"Steel Breaks in a Recession"... Steel Industry Struggles for Survival through Restructuring
The domestic steel industry is facing severe downturns, compounded by both the dumping pressure from Chinese products and the imminent high tariffs from the U.S. government. With global supply overcapacity and rising raw material costs, steelmakers are resorting to drastic measures for survival. Intense restructuring, such as workforce reductions and factory closures, is underway, and major companies are maintaining emergency management systems, betting their survival on overcoming the crisis. According to the industry on the 19th, Hyundai IMC, a subsidiary of Hyundai Steel, will accept voluntary retirement applications from technical staff until the 21st. The company plans to offer benefits to those applying for voluntary retirement, such as recognizing up to 50% of the remaining service period for up to 36 months and providing educational support of 10 million KRW per child. In December of last year, Hyundai Steel reached an agreement with its union to transition the Pohang No. 2 plant's steelmaking and rolling processes from the existing 4-shift, 2-team system to a 2-shift, 2-team system. This move is aimed at cost reduction and improving efficiency. Initially, Hyundai Steel had proposed shutting down the Pohang No. 2 plant, but a conflict arose when the union demanded an increase in investment alongside the withdrawal of the shutdown plan. Eventually, both sides reached a compromise by agreeing to reduce operations instead. As a result of the operational downsizing, the company is currently accepting requests for employee transfers. Employees working at the Pohang plant have the option to transfer to Hyundai Steel subsidiaries in Dangjin or Incheon or choose voluntary retirement. The specific timeline for the work transfers has not yet been determined. There is growing speculation that Hyundai Steel, having initiated voluntary retirement programs at its subsidiaries, may also pursue workforce reductions at the parent company in the future. This opinion is gaining weight, especially considering the overall decline in demand and increased cost pressures in the steel industry, making further workforce adjustments seem inevitable. However, Hyundai Steel has dismissed these concerns, stating that there are currently no plans for additional restructuring. The trend of restructuring in the steel industry is not limited to Hyundai Steel. In October 2024, POSCO Group also implemented voluntary retirement programs, targeting long-term employees with over 10 years of service at major subsidiaries such as POSCO and POSCO International. Notably, this large-scale voluntary retirement within the steel division is seen as the first of its kind in the group. This move is interpreted as a reflection of the growing sense of crisis across the industry. Earlier, POSCO implemented significant cost-cutting measures, including reducing executive salaries by up to 20% and abolishing its stock compensation system, as part of its efforts to improve management efficiency. POSCO Group Chairman Chang In-hwa is also accelerating business restructuring this year, pushing forward with the group's organizational transformation. Last year, POSCO secured 26.6 billion KRW in cash by selling its steel division's service center in China. Both inside and outside the industry, there are expectations that restructuring and business adjustments, particularly in China, will continue this year. POSCO Holdings is reportedly in the process of selling its Jiangsu Province Zhangjiagang Pohang Steel Mill as part of its restructuring efforts. In July of last year, the company also shut down the No. 1 wire rod plant at the Pohang Steelworks, unable to withstand the pressures of overcapacity in the global steel market. An industry insider commented, "Given the difficulties facing the domestic steel industry, Hyundai Steel's subsidiary implementing voluntary retirement along with employee transfers seems to be part of this broader trend. As production cuts are underway across the industry, it is expected that some level of workforce movement will be inevitable." ChatGPT를 사용하여 번역한 기사입니다.
