SK On, the battery unit of South Korean chip-to-construction conglomerate SK Group, said Monday it will freeze the annual pay of all executive-level officials until it turns to profit, declaring emergency management amid its sluggish performance.
The company decided to drastically revamp all working processes, including resource distribution, to improve operational efficiency in response to the changing industry environment as global electric vehicle markets are in a stagnation phase, known as the "chasm," which is believed to precede widespread adoption of EVs.
Under the measures, C-suite executives, including chief executive officer, will take on more responsibility for the crisis the firm is facing. The authority to determine the terms of all C-level executives will be given over to the board of directors.
The positions of chief administrative officer and chief commercial officer will be discarded.
The decision came early Monday as the company held a full executive meeting virtually to share its management status and direction for reorganization. They agreed to take the lead in overcoming the crisis.
After concluding the meeting, SK On CEO Lee Seok-hee told all employees: “From executives to leaders, we must shoulder the heavy responsibility of navigating through this crisis.
“Let us all approach our roles with the determination that there is no turning back, and strive for top performance in our respective positions.”
The SK On chief further emphasized that the current crisis presents an opportunity for the battery maker to solidify its position as a truly global manufacturing company. By embodying the spirit of “self-reliance," it can achieve even greater results, the CEO urged.
SK On recorded an operating loss of 331.5 billion won ($240 million) in the first quarter, recording losses for 10 consecutive quarters since its launch in 2021. The cumulative deficit for 10 quarters amounts to 2.6 trillion won.
Although the April-June period is also expected to see an operating loss of around 300 billion won, the company aims to achieve profitability in the fourth quarter through measures like depleting inventory and expanding shipments due to new electric vehicle releases.
“We decided to streamline the organization to reflect the changed business environment,” an SK On official said. “We decided to boldly transform all areas that require change, from work domains and procedural processes to resource allocation.”
SK On has decided to significantly reduce various executive welfare benefits and business promotion expenses. Measures such as mandatory economy-class travel for overseas business trips will continue.
But it will continue to invest in research and development projects to strengthen its competitiveness in car battery manufacturing, while reorganizing sales operations to flexibly respond to market demands, it said.
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