2024-04-17 12:31:00
industry
Entered 2024.04.17 18:32 Modified 2024.04.18 01:50 Paper A1
Samsung enters ‘emergency management’
Preemptive response to management uncertainty
It remains to be seen whether it will spread to other companies.
Samsung Electronics Seocho headquarters building. Photo = Reporter Kim Beom-jun Executives of all Samsung Group affiliates will begin working six days a week as early as this week. In a situation where the performance of major affiliates such as Samsung Electronics was not as good as before, and uncertainty in the business environment such as exchange rates and oil prices increased, the company virtually entered an ’emergency management system’. As other companies are also facing similar concerns, there is an analysis that there is a high possibility that the ‘executive six-day work week’ will spread throughout the business world.
According to the industry on the 17th, executives at all Samsung affiliates will begin working six days a week as early as this week. An executive at a Samsung affiliate said, “Considering that the performance of major affiliates, including Samsung Electronics, is falling short of expectations, we are implementing this with the purpose of encouraging executives to be alert and participate in overcoming the crisis.” He added, “As the conflict between Iran and Israel is increasing, the exchange rate is rising. “This is a measure that takes into account worsening business conditions, such as soaring oil prices,” he explained. Samsung Electronics has decided to include other executives in production and sales as well in the six-day work week, which is being implemented mainly by executives in charge of management support and development. Executives from electronics companies such as Samsung Display, Samsung Electro-Mechanics, Samsung SDI, and Samsung SDS also decided to implement it as early as this week. Executives from the three engineering, procurement, and construction (EPC) companies, including Samsung C&T, Samsung Heavy Industries, and Samsung E&A, have been working six days a week since the beginning of this year. It is reported that financial affiliates such as Samsung Life Insurance will also begin reviewing the six-day workweek system.
It is reported that the six-day work week will involve each executive choosing to work on either Saturday or Sunday. Employees below the manager level are not eligible for holiday work.
The industry predicts that ’emergency management’ will spread throughout the business world. SK Group, which is suffering from poor performance of its main affiliates, also revived the ‘Saturday Presidents’ Meeting’ in February, where top executives and CEOs of major affiliates gather on Saturdays to discuss pending issues for the first time in 20 years.
Performance deteriorated due to triple whammy… Companies that turn on their emergency lights
Samsung Semiconductor posted a surplus in the first quarter, but its foundry business still suffered a loss.
“It is in effect a declaration of emergency management.”
This is the industry’s evaluation of Samsung Group’s ‘implementation of a six-day week for executives’. The reason Samsung went into emergency management was because it believed that the business environment was not easy. Samsung Electronics’ business performance has deteriorated to the extent that it recorded an operating loss of 15 trillion won last year in its main business, semiconductors. External variables are also unusual. As the war between Russia and Ukraine and the conflict between Iran and Israel spread, the volatility of exchange rates and oil prices, which are key management variables, is increasing. There is an analysis in the industry that there is a high possibility that the emergency management started by Samsung will spread to other large corporations.
○ Crisis suppressing Samsung Group
Samsung’s implementation of the six-day week for executives had a significant impact on Samsung Electronics’ performance. The semiconductor (DS) division, which was responsible for 75.6% (KRW 44.57 trillion) of Samsung Electronics’ total operating profit (KRW 58.89 trillion) in 2018, posted an operating loss of KRW 15 trillion last year. Although the DS division turned profitable in the first quarter of this year, the system semiconductor business, including foundry (semiconductor consignment production), which is being intensively fostered as a future business, is still in deficit.
Competitors’ pursuit is also unusual. The high bandwidth memory (HBM) market, which is the center of the artificial intelligence (AI) semiconductor market, is led by SK Hynix. Intel, which announced its entry into foundry, has presented a blueprint to surpass Samsung and rise to second place.
The external environment, which directly affects corporate management, is also worsening. This is because geopolitical risks are increasing due to the conflict between Israel and Iran following the Ukraine War. As a result, oil prices and exchange rates are fluctuating. Dubai oil, which was $86.31 per barrel as of the end of last month, rose to $90.26 as of the 16th. The won-dollar exchange rate hit 1,400 won during trading. Sudden fluctuations in exchange rates and oil prices are factors that increase uncertainty in corporate management. The shock waves that prolonged high interest rates have on the global economy are continuing.
○Expansion of emergency management to all industries
Former Samsung executives plan to work on weekends to come up with a ‘crisis overcoming strategy’ for their respective businesses. It is also known that work will be done to reexamine whether the previously established business strategy is effective in a changed business environment.
Industry circles are talking regarding the possibility that Samsung’s emergency management declaration will spread throughout the business world. This is because business conditions in key industries are worsening. SK Group, the second-largest business group, revived the ‘Saturday Presidents’ Meeting’ for the first time in 20 years, where top executives and CEOs of major affiliates gather on Saturdays to discuss pending issues. In addition, executives from the Supex Pursuit Council, the highest corporate consultative body of SK Group, decided to return the flexible work system that allows them to rest on two Fridays each month. It is known that this reflects Supex Chairman Choi Chang-won’s intention that executives should step up and create a ‘working atmosphere’ in order to control the loose group atmosphere.
The petrochemical industry is undergoing a large-scale workforce restructuring. LG Chem, Korea’s No. 1 company, recently decided to accept applications for voluntary retirement by the 30th from production technicians in its advanced materials business division who have worked for more than five years. LG Chem decided to sell its IT film (polarizer and polarizer material) business facilities to a Chinese company for regarding 1.1 trillion won in September last year in order to liquidate marginal businesses with low profitability and expand investment in new businesses such as secondary battery cathode materials. . Lotte Chemical is also working on relocating its workforce. It was decided to transfer some employees of the Ulsan plant, which manufactures PET, a plastic raw material, to other plants. The analysis is that this is a measure to control PET supply due to the ‘rush for expansion’ by Chinese petrochemical companies.
Reporter Hwang Jeong-soo/Kim Woo-seop [email protected]
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