Hazardous auto parts industry claims $ 3 trillion in emergency funding

Hyundai Kia reduces production – rising labor costs
851 leading suppliers, SOS
The auto parts industry, which is facing a crisis, has asked the government to provide more than 3 trillion won of emergency funds. There is a growing concern that if banks do not provide funds to heavily indebted companies, they risk bankruptcy. The government has also defined measures to support the auto industry at the government level.

According to the Korea Automobile Industry Cooperative Association, the Ministry of Industry and Commerce has recently requested an amount of 3.1 billion won for urgent financing through the demand survey of the auto parts sector. According to the results of a survey of the amounts to be provided by the Government to 851 major suppliers of Korean car manufacturers.

The most demanding was to ask for a whiff of money. The request for financing related to the extension of the repayment of the loan reached 1 700 billion won. The result is an investment of W 1,000 billion in investment in facilities and W 400 billion in research and development (R & D).

In fact, the financial difficulties of the parts manufacturers are serious. It is known that about 10% of the 28,000 billion KRW corresponding to the size of the national auto industry are in a condition of capital infusion. Of the 89 ranked prime suppliers, 42 companies accounted for 47.2% of operating losses in the first quarter of this year. Of these, 28 were in the red in the first quarter. In June of this year, Lihan, a car collection and removal company, asked KDB Korea Bank, the main creditor bank, to restructure its structure (training session).

It is difficult to grasp the situation of the 2 nd and 3 rd partner companies. Last April, the second partner company A returned to the main supplier 150 of the 230 molds for the manufacture of plastic parts. We must increase the unit price by raising the minimum wage, but the first supplier did not have enough capacity. Other second level suppliers also indicated that "labor costs have increased 24% over one year" and that "we will stop delivery if we do not increase the price unitary ".

▼ "Crisis of the failure of the automotive industry chain"

An official from a Gyeongnam-based auto parts company said, "This is the first time Hyundai and Kia have cut their production plans, and the financial difficulties of the partner companies are serious." Spare parts sector said: "If the second and third partner companies started to deviate, production would be inevitable immediately.It will be a vicious circle that eventually lead to the insolvency of the finished car."

At the end of 2016, the auto industry accounted for 13.9% of Korea's manufacturing output and 12.0% of its workers. This is why the government is striving to propose measures. The Ministry of Commerce, Industry and Energy recently concluded a regional meeting with the auto parts sector from the month of August and is now taking comprehensive steps to strengthen the dynamism of the automotive industry. Financing, R & D and installations. Recently, Chung Tae-ho, principal secretary, reportedly met with representatives of the industry. Financial measures should be published at the end of the month or early next month as soon as possible. At the meeting with the CEOs of nine banks on December 17, the chairman of the finalist financial committee said: "Do not let auto parts companies accept loans for loans that do not take into account the financial situation and of the management." A government official said: "There were many complaints that the auto industry was stagnating, while the situation was different for each component manufacturer.