South Korea's two key conglomerates Samsung and LG are reportedly pushing for massive restructuring in their attempt to streamline their business amid the prolonged global economic slowdown.
Samsung C&T Corporation, the group's trading arm, is set to lay off a number of its employment in its construction area, according to market watchers.
The company began Monday to notify its employees, who are subject to dismissal. The number of its employees who are to be notified of the lay-off is set to be around 1,000 out of the firm’s total 7,200 workers.
The company was expected to reduce the size by restructuring it prior to the merger with Cheil Industries but it was reportedly delayed as hedge fund Elliott opposed the merger. At the time, Samsung had to focus all of its energy to push ahead with the merger and it seemed no right time for the company to dismiss its employees.
Samsung Life Insurance also received applications dubbed "candidates for professionals" from the manager levels who were promoted more than four years ago. The program allows the employees to leave the company and sign deals with the company again as temporary workers. Then, they are able to seek re-employment while giving lectures on the firm’s insurance planners. Although it doesn't look like voluntary resignation on the surface, it is no different from leaving the company. Apart from Samsung Life Insurance, other financial arms such as Samsung Card also reportedly plan to adopt such systems to reduce its headcounts.
Samsung Heavy Industries already discharged around 20 executives in September and is receiving voluntary resignation from both office and assembly employees since October.
Samsung Engineering, the group's engineering arm, is not also free from the restructuring plan as the company's operating loss during the last three years posted more than 2.5 trillion won.
Samsung Electronics' vice chairman and de-facto chief of Samsung Group, Lee Jae-yong already showed his willingness on closing uncompetitive businesses in a bid to streamline the group in the fierce competitive global markets.
Samsung's arch rival LG is also pondering over massive lay-amid sluggish sales for several years. Industry watchers said the group may push ahead with massive lay-off at the end of this year, especially in its sluggish smartphone division.
LG Electronics began to re-arrange its employees to more promising vehicle components division from two to three years ago.
Koo Bon-joon, vice chairman of LG Electronics, reportedly ordered massive lay-off after its smartphone division posted lower-than-expected earnings this year.
LG Electronics replaced its head of mobile communications at the end of last year, putting all of its energy in the global smartphone market. However, the division posted 78 billion won in loss in the third quarter of this year.
After seeing weak sales amid the sluggish smartphone market, around 15 to 20 percent of its employees were already arranged to the vehicle component division.
Worse, its new marquee smartphone V10 unveiled in the second half also initially saw a lukewarm response in the market.
LG Electronics' home entertainment division in charge of television business managed to get out of the red in the third quarter, but its OELD TV still has a long way to be commercialized and the global TV market itself is struggling from the recession.
One industry insider familiar with the issue said, "LG Electronics is expected to reshuffle personnel in its mobile communications division to censure them for misconduct."
Market watchers said the group may see re-arrangement of its employees as well as business restructuring as Koo Bon-moo, chairman of LG Group, has recently stressed "change."
