Dow Jones Newswires
SEOUL, South Korea -- Daewoo Motor Co. said it has cut its
senior-executive staff at home and abroad by 30% as a part of its
The South Korean auto maker closed 17 bureaus led by senior
executives, and reduced the number of senior executives from 135 to
95. The company said it cut 48 senior executives in August of 1999,
and 45 more in January. Daewoo plans to announce additional staff cuts
and business restructuring measures in the near future.
The number of Daewoo Motor employees who
quit their jobs totaled 95 in September, up from
48 in Aug. The company has approximately
19,000 assembly-line and office workers.
Meanwhile, the company said it again failed to pay its employees salaries
this month because of a shortage of funds. It hasn't paid its office
workers for September and October, and it hasn't paid its assembly line
workers for October.
The government and creditors of Daewoo Motor are in talks with
General Motors Corp. in an attempt to sell the auto maker.
GM, which had a 15-year alliance with Daewoo that ended in 1992, has
long been interested in Daewoo as a way to further expand into Asia's
auto markets, which are starting to recover from their slump during the
1997-1998 Asian financial crisis.
GM and Daewoo Motor signed a memorandum of understanding in 1998
to pursue a strategic alliance. GM, the world's No. 1 car maker, was
prepared to make a bid to acquire Daewoo Motor last December, but its
creditors decided to sell the company in an auction. GM and Italy's Fiat
SpA submitted a joint bid to become preferred negotiating partners in
June, but it was rejected by a special evaluation committee in favor of a
$6.9 billion bid from Ford Motor Co. However, last month Ford decided
not to submit a final offer for Daewoo Motor, leaving creditors
scrambling to reopen talks with other companies. The collapse of the
sale scared investors by spotlighting the slow pace of corporate reform
in South Korea.
GM and Fiat both expressed a continued interest in acquiring Daewoo
Motor after Ford's withdrawal, but it has remained unclear how the two
companies would proceed. GM's agreement to begin talks to acquire
Daewoo Motor takes its creditors out of a serious bind. DaimlerChrysler
AG and Hyundai Motor Co., which bid jointly for the company in June
but also were rejected, said that they wouldn't bid on an outright
purchase of the auto maker. However, Hyundai, South Korea's largest
car maker, may consider acquiring parts of Daewoo's operations.
Daewoo Motor has been a painful drain on the country's already weak
financial system. Daewoo Motor is part of the conglomerate Daewoo
Group, which creditors decided to dismantle in August 1999 after it
amassed about $80 billion in liabilities. Since then, the banks have been
forced to lend even more money to Daewoo Motor to keep it running.
The Seoul government has been desperate to sell off Daewoo, hoping
to use the money to bail out other troubled sectors, such as the
If GM successfully acquires Daewoo Motor, the South Korean company
could give a boost to GM's presence in Asia's fast-growing car market
and access to the effectively closed South Korean car market, one of
Asia's most important. Daewoo Motor, which has about two million units
of annual production capacity world-wide, is also strong in Eastern