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Ssangyong strike affects Australian supply

Here's hoping: The planned C200 small SUV is the light at the end of the Ssangyong tunnel.

Striking workers put SsangYong recovery in doubt, but local importer hopeful

20 Jul 2009

SSANGYONG’S Australian dealers are running low on stock as a debilitating strike at the company’s assembly plant in Pyeongtake, South Korea, enters its fifth week.

News reports from Korea today suggest the police are planning to enter the factory to evict the strikers, who occupied the plant in protest at staff cuts.

The car-maker, which is 51 per cent owned by Shanghai Automotive Industry Corporation (SAIC) and which sources transmissions from Albury-based Drive Systems International, is currently under bankruptcy protection.

Australian importer Sime Darby, which took over local distribution last November, hopes the situation can be resolved and SsangYong can bounce back with a new range of products starting with the C200 compact SUV that promises to be a breakthrough model.

SsangYong Australia still has supply of most of its models, but is running on stocks of its Actyon Sports ute, of which it shifted 103 in June.

 center image Left: SsangYong Actyon Sport.

Sime Darby Australia managing director Rob Dommerson told GoAuto SsangYong dealers were eagerly awaiting news of an end to the current stand-off between unions and the company’s receivers.

“They are getting a bit anxious, as are we,” he said. “We have been very upfront with where SsangYong is up to.

“I have written to the dealers, updated them but also told them of the risks that are inherent there because there are no guarantees in this. We are similarly saying that to customers.” Mr Dommerson said there was a danger that SsangYong would not emerge from the court protection of receivership, but he took heart from recent positive examples in the US.

“We watch what happens to Chrysler and GM,” he said. “They are in the same situation, in protection and they are almost celebrating the fact that they have got that protection and can restructure.

“SsangYong is in a similar position, but we have to be careful in how we present that. The word we use is hopeful.” Armed unionists seized the plant to protest against the plan of 51 per cent owner SAIC to cut jobs to make SsangYong more efficient.

While the protest is deemed illegal, the unionists are unwilling to move from the plant.

“They have advised us that until they have resolved it they don’t want to start production again. The unions have taken up residency there,” Mr Dommerson said. “It is a very delicate situation.” Mr Dommerson said SsangYong had a bright future ahead of it if it resolved the current issue.

“The people who are running the company at the moment are the receivers, or court of receivership, which ultimately is the government, and they are quite hopeful that all of this can be resolved,” he said.

“They have got a plan in place that they have presented to the court on how they can restructure the company and it is not just C200 – C200 is the icing on the cake.

“They have got some very good existing model ranges, good demand for it and a great exchange rate at the moment, that is why you are seeing Kia and Hyundai doing quite well.

“It is trying to be resolved with common sense, and if they resolve it SsangYong gets back on its front foot and produce more cars then there will be more jobs.” Mr Dommerson said going into receivership could help SsangYong restructure without too much union influence.

“SsangYong needs to be redefined,” he said. “One of the key things is that it needs to have better labour management relationships.” He said Sime Darby did not see the receivership action coming.

“I have to be honest that we were pretty surprised at the start of this year when the Chinese basically said to the Korean government, ‘We are struggling to manage this company’.” “What’s come to pass now is the deep ingrained union core that was causing the problems. You can see how militant they are. The Chinese might have walked away a bit too easily, but we are now starting to understand who was managing the company.” SsangYong Australia is likely to experience some shortage of vehicles because it will take a month to get the plant up and running, and then more time before cars can be shipped to Australia.

The company is still optimistic about the future model line up and especially the C200, which was initially scheduled to arrive late this year but is now expected to go on sale early next year.

SsangYong says the C200, which will have a different name when it comes to market, will be a rival for strong selling crossovers such as the Toyota RAV4 and Honda CR-V.

“It fits right in that part of the market – small to mid-sized SUV – with diesel engines.” Mr Dommerson said the C200 would expand the appeal of SsangYong.

“We think it will be an image-mover,” he said.

“It gets into the popular end of the market. At the moment, we tend to be a little bit specialist, 4WD commercial with the ute.” VFACTS figures show SsangYong has already been hit by the uncertainty surrounding its future with it Australian sales 43.5 per cent down to end of the June compared to the same period last year.

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