AFTERMATH OF PLANT SHUTDOWN

[Anchor Lead]

Hyundai's Asan plant has suspended operations due to a global shortage of automotive semiconductors. The move is sending repercussions to hundreds of contractors. There are concerns that the businesses could suffer from sales reductions, financial difficulties and even bankruptcies if the situation gets prolonged.

[Pkg]

Production lines have come to a halt at a supplier of Hyundai. Fifty of its employees are now on leave. This is the fallout from Hyundai's decision to suspend its Asan plant for two days due to a shortage of automotive semiconductors.

[Soundbite] Bae Dae-ho(Contractor's factory manager) : "If we are closed for two days, it incurs losses of some 80 million won in labor costs and about 600 million won in sales."

The suspension has dealt a severe blow to the 170 contractors and hundreds of subcontractors at the plant. The suppliers are also faced with sales losses totaling tens of billions of won. The loss in sales could increase to as much as trillions of won if the suspension is extended. Adding to concerns is the fact that the shortage of chips is predicted to continue into next year in the worst-case scenario. The Asan plant is considering shutting down again for two days next week. That will inevitably increase the burden on its suppliers, which are already reeling from a financial blow caused by the pandemic.

[Soundbite] Lee Seo-goo(Prof., Korea Nazarene Univ.) : "It is highly likely that the damage can grow further if the government fails to move quickly to mend the situation now."

There are also concerns over job losses and employment instability, as the suppliers may curtail production in consideration of possible reductions in orders from Hyundai amid the semiconductor shortage.