August 11, 2009 11:57
Hyundai Asan has been suffering its worst-ever crisis since its tour services to Mt. Kumgang were suspended in July last year following the shooting of South Korean tourist Park Wang-ja by North Korean soldiers. The suspension dealt the company a heavy blow as the tours were its main source of profit.
The tour business had been gathering steam up until the shooting, generating W14.5 billion in net profits in 2006 and W16.8 billion in 2007 (US$1=W1,228). Hyundai Asan suffered a W21.3 billion deficit in 2008, and its loss for the first half of the year alone has already surpassed that with W25.7 billion. The total damage incurred by the halt of the tours is estimated at W153.6 billion as of the end of June.
Hyundai Asan has had to carry out restructuring several times, cutting the number of staff to some 400 from 1,084 before the suspension. The remaining employees have accepted pay cuts of five to 30 percent or had their salaries deferred. Its organization was also dramatically downsized; out of six departments in the Mt. Kumgang office, four, including sales and accommodations, were cut, leaving only the maintenance and repairs departments.
Despite these measures, Hyundai Asan has not been able to regain its footing. It has failed to resume the tours amid escalating tensions on the Korean Peninsula following the North’s nuclear tests, the detention of a South Korean Hyundai Asan employee and the fuss over the Kaesong Industrial Complex. "Because of a W20-billion capital increase in April we can afford to survive for another 10 months, but we are approaching the limit as it is uncertain when the stalled tours can be resumed," Hyundai Asan president Cho Kun-shik told reporters in July.
Yet Cho and Hyundai Group chairwoman Hyun Jung-eun have not abandoned their hopes for the tours. At a recent Hyundai Group sporting event, Hyun expressed her determination to never give up on the business. Cho also told employees last month, "I would step down right now if it would help us resume our business with North Korea. I would do anything to find a solution for the Mt. Kumgang tours."
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