Renault Samsung to reduce the number of employees in South Korea

Article by Christian A., on August 13, 2012

A voluntary redundancy program will be launched by the South Korean unit of Renault amid a sales slump worldwide. Renault Samsung did not say just how much it is targeting for its reductions in the work force. But according to a media report, hundreds of jobs may be lost. The automaker said that 4,500 workers qualify for the program.

Around 1,000 design and research staff members are excluded. Renault Samsung’s decision comes after the South Korean unit of General Motors Co. had announced the voluntary redundancies.

In South Korea, this is the preferred method used by companies to reduce personnel costs. Layoffs are not favored in this country. Demand is lower because of the worldwide economic slowdown, significantly affecting the automakers in Asia's fourth biggest-economy.

There have been reports that about 130 managers at GM Korea applied for the scheme. When asked how many employees have applied, a GM Korea spokeswoman declined to provide a number.

A Renault Samsung spokeswoman said that conditions continue to be hard and so it created revival measures such as voluntary retirements to cut costs. This would be the first voluntary retirement program for Renault Samsung since it started in 2000.

Deadline for applications is on Sept. 7. In addition, Renault Samsung denied rumors that there will be further job restructuring if the applications don’t meet targets. Renault Samsung is forced to cut production at its domestic plant after having the worst sales performance this year compared to fellow South Korean carmakers.

It posted a combined drop of 34 percent in its home and overseas markets in the first seven months of 2012 compared to the previous year. The company said last month that its Busan factory is targeting to produce around 180,000 vehicles this year from a capacity of 300,000 units.

Headquartered in Busan, South Korea, Renault Samsung Motors (RSM) was first established as Samsung Motors in 1994 by the Samsung Group, with technical assistance from Nissan. Samsung Motors commenced selling cars in 1998, but the Asian financial crisis forced Samsung to divest Samsung Motors and other non-core subsidiaries. Negotiations with Renault began in December 1998, and in September 2000, the French carmaker acquired a 70-percent stake for US$560 million. Samsung Motors was then renamed Renault Samsung Motors. The Samsung Group retained minority ownership.

Renault Samsung Motors has been operating a manufacturing plant in Busan in the Sinho Regional Industrial Site, since 1998. Covering an area of 1,650,000 square meters, the Busan plant boasts of production capacity of 300,000 cars annually.

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