If Ssangyong union doesnt restructure, then SAIC will quit Ssangyong
Recent news reports have said that Ssangyong is out of cash, and more shocking, they don’t have enough monies on hand to pay their workers salaries. Ssangyong’s biggest share holder, SAIC, own 51% of Ssangyong which gives them a controlling share in the Korean SUV maker. But when it came to the crunch last week, Ssangyongs request for a cash injection from SAIC to cover immediate running costs was denied. Rumor has it that SAIC is forcing the union to bend to its demands, as previously the union demanded that Chinese executives quit.
Chosun Daily gives us the round up on Ssangyongs financial failings:
Korea’s smallest carmaker Ssangyong Motors on Sunday said it cannot pay December salaries, which were due on Wednesday. Domestic carmakers saw a steep drop in sales in due to the worldwide economic crisis, but this is the first time a domestic automaker has failed to pay workers the money it owes them.
In letters to staff sent Friday, Ssangyong said, “The company is expected to post a deficit of more than W100 billion (US$1=W1,292) this year alone. Due to lack of operating funds for December, it is impossible for the company to pay salaries any longer.”
It had asked the head office of its parent company Shanghai Automotive Industry in China for emergency operating funds, but the request was turned because the in-house union had called for Chinese executives to resign, Ssangyong said. Shanghai Automotive took over Ssangyong in January 2005 by buying 48.9 percent stake, bringing holdings to 51.3 percent. Ssangyong employs about 8,000 staff — 2,500 white-collar workers and 5,500 production-line workers.
The Ssangyong executive committee plans a protest rally against management in front of the company’s Pyeongtaek plant in Gyeonggi Province at 8:30 a.m. on Monday.
Ssangyong began suspending the operation of all plants, including the Pyeongtaek plant, for three weeks last Wednesday. On Dec. 12, Ssangyong drastically downscaled its entire organization by merging the domestic business division, the overseas business division, and the services division into a single one, and fired a dozen key executives. A Ssangyong executive said, “The company will conduct an additional round of restructuring focusing on its business departments.”
With domestic sales dropping 34.5 percent from January until November, the number of Ssangyong’s dealerships has shrunk by about 60, from 237 early this year to the current 180. November sales alone fell by 63 percent year-on-year.
Bloomberg Asia then tells us more of the SAIC pull out:
Dec. 23 (Bloomberg) — SAIC Motor Corp., China’s largest automaker, may exit from Ssangyong Motor Co. if the South Korean company’s labor union doesn’t accept a restructuring plan, a lawmaker said after meeting Ssangyong’s head.
SAIC may pull out by early or mid-January, Jung Jang Seon, chairman of the Knowledge Economy Committee of South Korea’s National Assembly, said in a statement. Jung today met with Ssangyong Chief Executive Officer Choi Hyung Tak, he added, without giving details of the proposals before the labor union.
The Chinese automaker’s withdrawal will mean bankruptcy for Ssangyong, Choi said, according to the statement. Yonhap News yesterday said the company may not be able to pay December salaries on time due to a lack of funds for operations.
Cha Ki Woong, a Ssangyong spokesman, and Zhu Xiangjun, a SAIC spokeswoman, both declined to comment. SAIC owns 51 percent of Ssangyong. Yonhap News reported the possible pull out earlier today.
2008 appears to have been a roller coaster year for Ssangyong, first it was the oil spike which saw consumers ditching their SUVs (which Ssangyong only makes) and then the global credit crisis which left consumers with no credit to buy big ticket items, such as SUVs.
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But what about all those re-badged, fake X-5′s they crank out??
I think that’s Shuanghuan rather than Ssangyong that you’re thinking of.
It would be a big loss. I am sincerelly a Fan of their SUV models.
Ssangyong has produced real different SUVs and some other urgly models (like Chairmann and the MPVs).
Just to bring into mind was BMW that inspired its X6 on the Action Model.
I would like to believe that the strategy from SAIC is just to broke Ssangyond down in order to assume the remaining part to than perform a re-borning plan.
I hope that the Chinese Executives from SAIC could understand that not only the technology from Ssangyong is important, but also the Dealers they have distributed worlwide (which are not so many as Volvo, for example, but very helpfull) as well the present access to Daimler Benz Engines.
Case a plan would be developed quickly, SAIC would be able to place its own models produced in the PRC inside those markets which is quite difficult to enter together with the Ssangyong models inside the same dealers.
The PRC Government has assisted very well their companies on the way to became Global Players, but sometimes, I am forced to think if some Chinese Executives really understand how far and clear their Government can see.
Marry Christmas and Happy 2009 for All.
J. I. Hosang
Hosang, I am in agreement with you! Should SAIC let Ssangyong die, it will be a great loss for the design world. Only Ssangyong it seems are willing to break away from the SUV box molding that every other company seems to follow. Prior to buying a Qashqai, I gave the Kyron and Actyon a good looking over, I liked them very much, especially the Actyon. Amazing styling for an SUV!
As it stands now, neither SAIC nor Korean government is interested in rescueing Ssangyong. It is in their mutual interest that Ssangyong dies.
SAIC is reportedly set its eyes on Chrysler acquisition and is trying to conserve its fund as much as possible to raise necessary cash for transaction, so SAIC refuses to bail Ssangyong out with any serious cash infusion. Beside, SAIC feels it has already obtained almost all of Ssangyong technology and had little use left of Ssangyong, so it is time to dispose. Of course, abandoning Ssangyong doesn’t help its reputation with US regulators when buying Chrysler, but current climate is difficult enough that such ill repulation would be overlooked.
Likewise, Korean government sees Ssangyong as the hole of Korean auto technology leak to China and wants to close that leaky hole via Ssangyong bankruptcy. The government was especially furious after SAIC made an illegal transfer of government developed hybrid technology transferred to Ssangyong only under the condition that it would not be transferred out of Korea(GM received same tech from Korean government under same condition and kept its end of bargain. Only Korean built GM cars exported out of Korea would be equipped with this hybrid tech, not the ones built elsewhre. This tech, using the most advanced battery tech announced, is announced by Hyundai as Blue Drive launching next year), and cut off Ssangyong from all government tech aid programs. Now that Ssangyong faces bankruptcy, the current anti-labor Korean government sees Ssangyong’s problems stemming from SAIC’s mismanagement(70% of Ssangyong directors are Chinese) plus stupid militant union which the government wants to get rid of, so Ssangyong bankruptcy is like two birds with one stone; driving Chinese out and delivering a damage to militant labor unoin. In fact, the government already prepated for a Ssangyong bankruptcy scenario and is ready to move in. The Korean government would bail GM Daewoo out(Because GM Daewoo exports 1.5 million cars a year), but not Ssangyong.
So no Ssangyong bailout from Korean government, the only one left to bail Ssangyong out is SAIC and Chinese banks.
The hybrid tech leak from Ssangyong to SAIC is still pretty much unclear at the moment. Both Ssangyong and SAIC said that never happened. SAIC on the other hand has its own hybrid research with hundreds of million dollars.SAIC hybrid technology is ahead of Ssangyong and SAIC even intended to transfer the technology to Ssangyong. The leakage allegation from the Korean government rooted from an anonymous message from an unknown source.
The source was an insider whistle blower. Of course Ssangyong management(SAIC executives from China) denies leak.
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About the extent of SAIC technology looting of Ssangyong. It is revealed that SAIC still owes Ssangyong $120 million for transfered technology. It is also known that SAIC paid $20 million for Kyron(Roewe 750 to you) license. Then it becomes obvious how much Ssangyong tech was taken to SAIC. Still fine, Ssangyong is a private enterprise run by SAIC and private enterprises should do what they please with their assets, right?
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It only became a problem when SAIC transferred the technology Ssangyong didn’t own, like supplier’s drawings and government-supplied hybrid tech. Now the transfer suddenly becomes criminal.
Actually, the complaint came from the Ssangyong union, alleging SAIC is only interested in “looting” the company (partially through illegal means) and not long term development. Not the most unbiased opinion. That’s why Japan doesn’t have unions!
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SAIC had paid (as if Ssangyong could’ve afforded anything when they were floundering) for an unnamed German contractor to develop separate hybrid technology, petrol hybrids for SAIC and diesel hybrids for Ssangyong. I doubt the Koreans or the Chinese had the capability (as confirmed) to carry out this research, thus there was nothing to steal from Ssangyong. This is unlike Japan who has had superior engineering heritage inherited from Germany in the 19th century. Hell, Kia had to hire Peter Schreyer from the VAG group back in 2006 to come up with any of the decent designs they have today. Just like how Hyundai relies on Joel Piaskowski for design leadership at its main design centre, not homegrown Korean talent. And, just as bad, China relies on m&a activity to grow as well, through acquisitions such as the Rover/MG deal to get anywhere, not organic growth. Although it seems BYD may be getting somewhere by piggybacking on their battery tech. Again, just goes to show there’s not much in terms of “tech” at non-Japanese Asian automotive firms.
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Ssangyong, even in the days of Daewoo ownership, had to pilfer technology from Mercedes to create anything worth releasing. Their idea was great, too bad S.Korea wasn’t ready to pay for Korean S-class replicas (the “Chairman”). Doesn’t the Stavic still use a Merc tranny?
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Plus, Ssangyong’s management team is Korean too. Blame them for being greedy and being plain spineless to not listen to their Chinese overlords. At least SAIC has its eyes on the ball.
> I doubt the Koreans or the Chinese had the capability (as confirmed) to carry out this research.
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I will give you a nice example. When GM CEO Rick Wagoner drove a Volt mule to the US Senate for the second bailout hearing, the mule he drove wasn’t actually a Volt or even Cruze; it was a stock KDM Lacetti airlifted from Korea. This made Volt fans furious because this meant Volt R&D was moved to Korea. It was already well-known that Volt would have Korean battery pack and battery control unit, but the Lacetti that Wagoner drove to the Senata confirmed that Volt, so called GM’s savior, was going through its final phase(pre-production) of development in Korea and not in Detroit as many presumed. Why did this happen? Because Volt rides on a Korean chassis and is powered by a Korean battery pack, and most of core components come from Korea. In fact, the final Volt is rumored to have “Powered by LG” badge outside.
haha, I’ve never cared about the Volt because Prius will destroy it anyday. But wow, after some reading, I just discovered the Volt is a huge pos.
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“..basically, the Volt’s not a hybrid because it still only has one drivetrain, an electric one. The engine makes electricity to power the electric motor running the wheels as well as to “sustain” the batteries, but not to charge them up. It’s still, we guess, an Range-Extended Electric Vehicle (REEV)”
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Is this why it’s powered by LG and not Toyota? This is why Toyota is #1.
Also, everyone knows the financial straits GM is in right now. GM chose to utilize its R&D center and suppliers in Korea because they are cheaper to use than their American counterparts. If you think the choice was due to quality rather than price, hah. GM is leaning towards Continental AG (of course, a Deutsche company) and A123Systems for the Volt’s lithium-ion batteries, but they’ll never be able to afford anything from these higher tiered companies when they’re at risk of defaulting with their loans. I’m sure the rest of GM’s bankers are calling them up everyday to make sure they are doing everything to maintain a positive cash flow to service their debt.
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Of course, it would’ve been worse to go with their Chinese JV’s since most of it would’ve been visible to their competitors and possible industrial espionage.
@ dai_nippon
> GM chose to utilize its R&D center and suppliers in Korea because they are cheaper to use than their American counterparts.
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The decision was based on speed of development rather than cost. Since most of core Volt parts suppliers are Korean anyway, it makes sense to move all final-phase of R&D(pre-production) to Korea, where the chassis supplier and battery suppliers are located, to speed up production.
hmm… first a Korean now a Japanese, who’s next.
And yes I did read somewhere before (and I will try to dig it out) that SAIC hybrid system is different from the one ssangyong is developing, as that japanese mentioned above, Saic is going for petrol hybrid, and ssangyong is going after the diesel hybrid, what is the point of looting the ssangyong hybrid, to mingle petrol and diesel together ?
Components are interchangable. It is just like how you can use same transmission with both gasoline and diesel engine.
Same core components(regenerator, ultra-capacitor, drive control unit, battery, etc) can be used with both engine type, and this is why SAIC was desperate to gain an access to goverment-issued hybrid tech.
here from gasgoo
“An unnamed source said Ssangyong Motor and SAIC had both commissioned a famous German engineering company to research and develop the hybrid technology, but they couldn’t share the technology as Ssangyong planned for diesel engines while SAIC for petrol engines. Besides, SAIC didn’t need the so-called technology as the Chinese automaker always stepped faster than Ssangyong on hybrid research and development, the source told.”
SAIC is spending nearly 300 millions dollars on the hybrid system, whereas the Korean government only support this tech with one millions dollars (according to Gasgoo news), how advanced can this be ? and plus two systems are different.
or are you just simply overblowing and exaggerating things ?
Then Gasgoo is wrong, since each contestant(Two are competing) in second phase of battery development project(The first phase resulted in LG’s Lithium Polymer hybrid battery pack half the size and weight of Toyota’s system and will be commercialized next year, available to all Korea-located automakers except for Ssangyong. Ssangyong has been cut off from all government tech transfer programs thanks to earlier scandal) are getting $10 million each year.
So is the Hyundai Blue Drive also sourced from this German engineering company ?
No, both Hyundai and Ssangyong hybrid drive systems were issued by the government R&D center. They are government property and individual automakers are considered licensees who are prohibited from transferring tech outside of Korea. SAIC management running Ssangyong is accused of violating this agreement and is facing a criminal prosecution. This isn’t the first time Chinese executives are criminally charged with industrial espionage.
ok believe whatever you want, there are always two sides of the story, we shall see how advanced your Korean hybrid system is next year or maybe 2015 (according to some sources). I guess that was SAIC mistake to be involved with the Korean Ssangyong at the first place, if Ssangyong was any useful Daewoo would not have sold it anyway. It’s best now that SAIC draws a line between them and that Korean arm.
Well, take a look.
http://blog.wired.com/cars/2008/11/for-hyundai-blu.html
As for Ssangyong’s past, it wasn’t sold by Daewoo; Daewoo was the receiver of Ssangyong when its original owner(Ssangyong Corp, of course) put it under the receivership of Ssangyong because two shared the dealer network. When Daewoo itself went belly up, the whole group was broken up and sold in pieces. Of course Daewoo was pursued by likes of Ford(which initially bid $6 billion) and GM, while Ssangyong was left ignored and unwanted except for the Chinese because even Ssangyong’s obsolete tech was like light-years ahead to them.
darn this place is a mess a korean showing off on a chinese cars blog.
Believe we should be more independent in our concerns like:
1 – German Companies are not all the best, not so independent as mentioned, just check what they did when the crash test was done with the Brilliance BS6, they cutted the longarins in order to increase the damage to the sample car which was crashed. In other segments we have seen them acting very bad and thinking that everyone around them was stuppid.
2 – Leak of technology is a must in the whole industry. Chinese are not masters but would say that historically it has being done since years.
a) In Israel the Israelian Aircraft Industry (IAI) steal projectf from Dassault-Breguet, from the Mirage Jet Fighters.
b) Still today, there are rumors that some Executives from Daewoo sold the project of the Daewoo Matiz/Chevy Spark to Chery and not Chery that have copied it from General Motors.
c) Hyundai started producing the Ponny, a simple copy from the Mitsubishi Colt from the 80′s.
3 – Chinese are investing mountains of capital in new fuel althernatives, such as Flex-fuel and Electricity. I sincerelly do not believe that the South Koreans are so advanced to try to keep their technology protected. Today this matter is discussed in Universities worldwide (because when a Government, like the South Korean one, is said to be investing in something, is just using the Universities men-power), would they have really something so different and advanced.
The fact here is that another player is close to leave the market and it would be as some other mentioned before, a loss.
Nice 2009.
a) That was in the 60s, during desperate times when Israel was still in infancy and was surrounded by Arab states waging wars. Of course no one accuses of Israel of IP piracy anymore, they have some of best engineers and scientists in the world.
b) No, the official history is that Daewoo and Chery were negotiating a licensed production of Matiz and Magnus by Chery prior to Daewoo sales to GM, so the proper licenses was never granted. Nevertheless, Chery proceeded onto unlicensed Matiz and Magnus production.
c) Pony was a licensed Mitsubishi design, designed and supplied by Mitsubishi who also engineered Hyundai vehicles for Hyundai in the 70s and 80s in exchange for a 5% royalty. Hyundai actually played by the rules from the beginning unlike Chinese.
3) Well, what Chinese are doing are small uncoordinated independent projects here and there. This is different from Koreans who have a national “industrial policy” like the infamous hybrid tech in the center of ongoing dispute, where the government does basic research, funding, and sets standards so that parts are interchangeable and all automakers could share parts to lower cost. What SAIC took was pretty much useless because it was designed to work with LG’s polymer battery pack(Does not work with another battery type so SAIC must rework the system and fill in the missing gap that Ssangyong didn’t receive from Korean government), which of course will not be supplied to Ssangyong or SAIC.
In case you need to see how effective Chinese industrial policy is, look no further than the spectacular failure of TD-SCDMA, a 3G standard obsolete before it launched, and Chinese HDTV standard. China’s hybrid and alternative energy vehicle programs are destined to suffer similar fate.
The main topic is about SAIC ditching Ssangyong then it was soon deviated to hybrid tech now it is steering into Chinese 3G and HDTV standard.
I honestly don’t know what this IHC guy doing here on China Car Times, most of the time he keeps flaunting about his Korean cars, how good they are, how advanced the Korean tech is, blah blah find all sort of excuses. There are Korean cars blog on the Internet , why don’t he just go there and make a name I_love_my_Korean_cars and write whatever he want about Hyundai, Kia or Daewoo there. Why keep comming here to give people lectures about Korean cars. Sigh…….. Sometimes it makes me feel that this Chinese cars site is the advertising blog for Korean cars.
@ mememe
> The main topic is about SAIC ditching Ssangyong then it was soon deviated to hybrid tech now it is steering into Chinese 3G and HDTV standard.
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They are simply examples of Chinese failures in big products. Chinese are exceptionally good at simple and small things. Yet they struggle in big and complicated projects. I always wonder why.
Which big and complicated projects has Korea done lately?
huh ? China as a developing country already making milestones in building jet aeroplanes, space rockets, send people into space, building supercomputer, atom chip (2nd country in Asia to achieve this after Japan, and after US, France and Germany) running an extensive nanotechnology projects.These are the things that I never heard about when talk about Korea. A Korean like you should wake up and smell the coffee, your korea was not always the korea of today, it was once poor, backward, low tech backwater struggling for foreign help like everyone else.
China supercomputer was the only supercomputer outside the United States to be included in the top ten worldwide ranking. Where is Korea ? oh i guess they are only good at little things like cell phones and thing like that hyundai blue drive (which is nowhere even near the BYD battery tech), they always struggle at big things. I wonder why.
A nice compilation of a list of Ssangyong Vehicles that SAIC transferred for mere $120 million(Still not paid and Korean government is urging SAIC to pay up) popped up.
Ssangyong Kyron -> Roewe SUV very soon
Ssangyong S161 -> Roewe 350/MG5 4Q2009(This is news to me)
Ssangyong C200 unibody SUV -> Roewe compact SUV
Ssangyong Chairman W -> Roewe 950(??) 1H2009
Of Roewe line-up, only Roewe 550 and 750 are non-Ssangyongs. SAIC did try to launch Roewe 550 and 750 as Ssangyongs in Korea but both were canceled as they were deemed uncompetitive in Korean market.
It would be interesting how SAIC would continue Roewe R&D without Ssangyong, as 2/3rd of Roewe line-up are Ssangyongs.