Ssangyong's future in doubt

The future of Ssangyong remains in doubt as the occupation of its factory in South Korea continues.

For the second day running, violent clashes have occurred between police and around 500 workers who have barricaded themselves in the paint shop at the factory in Pyeongtaek, 43 miles south of Seoul.

A Ssangyong source told Autocar that the future of the company was in doubt for as long as the occupation continued.

“Ssangyong’s future is uncertain,” said the source. “Until those people in the factory are out, production can’t go on and things are unable to return to normal.”

Ssangyong entered Korean court-approved bankruptcy protection earlier this year, a process similar to the one recently undertaken by General Motors and Chrysler in the US.

Entering court protection has protected Ssangyong from its creditors and it must submit a new business plan by 15 September. Part of its plan has been to cut costs, which included laying off 36 per cent if its workforce.

Around 2600 accepted this, but 1000 workers, backed by the strong Korean unions, barricaded themselves inside the factory 10 weeks ago and the stand-off is still going on. South Korean police commandos have been dropped by helicopter onto the building in a bid to end the siege.

“Over time, the shut-in has affected production and Ssangyong is now at the stage where it has ordered them out but they are not coming out,” said the source.

“It will take weeks to get back to normal. The longer the situation goes on, the more difficult it becomes.”

Creditors have filed a petition in Korea asking for Ssangyong to be liquated, but the source said this was political pressure and would be removed when the siege ended.

The siege has yet to directly affect Ssangyong in the UK but it is likely to in the future.

“We’ve had good stock levels in the UK and will have enough cars to last us until around the end of September, but obviously Ssangyong is not making cars at the moment and probably won’t be able to for some time,” said the source.

“But it is affecting our future plans. We can’t plan for the future while this goes on until this problem is resolved.”

Ssangyong had been set to unveil a production version of its C200 crossover at the Frankfurt Auto Show in September and it was supposed to secure the firm’s future.

“The C200’s appearance is unlikely at Frankfurt, but we haven’t heard anything official yet,” said the source.