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Despite the slimming of the Korean auto industry, chronic overcapacity is still a major issue, Even so, the heads of the surviving companies are vague and evasive about the need to rationalize to fix the problem.

"It is essential that all car makers cut overcapacity. Without that we will not be able to survive," says Lee Kye-ahn, president of Hyundai. The issue is being addressed by "eliminating some facilities and getting market competitiveness," says Kang Byung-ho, president of Daewoo.

However, neither will admit older and more inefficient plants may have to be closed. This will not be easy. The closure of a factory would involve strikes and rioting.

Lee and Kang believe a recovery in Korea, coupled with strong demand in export markets, will help Korean automakers through the crisis and boost plant use. "Demand for Korean cars in Europe and North America is strong," says Hyundai's Lee.

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Author:Bursa, Mark
Publication:Automotive Industries
Geographic Code:9SOUT
Date:Jun 1, 1999
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