Paul Lewis/SINGAPORE
Three of South Korea's leading aerospace manufacturers have established a joint working committee and appointed teams of consultants to produce a business plan for the proposed new single corporate entity, which is tentatively named Korea Aerospace Industries.
The three corporations concerned, Daewoo Heavy Industries, Hyundai Space & Aircraft and Samsung Aerospace, have each seconded two representatives to the new working committee. The body, which includes the indirect involvement of the Ministry of Industry and Energy, is charged with finalising a detailed merger agreement by the end of the year.
To assist with this amalgamation process, individual firms of financial consultants have been appointed by the three aerospace manu- facturers. Samsung is being advised by Goldman Sachs, Daewoo by KPMG Peat Marwick and Hyundai by Deloitte & Touche.
A preliminary plan has already been completed based on the existing individual capacity and work of the three planned partners. Korea Aerospace Industries will initially have a workforce of 3,450 employees, comprising about 1,700 people from Samsung's airframe business, 1,000 from Daewoo and 800 from Hyundai. The intent is to reduce this immediately by about estimated 10-15%.
The three companies are suffering from a growing production overcapacity in the face of diminishing work, but it is unclear if the plan will call for the closure of plants. Hyundai has a large, newly completed, facility at Seoson and Daewoo has a new plant at Sachon, in addition to Changwon.
The merger will also include Samsung's Sachon plant, but not its Changwon engine works, which employs a further 800 staff and will remain outside of the new single corporate entity.
Other issues to decided by the committee include the appointment of an independent body to value individual company assets so as to fairly apportion equity, as well as the high amount of debt incurred by the three.
The mandate of the existing Korea Commercial Aircraft Development Consortium, tasked with co-ordinating international cooperation, is to be extended until at least April 1999, when it is planned to establish Korea Aerospace Industries legally.
Source: Flight International
