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Mahindra & Mahindra Limited : Ssangyong to Reinstate All its Workers on Unpaid Leave

01/11/2013 | 07:58am US/Eastern
  • Ssangyong Motor labor and management agree to reinstate all the 455 unpaid leave workers on March 1, 2013
  • Limitations of production increase for an early reinstatement, overcame by job sharing to alleviate suffering and to advance reinstatement
  •  With a turnaround of the company as a prerequisite, Ssangyong labor and management present the tasks that need to be solved without outside pressure and clearly express their concern on the proposed National Assembly's investigation

Ssangyong Motor (CEO Lee Yoo-il; www.smotor.com), part of the USD15.9 billion Mahindra Group, announced on Jan. 10, 2013 that it will reinstate all its workers on unpaid leave in the spirit of job sharing to alleviate the suffering and increase the production volume.


Ssangyong Motor labor and management have been focusing on increasing the production volume through sales expansion as a turnaround of the company would be the only solution to the current situation.


Even though Ssangyong Motor has not yet achieved a financial turnaround, it has been improving its sales record year after year since 2009. Building on these performances, it will continue to focus on market expansion by entering new overseas markets and launching facelift models this year to maintain this growth trend.


As there are limitations to an early reinstatement of unpaid leave workers by increasing the production volume for job creation, Ssangyong union members decided to share jobs to alleviate the suffering of unpaid leave workers.


To this end, the labor and the management have been conducting several rounds of discussions and finally agreed to reinstate all the unpaid leave workers. However, the company is not considering a rehire of the voluntary retirees and the dismissed workers.

Also, the various conditions, procedures, line operation plan and assignment of workers to production lines and other details related to the reinstatement of the unpaid leave workers will be further discussed between the labor and the management in working-level meetings by the beginning of February. As for any worker who does not get assigned to work, the Collective Bargaining Agreement will be applied.


On the proposed National Assembly investigation, Ssangyong Motor also made it clear that it is opposed to it as the allegations on issues such as accounting fraud raised by the outside labor and some political circles were already proven as unfounded by the Financial Supervisory Service and the Court, and were also fully addressed during the National Assembly hearting and audit.


Furthermore, an unprecedented National Assembly investigation on an individual company under a constitutional government would damage the Company's image and reduce its credit worthiness worldwide. It will lead to a sales decline that will also have a negative impact on the reinstatement plan, which was prepared with great difficulties.


Also, as many of the points on the list of the investigation items are still being litigated in the court, a parliamentary investigation on those issues would violate the National Assembly Audit and Investigation Act, Chapter 8 that prohibits a parliamentary investigation with the purpose of intervening in an ongoing litigation.


Dr. Pawan Goenka, Chairman, Board of Directors, Ssangyong Motor Company and President, Automotive and Farm Equipment Sectors, M&M Ltd said that "Mahindra has always believed in finding a solution to the issue of unpaid leave workers, and I am pleased that the demand of Ssangyong vehicles has increased such that we are able to reinstate the unpaid leave workers.


He further stated that "Mahindra acquired Ssangyong assuming that all the restructuring efforts done prior to the acquisition were fully compliant with the Korean legal and governance systems. Therefore, if the past restructuring is questioned and all the dismissed workers were to be taken back, it will make it difficult, if not impossible, to achieve the turnaround of the company. The turnaround of Ssangyong still needs significant investment in future products and capacities and hence will need full support from the government and honorable members of the National Assembly.


Mahindra has invested a total of KRW 522.5 billion in March 2011 (new paid-in capital increase of KRW 427.1 billion, corporate bonds 95.4 billion won) to acquire 70% of the Ssangyong Motor shares. Mahindra has shown a strong resolve to provide for the financial resources for the mid- to long-term investments and advance the turnaround of the Company by making a direct investment in Ssangyong in the first half of 2013 and implementing various measures to build up core competencies of the Company.


Moreover, as the current issue cannot be solved by outside intervention, being an issue related to the business operation of an individual company, Ssangyong Motor needs the support from the political circle so that the labor and the management can take the initiative in solving the issue. It also asked the outside parties to help the company pay full attention to business management only as it exerts all efforts to ensure job stability and job increase. It has the responsibility to preserve the jobs of approximately 4,800 direct employees and some 110,000 employees working in the A/S network and at the suppliers.


CEO of Ssangyong Motor Lee Yoo-il said that "Ssangyong Motor's labor and management have been making utmost efforts to normalize the company's operations during the last three years based on a cooperative relationship, and added that "based on these efforts, we now created the conditions for the unpaid leave workers to come back, and we will continue to do our best to strengthen the future-oriented labor-management relations.


Head of the Ssangyong Workers' Union Kim Kyu-han also said that "we were able to come up with the latest agreement on the unpaid leave workers issue as a result of several rounds of in-depth discussion and close communication between the labor and the management. He also mentioned that "this will serve as a momentum for the Ssangyong Workers' Union to continue to play a responsible role in the turnaround of the company. In this context, we strongly oppose any move for a National Assembly investigation as it will block the turnaround progress of the company.

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