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12/22/2008, 11:06 AM

Korea’s Ssangyoung out of money, can’t pay employees

Chrysler and General Motors are hopefully that a recent government aid package will be enough to stave off bankruptcy, but things are looking much bleaker for Korea’s Ssangyoung Motors. The small automaker announced late last week that it is no longer able to pay employees.

Ssangyoung has experienced an even bigger drop off in sales than most automakers, leaving Ssangyoung’s piggy bank virtually empty. “The company is expected to post a deficit of more than W100 billion (about $76.7 million) this year alone,” the company said in a letter to employees. “Due to lack of operating funds for December, it is impossible for the company to pay salaries any longer.”

Ssangyoung has asked its parent company – China’s Shanghai Automotive Industry — for emergency funds, but to no avail. Apparently Shanghai Automotive is upset that Ssangyoung’s in-house union called for the firing of several Chinese executives, prompting the automaker to turn down Ssanyoung’s request, despite the company’s 51.3 percent stake in the Korean automaker, according to Chosun.

Ssangyoung has drastically reduced its operations over the past few months, including the shuttering of several plants. Ssangyoung’s dealership network has shrunk from 237 in early 2008 to just 180 now, resulting in a sales drop of 63 percent last year. In all, the jobs of 8,000 workers hang in the balance, with the future uncertain for Ssangyoung.

LINK: Korea’s Ssangyoung out of money, can’t pay employees
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