Long Ripples
The Samsung Group is disposing of inessential assets across its subsidiaries in order to tackle a management crisis before it happens. According to industry sources, it is looking to sell its BD700 along with two B737s and six helicopters so as to leave only one helicopter, which belongs to the Samsung Medical Center, as corporate aircraft. The pilots and maintenance engineers are slated to be transferred with them as well. Samsung Electronics, in the meantime, is going to halve its management support divisions’ expenditures next year.
Samsung Heavy Industries sold its land and buildings in Hwaseong City, Gyeonggi Province to SEMES, a subsidiary of Samsung Electronics, at 31 billion won (US$26 million) on Sept. 10. On the first day of this month, it decreased the number of executive members by about 10, by scaling down support divisions.
Samsung Electro-Mechanics recently sold off its hard disk drive (HDD) motor business unit and spun off its power, tuner, and electronic shelf label (ESL) business units. Samsung SDI disposed of its PDP panel and module divisions in July and is expected to take additional similar measures in the near future. Samsung Fine Chemicals decided to sell its real estate assets located in Suwon City, Gyeonggi Province to Samsung Electronics for 95.3 billion won (US$80.6 million).
This move is likely to spread to the other leading conglomerates. For example, the SK Group is predicted to slim down its business, as Chairman Choi Tae-won is about to come back after the presidential pardon granted last month. In this context, SK Innovation already sold some of its non-key assets, while SK Planet disposed of its shares in SK Communications. LG Electronics recently announced that it would relocate its personnel in the mobile phone business unit.
A problem for them is that they need to comply with the government policy for the creation of 200,000 jobs by 2017, while cutting back on people and spending as mentioned above. “Assuming that the economy showed an insufficient recovery, they might be compelled to resort to such measures as a wage peak and voluntary retirement that contributes to job creation by means of the sacrifice on the part of existing employees,” said an industry insider.