reached Friday, making 2020 the 11th year in a row in which the company was able to conclude wage negotiations without a dispute.
Under the terms of the agreement, base wages will remain unchanged, and some bonuses will be cut. The two sides agreed in the past to cut bonuses and return to performance-based extra pay, while holiday presents and bonuses for long-term employees will be ended and medical and tuition support will be reduced.
SsangYong Motor said the agreement was reached by consensus and that the two sides collaborated closely given the lack of profits for three years and the coronavirus outbreak.
The automaker reported a net loss of 341.4 billion won ($280 million) and an operating loss of 281.9 billion won last year, with revenue falling 12.7 percent to 3.6 trillion won. The company has lost money for 12 consecutive quarters and accumulated around 411.4 billion won in net losses over that time.
In 2019, SsangYong Motor sold a total of 135,235 vehicles, down 5.6 percent from 143,309 in 2018. In the first quarter this year, it sold 30.7 percent fewer vehicles compared to the same period a year earlier.
The Korean company, which is 74.65 percent owned by Indian automaker Mahindra & Mahindra, has been emphasizing friendly labor relations as it seeks support from the parent company and creditors.
Mahindra & Mahindra provided a loan of 40 billion won to SsangYong Motor earlier this month, which will later be converted into equity in the Kospi-listed company. SsangYong Motor was initially expected to receive 230 billion won for rescue from Mahindra & Mahindra based on the fact that the Korean unit will need at least 500 billion won over the next three years.
But the Indian company’s board voted to abandon the original plan as the parent is facing business difficulties of its own as the pandemic reduces demand. In January, Mahindra & Mahindra Managing Director Pawan Goenka visited Korea and had discussions with the state-run Korea Development Bank, SsangYong Motor’s main creditor, and mentioned the possible need for help in rehabilitating SsangYong Motor.
As the company received much less funding than expected from the Indian parent, it has become important for SsangYong Motor to reduce losses on its own to avoid a looming liquidity crisis.
BY KO JUN-TAE [email@example.com]
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