Monday, November 19, 2012

LTW - Defectors Return, Korean Diabetes, Hyundai goes to Brazil

 1. National
1) Defectors from N.Korea return to their country
The North Korean news agency announced that Kim Kwang-hyok, 27, who defected to South Korea in 2008 via China has returned to North Korea along with his wife, also a North Korean defector whom he met in South Korea. Showing the couple in a press interview, the news agency reported that the couple was lured to the South “by dint of gimmicks, appeasement and manipulation of brokers and agents of the South Korean intelligence agency” and “suffered a miserable life in S.Korea.” It was the 2nd time North Korea reported on the returning defectors in the media this year.

North Koreans defect to South Korea because of poverty, but North Korea has claimed that the defectors are not the victim of poverty in North Korea. One North Korean said in a press interview that “More South Koreans are moving to the U.S. than North Koreans coming to South Korea. Are the South Koreans the defectors to the U.S. because of poverty in South Korea?”

2) More Koreans have diabetes
According to a report from the Korean Diabetes Association, one in 10 adults over 30 was diabetic in 2010. The rate rose to 22.7% for people over 65. If to include those suffering from pre-diabetes symptoms like abnormal glucose levels, nearly half (47.4%) of all senior people are either diabetic or close to it.  The rate of diabetes among Koreans was 8.6% in 2001, and rose to 9.1% in 2005.  KDA said the rising number of senior citizens, surge in obesity, lack of exercise, consumption of fatty foods and stress are the main reasons behind the increase.
I respect my wife for spending two hours every day at a fitness center as I feel 5 minutes on a treadmill is worse than 5 hours of watching a cricket game. My respect for her evaporates quickly, however, each time she pushes the button for an elevator at my apartment where we live on the third floor.

2. Economy
1) Hyundai Heavy Industries to build a diesel engine plant with Cummins of U.S.A.

Hyundai Heavy Industries broke ground to build a new diesel engine plant in a joint venture with Cummins Engine in Daegu, 300km southeast of Seoul. The plant will produce 50,000 engines a year once it is completed in 2014 with $80M investment. HHI said the JV will secure a steady supply of engines for construction equipment as it is expanding its business in this field. HHI’s construction equipment division has sales of $3.7billion last year, up 29% from 2010. HHI expects the new plant will generate 5,000 new jobs and $1.8 billion in economic effect.

HHI is the world’s largest shipbuilder with 53.7 trillion won ($48.8B) in sales in 2011.With slowdown in European economy, HHI just began offering “honorary retirement” package to cut labor cost, the first time to do so in its 40 year history. What is irony is that HHI had spent billions of won in T.V commercials until just a few months ago to boast their contribution to the society by saying “Do you know a company whose average employee service period is 19.1 years?”  Well, “Do you know a company which plans to cut average employee service period by 30% in less than 3 months?”

3. Auto Industry
1) Hyundai opens its Brazil plant.

Hyundai Chairman Chung Mongkoo was in Piracicaba, 160km northwest of Sao Paulo, for the grand opening of its first automobile plant in South America. Built on a 1.4 million area with investment of $700, the plant can roll out 150,000 units a year. The HB20 subcompact car that runs of gasoline and bio-ethanol is the plant’s first model. With the 35% duty exemption for those from the new Brazil plant, Hyundai expects to boost its sales in Brazil significantly from 85K a year to capture 10% of the Brazil market. The Brazil plant is Hyundai’s 7th overseas plant after India, Turkey, Beijing, Alabama, Czech Republic, and Russia, not counting Kia’s three other overseas plants.

I can testify the grand opening of the Brazil plant was the work of nearly 14 year preparation. When I put my resignation in Hyundai, my boss thought I was still a value for the company and put me in Brazil project task force team on April 30, 1999. I left the company on May 10, though. There had been ups and downs with the Brazil project ever since, and Hyundai finally broke ground in Oct, 2010 as Hyundai thought its goal of world’s No.4 maker would not be possible without a plant in Brazil that has become world’s 7th automotive manufacturing country. It wasn’t that Hyundai wanted to reinforce its soccer team by hiring a bunch of Pele’s proteges.

2) GM Korea’s Gunsan plant in dispute
The union in GM Korea is protesting at the company’s recent decision not to produce new 2014 MY Cruze in its Gunsan plant, 300km south of Seoul. Employing 3,300 employees, the Gunsan plant currently manufactures 260K passenger cars a year, and 160K of them are Cruze. GM Korea President Sergio Rocha said there will be no reverse of the decision, and the decision was made after GM’s strategy over manufacturing cost, profit and sales opportunities. The union threatened that “GM will receive huge protest from the workers unless it revokes its decision.” The union also said they can even wage strikes.

The union is getting emotional instead of logical, just like what they have been doing so many years under Daewoo Motor days. This is GM, a typical American company, and it is those in Detroit who are making global strategic decisions. The union can strike, make protest visits to GM in Detroit, petition to Korean politicians or have PSY sing “Gunsan Style” at Today Show, but all their efforts still would not be productive unless they can better explain to Mr.Rocha and GM CEO Dan Akerson why Cruze production in Gunsan means more money to GM than anywhere else. Just an opinion of someone who has worked for an American company for 14 years after Brazil project.


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