According to reports, Hyundai Steel, the subsidiary of Hyundai Motor and Kia, said it entered management emergency. The company tried cost-saving measures due to US tariffs on steel and aluminum, as the rising competition in the domestic market on imports from China and Japan caused profits to decline.
It decided executive salaries should be cut by 20% and considered a voluntary resignation program for employees to reduce spending. Hyundai Steel said it made such decisions due to the expectation of lower performance unless it sets strict internal measures on current business conditions in domestic and overseas markets.
The company also faces further losses due to a recent conflict with the labor union. The salary negotiations started last September; however, there are disagreements on issues like performance bonuses.
South Korea will face the 25% US duty on steel products, which will be a serious problem for Hyundai Steel. In the past, South Korea has had a duty-free import quota to the US of 2.63 million tons. Analysts see the domestic steelmakers will be challenged with additional costs of up to US$890 million with 25% duty imposed. Furthermore, the United States also imposed duties on derivative products that will be higher than earlier expected.
