SAIC seeks to axe 2,000 jobs at ailing Ssangyong

SEOUL (AFP) — The Chinese parent of ailing South Korean automaker Ssangyong Motor wants to axe some 2,000 jobs -- almost a third of the employees -- in return for financial support, a media report said Monday.

The redundancies are a condition for Shanghai Automotive Industry Corp (SAIC) to provide a 200 million dollar credit line, JoongAng Ilbo newspaper said, quoting an unidentified former Ssangyong executive.

Ssangyong is teetering on the edge of a financial crisis and failed to pay workers on time this month, but has not so far received funds from its parent.

The main South Korean creditor, Korea Development Bank, on Friday refused to provide new loans unless the Chinese firm helps first.

"Ssangyong has now only 10 to 20 billion won (7.8 to 15.6 million dollars) in operating funds and will be unable to sustain itself beyond January next year without Shanghai's help," the executive told JoongAng.

"Shanghai demanded early this month that the Ssangyong management lay off 2,000 assembly line workers in corporate restructuring in order to secure a 200 million dollar bailout fund from Chinese banks."

Ssangyong has a total of 7,100 employees, of whom 5,100 are assembly line workers.

JoongAng did not identify the former executive, whom it said was dismissed from the automaker early this month.

A Ssangyong spokesman told AFP: "I'm unaware of the proposed layoffs. The company has yet to work out any corporate restructuring plan."

The Chinese owner is known to have demanded wage cuts and redundancies at Ssangyong, a move strongly opposed by unions, but no details have been given. It has reportedly threatened to abandon the automaker in January unless its demands are met.

For the third quarter Ssangyong, acquired by Shanghai Automotive in 2004, posted a net loss of 28.2 billion won -- the fourth consecutive quarterly loss.

The company says it expects a net loss of more than 100 billion won this year due to a slump in demand.

Ssangyong halted production for two weeks from December 17.