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Virus Infection Concerns Compel Korean Companies to Shut Down Factories, Research Centers
Companies Shift into Emergency Mode
Virus Infection Concerns Compel Korean Companies to Shut Down Factories, Research Centers
  • By Michael Herh
  • February 26, 2020, 14:19
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Health officials conduct quarantine activities at the Dongnae branch of Mega Mart after a COVID-19-infected person visited it.

A spike in the number of patients infected with COVID-19 has forced many Korean companies shift into emergency mode. Korea has had trouble in importing parts from China, but now it has to worry about shutdowns of industrial plants.

Samsung Electronics and GS Caltex temporarily halted their operations while offline stores visited by infected people such as Shinsegae Department Store’s Gangnam Branch, were locked down. The auto industry, which stopped its factories due to shortages of parts from China, is struggling with sluggish production and sales. The aviation and travel industries are facing a life-or-death crisis.

Samsung Electronics' Gumi Plant shut down all of its worksites and had been in the middle of quarantine work since Feb. 22, industry sources said on Feb. 23. The action was taken in after an employee was infected with the virus. Samsung Electronics plans to restart the plant’s operation on the afternoon of Feb. 24th after finishing the quarantine work. Samsung Electronics is concerned about a disruption in production of foldable smartphones at the factory.

The Daejeon R&D Center of GS Caltex will also lock down itself from Feb. 21 to the weekend in order to preemptively cope with any accidents after it was confirmed that an employee had contacted the family of a confirmed patient in Daegu. The employee was tested negative by medical personnel and the R&D center will resume its operation on Feb. 24.

SK Hynix found out a new employee who contacted an infected person from Daegu and told self-contained about 800 employees at Icheon Campus to quarantine themselves and stay at their homes on Feb. 20. LG Group subsidiaries told employees who commute to Gumi from Daegu to stay at or work from their homes if they visited the same places that infected people in Daegu visited.

Distributing companies that infected people visited closed down themselves and carried out quarantine work. The Gangnam Branch of Shinsegae Department Store visited by an infected person on Feb. 19, shut down its food corner only on the same day. Lotte Department Store’s Yeongdeungpo Branch was totally closed down. The same measure was taken for E-Mart’s Seongsu and Kintex Branches, and Homeplus’ Gwangju Gyerim Branch.

Shrinking production and demand are fueling tensions in the automotive and petrochemical industries. Although problems in the supply of Chinese wiring harnesses have been resolved to some extent, the domestic market is expected to hardly avoid taking a hit as the number of visitors at major car dealerships dropped to one-third of the normal level.

Makers of petroleum products are concerned about sluggish demand amid a slump in the Korean market as well as a drop in exports to China. According to the Oil Price Information Service by the Korea National Oil Corporation, the weekly gasoline price at gas stations across the nation in the third week of February fell by 14.1 won from the previous week due to shrinking demand.

It is the aviation and travel industries that suffered most from the spread of the virus. Flights between Korea and China by Korean airlines to Korea and China shrank 77 percent, and the travel industry also suffered a drop of 80 to 90 percent in new bookings in February. The aviation and travel industries are already tightening their belts including employees returning some of their wages, paid and unpaid leaves, and a cut in working hours. The government decided to support up to 300 billion won in liquidity funds in consideration of these situations. The worst case can take place if such situations are prolonged, experts say.

In the case of the semiconductor industry, however, the worst situations such as downtime have been avoided so far. "Even if some of production employees are confirmed to have the virus, infections will neither take place nor increase via air or due to contacts as the structure of a semiconductor plant at the highest level in cleanness and sanitation management," said an official in the semiconductor industry. "But chipmakers are thoroughly managing cleanness and sanitation in preparation for the worse cases.” At a semiconductor plant, even a few minutes of downtime can result in huge loss.

Although the entire Korean industry has preemptively banned business trips to China, situations are suddenly changing with an increase in new outbreaks, so Korean business people are worried about what will come next.

In commercial areas of Seoul, the fear of workplace closures has become rampant due to the spread of the COVID-19 virus. The LS Group closed down LS Yongsan Tower in Seoul as an employee working at the building was confirmed to have the virus and gave an instruction for telecommuting for two weeks to employees at the building. The LG Group canceled the “LG Tech Conference” to be held in April every year to recruit engineering talent in the United States. The LG Group also held a meeting with subsidiaries in the afternoon of the day to discuss the expansion of telecommuting.