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Samsung Undergoes Huge Shakeup

The Samsung Group is carrying out a group-wide restructuring in the wake of rumors of a crisis and the recent blackout at the Samsung Electronics semiconductor plant in Giheung, Gyeonggi Province.

Business Realignment Is Accelerating

Samsung SDI carried out a management evaluation in April and May and Samsung Electronics' Telecommunication Network Business did the same from June to August. Samsung Electronics' Semiconductor Business will also go through a month and a half evaluation starting this month. It's unusual for Samsung to evaluate its key business units in the same year.

The results of the Telecommunication Network Business evaluation came out recently, and a structural reorganization will take place based on that report. Meanwhile, Samsung Electronics' Suwon Complex has screened applicants for voluntary retirement three times since May and received consent from 400 volunteers. These moves are more than regular restructuring efforts.

A reorganization within the electronics unit is also picking up speed. Projects with higher odds of success are being concentrated within competitive affiliates. A case in point is Samsung Techwin's digital camera unit, which aims to be the world's number three. That unit will now be headed by Samsung Electronics Digital Media President Park Jong Woo.

Crisis Management Mode

Along with the evaluations, Samsung businesses are drafting cost cutting measures and running in crisis management mode.

Samsung Electronics on Aug. 1 activated its crisis mode. Employees at its Hwaseong plant normally pay 30,000 won (US$32.25) for monthly dormitory fees, but from this month they have to pay double that. A one million won gift given to employees for weddings and funerals has also been scrapped.

Paid leave for long-time employees has been cut back. Workers previously were awarded paid leave on their 10, 15, 20 and 25 year anniversaries at the company, but now that is given only to workers marking their 10th and 25th years. A holiday bonus given in proportion to work years has also disappeared.

Meal subsidies have also been cut. Meals in the company cafeteria cost 3,000 won, of which the company used to pay 2,000 won. Now the company pays only 1,000 won.

Some Samsung workplaces are now refusing to pay overtime and a 15,000 won transportation allowance for overtime work that hasn't been approved in advance. A worker at Samsung Electronics' Giheung plant said employees are being pressured to finish their work during normal hours.

Executives are feeling the pinch too. An employee in the group's corporate restructuring office said overseas business trips are being curtailed when possible and holders of corporate credit cards have to be careful not to exceed the monthly limit.

Samsung Group said, "We only told the affiliates to cut down on unnecessary costs. Detailed guidelines and action plans are set within each affiliate."

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