Job Cuts at Renault Samsung Motors Could Hit 80% of Staff

Job Cuts at Renault Samsung Motors Could Hit 80% of Staff

Could affect 4,700 workers

Renault (IW 1000/78) said Friday that a voluntary job cut plan at its struggling South Korean unit Samsung Motors could affect up to 80% of its staff, or almost 4,700 workers.

The program "concerns all salaried staff at Renault Samsung Motors except for the 1,000 in research and development, and design," a spokeswoman said.

She added that the company employed 5,667 people at the end of 2011.

Workers would be let go "on a voluntary basis, with severance pay of up to two years pay depending on seniority," the spokeswoman said.

Employees who agree to leave are also to get two years of education fees for children and other allowances.

Renault had said earlier in the day in South Korea that it would offer some staff at the company it has controlled since 200 voluntary retirement owing to sluggish sales, but did not say how many might be affected.

Renault Samsung Motors has seen its sales wilt under pressure from South Korea's dominant Hyundai-Kia group.

What had been the third largest market for Renault (Renault, Dacia and Renault Samsung Motors brands) slipped to seventh place last year.

Sales by Renault Samsung Motors dropped by 27% last year to 118,135, and were down a further 41% in the first half of this year.

Analysts also blame a lack of new models for the dismal performance.Renault Samsung Motors produces just four models at its sole plant in the southern port of Busan, as well as engines.

It has been shutting down the under-utilized plant for several days a month since December. The factory which has an annual production capacity of 300,000 vehicles is expected to turn out around 180,000 autos this year.

At the beginning of this year Renault launched a plan to turn around the fortunes of the South Korean unit, aiming to reduce costs by sourcing 80% of components locally, and venturing into the electric vehicle market.

In July, the Renault-Nissan Alliance promised to invest $160 million to build a Nissan four wheel drive model at the Busan plant from 2014.

This will allow Nissan to manufacture more vehicles outside Japan, where it has been penalized by the strong value of the yen.

Copyright Agence France-Presse, 2012

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