Petrochemical industry in Korea could see massive downsizing next year

26-Dec-08

Korea's Financial Supervisory Service (FSS) has announced downsizing of construction and shipbuilding businesses early next year. The other industries likely to get restructured leading to massive downsizing in Korea are automobiles, semiconductors, petrochemicals. The petrochemical industry has faced downsizing on excessive facility investment in recent years, as well as a drop in prices following weak demand. Global automotive industry has been negatively affected by the global economic downturn. New car sales stood at 74,753 in November in Korea, down 27.7% from the previous year. To reduce inventory, carmakers have been suspending or reducing production. In Namdong Industrial Complex alone, nearly 300 auto parts manufacturers have suspended operations temporarily, affecting 5,000 workers. The semiconductor industry also will be unable to avoid downsizing as global chip prices have fallen by 40% since September on excessive supply amid a global economic recession. As the drop is something new, it is impossible to estimate demand. The semiconductor market is expected worsen in H2 of next year, and parts suppliers and equipment manufacturers are likely to face downsizing first.