LG CHEM is struggling with internal and external noise as it continues to undergo a high-intensity business reorganization due to the downturn in the petrochemical industry. As protests from the labor union against the restructuring intensify, management is strengthening communication.
According to industry sources on the 29th, senior management at LG CHEM recently met with the union to convey their stance regarding the sale of the water solution division. The union has strongly opposed the news that negotiations were ongoing with Glenwood Private Equity regarding the sale of the water solution last month.
Jang Gi-ryong, Chief Human Resources Officer of LG CHEM, is reported to have explained that no decisions have been made regarding the sale of the water solution. However, he mentioned that due to increasing uncertainties in management both internally and externally, they are reviewing not only the water solution but also the overall business of the company.
The union is expressing concerns about job insecurity due to the company's unilateral restructuring, including the sale of the water solution. Union members are conducting protest rallies at the Cheongju factory and headquarters. With the presidential election approaching, the pressure is mounting on the company as local governments and political circles are paying attention.
As the slump in the petrochemical industry continues, LG CHEM is seeking efficiency improvements in various ways, including the disposal of non-core assets, halting factory operations, and reducing expenses. Shin Hak-cheol, vice chairman of LG CHEM, announced at the shareholders' meeting in March that the investment plan for this year would be reduced by more than 1 trillion won and that they would focus on discovering medium- to long-term competitiveness centered on high-value-added products.
If the water solution business is sold, the company is expected to secure around 1 trillion won in cash. This funding is likely to be used for future business investments in specialty (high-value-added) and secondary battery (battery) materials. LG CHEM has identified battery materials, eco-friendly materials, and new drugs as its three key growth engines.
The domestic petrochemical industry, including LG CHEM, has been accelerating business restructuring since last year. LOTTE Chemical is focusing on improving its financial structure with an asset-light strategy. So far this year, it has disposed of its Pakistan subsidiary and equity in the Japanese company LezoNac. Hyosung Chemical has sold its specialty gas business to its affiliate Hyosung TNC and is also pursuing the sale of its film division.