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Daewoo Electronics completed a quiet restructuring last month, laying off as many as 1,500 of its 4,000 workers. It paid only W17 million (US$1=W906) per worker in severance pay, a miserable amount for many with over 20 years at the company. In the financial industry, laid off workers can expect hundreds of million of won in severance pay. But the restructuring at Daewoo was done quickly, in just two months, without dispute or conflict.
The company has been managed by its creditors since Daewoo Group's dissolution during the 1998 Asian financial crisis. The creditors and management had talked with a foreign company to sell the company throughout last year before the talks were broken off in May. It was then that restructuring began in earnest. Workers who kept their jobs gave up their bonuses to help pay severance to those laid off. Management also returned 30 percent of their annual salaries in the form of deferred pay. In addition, the company closed down its poorly performing units and sold off bad assets, clearing up potentially problematic elements worth W300 billion. These efforts began to bear fruit in October when it posted a slight surplus.
Despite the massive restructuring, Daewoo maintained its 44 overseas offices and branches in Europe, North America, Russia and other nations. It left its two overseas research centers in Europe and North America untouched. It is pinning its future on the overseas network, established by Daewoo Group with trillions of won in spending. Overseas sales now account for 82 percent of its total sales of W1.9 trillion.
Daewoo Electronics CEO Lee Seung-chang has two plans for overseas. One is to export the company¡¯s whole production system to emerging markets including the Middle East. That means teaching its know-how on producing appliances to overseas companies and exporting components or half-finished products to them. It is currently negotiating with foreign buyers from Egypt, United Arab Emirates, and Argentina. The other is to operate sales and after-service agents for Korean small-and-medium sized businesses, allowing them to use its brand if they want. "Daewoo still has brand power overseas," Lee said. "We will develop a new business model from which both we and local small-and-medium businesses can benefit."
(englishnews@chosun.com )
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