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Tuesday, 2 January, 2001, 11:37 GMT
Hyundai unveils new shake-up
hyundai workers protesting
Hyundai workers protesting against economic reforms
South Korea's biggest construction company, Hyundai Engineering and Construction, is to cut its workforce by more than 25% as it battles to overcome crippling debts.

At a New Year's ceremony the company, the flagship of the Hyundai group, said it would be axing 2,000 jobs from its workforce of 7,200.

Top executives are amongst those hardest hit by the restructuring, with 37 management posts to go, about 40% of the total.

If we fail to complete restructuring because of fear of the pain, we would not be able to avoid devastation

President Kim Dae-Jung

But the company has forecast pre-tax profits for 2001 of 400 billion won ($316m), reversing two years of losses.

It also predicted that it would achieve 7.38 trillion won ($5.8bn) in sales this year, up nearly 10% from last year, and 9.8 trillion won in construction orders, up more than 13% from a year ago.

Troubled company

The financial troubles of the building giant have rocked Korean financial markets in recent months.

Hyundai Engineering is currently facing debts of about 4.4 trillion won.

In November, the company announced it would sell off land, buildings and securities in an attempt to raise more than one than 1.3 trillion won.

The bulk of the money is expected to come from the sale of farmland west of Seoul, with other funds coming from relatives who control other company affiliates, including the most profitable, Hyundai Motors.

Troubled country

South Korea, under President Kim Dae-Jung, is currently implementing an economic restructuring plan in its corporate and banking sectors to tackle mounting financial troubles.

The South Korean government and foreign observers believe that the giant Korean conglomerates, or chaebols, who got into financial trouble by over-borrowing during the Asian crisis, need drastic restructuring.

But attempts to slim them down, as in the case of Daewoo Motors, have led to fierce union resistance - and a reluctance by foreign firms to step into the breach.

The government has itself admitted that at least 200,000 people will lose their jobs in the latest round of bankruptcies and streamlining of companies.

Other agencies estimate that the figure will be far higher.

'Great leap forward'

Only last week, the Bank of Korea predicted that gross domestic product growth would fall from an estimated 9.3% for 2000 to 5% to 6% in 2001.

But President Kim is determined to push ahead with the reforms.

"If we fail to complete restructuring because of fear of the pain, we would not be able to avoid devastation," he said on Monday.

"If we can overcome today's pain and complete reform... we will be able to make a great leap forward tomorrow," he added.

His economic plans caused a national strike by telecoms and banking workers who said that proposed restructuring in their industries would lead to mass job losses.

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See also:

20 Nov 00 | Business
Hyundai's new rescue plan
16 Nov 00 | Business
Hyundai ends family row
15 Nov 00 | Asia-Pacific
Hyundai to sell off electronics arm
27 Dec 00 | Asia-Pacific
Police raid Korean bank sit-in
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