Industry sources said that it is inevitable for companies to cut down on production as the economic downturn is likely to persist at least in the first half of this year.
They warned that the production reduction could create a vicious cycle of growing unemployment, falling consumption, and sluggish investments.
The output target cut by large firms is also feared to deal a severe blow to small- and medium-sized enterprises which have been already suffering from acute financial strains.
Steel giant POSCO has decided to curtail its steel production target by 4 million tons this year from last year’s. The move is apparently in response to an anticipated fall in demand amid the economic slump at home and abroad.
Hyundai Samho Heavy Industries, an affiliate of Korea Shipbuilding & Offshore Engineering (KSOE), has set a goal of winning shipbuilding orders worth $2.6 billion in 2023, accounting for 56 percent of last year’s target amount.
KSOE has set its target at $7 billion won, slightly higher than last year’s target of $6.95 billion. However, the sum is far lower than $10.7-billion orders it snatched last year.
The Hyundai Motor Group has set a target of selling 7.52 million cars this year, up 0.66 percent from last year. The figure is in contrast with last year’s 5.5 percent increase. The automotive conglomerate seems to believe that it is difficult to increase its sales in the face of the gloomy economic outlook.
In addition, some companies were withdrawing their investment plans on fears about a deepening economic slump. One of such firms is SK on., a clean energy subsidiary of the SK Group, has recently decided to call off its investment plan to build an electric vehicle battery plant in Turkey jointly with U.S. carmaker Ford and a Turkish company.
The reason for the decision appeared to be that SK found it difficult to raise funds to finance the investment plan amid a credit crunch in the local bond market.
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