industry
Entered 2024.04.17 18:32 Modified 2024.04.17 19:19 Paper A1
Samsung goes into ’emergency management’
All executives work 6 days a weekA preemptive response to management uncertainty
It remains to be seen whether it will spread to other companies.
Samsung Electronics Seocho headquarters building. Photo = Reporter Kim Beom-jun Executives of all Samsung Group affiliates will start working six days a week as early as this week. In a situation where the performance of major related companies such as Samsung Electronics was not as good as before, and where uncertainty increased in the business environment such as exchange rates and oil prices, the company more or less entered an ’emergency management system’. As other companies are also facing similar concerns, there is an analysis that there is a high possibility that the ‘active six day work week’ will spread throughout the business world.
According to the industry on the 17th, executives of all Samsung affiliates will start working six days a week as early as this week. This is because the human resources teams of all Samsung affiliates have recently recommended that executives participate in the six-day work week system. A Samsung affiliate executive said, “Given that the performance of major affiliates, including Samsung Electronics, is failing to meet expectations, we are implementing this with the intention of encouraging executives to be alert and participate in overcoming the crisis.” , “As the conflict between Iran and Israel escalates, the exchange rate rises. Samsung Electronics has decided to include other executives in production and sales as well in the six-day work week, which is mainly implemented by executives responsible for supporting and developing managers. Executives from electronics companies such as Samsung Display, Samsung Electro-Mechanics, Samsung SDI, and Samsung SDS also decided to implement it as early as this week. Executives from the three engineering, procurement and construction (EPC) companies, including Samsung C&T, Samsung Heavy Industries, and Samsung Engineering, have been working six days a week since the beginning of this year. Financial related companies such as Samsung Life Insurance are said to be entering the six-day work week system soon.
It is said that the six-day working week will be one where each executive committee will choose to work either on Saturday or Sunday.
The industry predicts that ’emergency management’ will spread throughout the business world. SK Group, which is suffering from the poor performance of its main affiliates, also revived the ‘Saturday Presidents’ Meeting’ in February, where the chief executives and CEOs of major affiliates gather on Saturdays to discuss proposed issues about the first time in 20 years.
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“It is effectively an emergency management statement.”
Here’s the industry’s assessment of Samsung Group’s ‘six-day week for executives’. The reason Samsung went into emergency management was because it believed the business environment was not easy. Samsung Electronics’ business performance has deteriorated to the extent that it recorded an operating loss of 15 trillion won last year in its core business, semiconductors. External variables are also unusual. As the war between Russia and Ukraine and the conflict between Iran and Israel escalate, the volatility of exchange rates and oil prices, which are key control variables, increases. There is an analysis in the industry that there is a high possibility that the emergency management started by Samsung will spread to other large corporations.
○ Crisis halts Samsung Group
Samsung’s implementation of the ‘active six-day work week’ had a significant impact on the performance of Samsung Electronics. The Device Solutions (DS) division, which is in charge of Samsung Electronics’ semiconductor business, recorded operating losses for four consecutive quarters last year, recording an operating loss of 15 trillion won. Although the DS division managed to turn a profit in the first quarter of this year, the system’s semiconductor business, including a foundry (bulk production of semiconductors), which is being intensively nurtured as a future business , still in deficit. The pursuit of competitors is also unusual. SK Hynix leads the high bandwidth memory (HBM) market, which leads the artificial intelligence (AI) semiconductor market. Intel, which announced its entry into foundry, has presented a blueprint to surpass Samsung and rise to second place.
The external environment, which directly affects corporate governance, is also worsening. This is because geopolitical risks are increasing as the war between Israel and Iran follows the war in Ukraine. As a result, oil prices and exchange rates fluctuate. In the foreign exchange market, the yen-dollar exchange rate rose once to 155 yen per dollar. The weakness of the gain is also serious. The won-dollar exchange rate also exceeded 1,400 won per dollar during the day. The shock waves that prolonged high interest rates are having on the global economy continue. A representative example is the recent statement by Jerome Powell, Chairman of the US Federal Reserve System, that the interest rate cut could be postponed.
○ Expand emergency management to all industries
Industry circles are talking about the possibility that Samsung’s emergency management statement will spread throughout the business world. This is because business conditions in key industries are worsening. SK Group, the second largest business group, revived the ‘Saturday Presidents Meeting’ for the first time in 20 years, where chief executives and CEOs of major related companies gather on Saturdays to discuss upcoming issues. In addition, executives from the Supex Pursuit Council (Supex), SK Group’s highest corporate advisory body, decided to return the flexible work system that allows them to rest on two Fridays every month. It is known that this reflects the intention of Supex Chairman Choi Chang-won that executives should step up and create a ‘work atmosphere’ in order to stabilize the relaxed atmosphere of the group. The petrochemical industry is undergoing large-scale workforce restructuring. LG Chem, Korea’s No. 1 company, recently decided to accept voluntary retirement requests by the 30th from production technicians in its advanced materials business division who have worked for more than five years. LG Chem decided to sell its IT film business facilities (polarizer and polarizer material) to a Chinese company for about 1.1 trillion won in September last year in order to liquidate marginal businesses with low profitability and expand investment in new businesses such as secondary battery cathode materials. Afterwards, in the second half of last year, the employees of the IT materials division responsible for the business were transferred to other departments and a special voluntary retirement was also carried out.
Lotte Chemical is also in the process of relocating its workforce. It was decided to transfer some of the workers of the Ulsan factory, which produces PET, a plastic raw material, to other plants. The analysis is that this is a measure to control PET supply due to the ‘rush to expand’ by Chinese petrochemical companies.
Correspondent Hwang Jeong-soo/Kim Woo-seop hjs@hankyung.com
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