MANUFACTURERS FACE HURDLES AMID PANDEMIC

[Anchor Lead]

he Korean economy was able to withstand the shock of the COVID-19 pandemic because of the country’s globally competitive manufacturing industry. But the manufacturers are facing difficulties again as the prices of raw resources spike and supply chains are disrupted on top of the extended pandemic.

[Pkg]

This plant has been manufacturing automotive parts for more than 40 years. It was counted among the small but strong businesses for its technology, but even the acclaimed company could not avoid the shock of COVID-19. The shortage of automotive semiconductors has halved its sales and its operating profit has been declining every year.

[Soundbite] Jo Hong-sin(CEO, Automotive parts manufacturer) : "I thought it was hardest when Daewoo Motor went under. But now I think the past two years since the pandemic were just as difficult."

To make matters worse, the prices of raw materials have soared on top of manpower shortages.

[Soundbite] Jo Hong-sin(CEO, Automotive parts manufacturer) : "Prior to the pandemic, no primary vendors ever quit. But I'm beginning to see first contractors selling or closing their businesses."

This makeup ingredients manufacturer barely overcame the pandemic by making hand sanitizers, but that wasn’t the end of their troubles. Now they are faced with the disruptions in the supply of raw ingredients and mounting interests on their loans due to interest rate hikes.

[Soundbite] Lee Chung-geun(CEO, Cosmetics manufacturer) : "We’re exhausted after two years. I think it’s going to get worse this year because of the interest rate hike."

The Korean manufacturing industry is facing the toughest year yet with the spread of COVID-19, skyrocketing prices of raw materials and prolonged supply disruptions. Some experts project that small manufacturers may not be able to return their production index to the pre-pandemic level. The prolonged slump may even take away their hard-won competitiveness.

[Soundbite] Noh Mean-sun(Research Fellow, Korea Small Business Institute) : "Investment is key to overcoming a crisis. But when economic difficulties continue, growth potential of small businesses may be greatly undermined because investments in R&D and facilities shrink."

The manufacturing industry has long been a steady pillar of the Korean economy. Concerns are growing as the crisis faced by the manufacturers may spread to other industries across the nation.