LG Display's newly appointed CEO Jeong Cheol-dong has been observed to have embarked on his first cost-saving drive to save the company from consecutive losses in earnings, starting with reducing its workforce, according to industry sources.
The display maker has announced a voluntary resignation plan for production workers who are over 40 years old and working at the manufacturing plants in Paju, Gyeonggi Province and Gumi, North Gyeongsang Province, according to industry sources on Wednesday.
The company is offering severance pay for 36 months of their current salary along with an amount to be negotiated covering their children's education expenses.
This voluntary resignation policy comes four years after LG Display last announced a similar plan in 2019. The company has been struggling with operating losses for six consecutive quarters since last year. From January to September this year, the Korean display maker's accumulated loss amounted to 2.6 trillion won ($2 billion).
Earlier this year, LG Display also allowed voluntary leaves of absence from office workers.
“We stopped the operation of liquid crystal display production facilities in Paju and Gumi. So we are taking a measure to deal with our surplus labor,” an LG Display official said.
In the wake of a global slump in demand and with Chinese rivals taking a share of the LCD market, LG Display has ended domestic production of LCD TV panels in the two factories in Paju and Gumi.
According to the company, the latest measure was decided before Jeong came into office, after making an agreement with the labor union.
Jeong, previously the president of LG Innotek, was appointed to lead the display maker in the latest regular reshuffle last month with the mission to improve poor performance.
"Getting out of the red is the most urgent priority, and for that, it is important that we complete the deals as we promised to our customers and achieve our planned targets,” Jeong said, sending his inaugural message to employees via email last week.
"We will put a strong drive on cost innovation across the business while improving quality, price and delivery -- the most basic elements of corporate competitiveness -- to build a solid company," he said.
Jeong was observed achieving a remarkable improvement in profit while serving as the CEO of LG Innotek, LG Group's electronic component manufacturer, from 2019 to 2022.
At LG Innotek, Jeong shut down the company's loss-making businesses, such as high-density interconnections for smartphones, and strengthened business in other areas such as camera modules.
Under Jeong's leadership, LG Display is expected to boost its high-value organic light-emitting diode panel business in the burgeoning automotive market, where premium auto brands have started using OLED panels for infotainment displays.
According to market tracker Omdia, the market for automotive OLED panels is expected to see a fivefold increase to reach $2.17 billion by 2027, with this year's global sales are forecast to stand at $481.75 million.
Last year, LG Display took 50 percent of the global automotive OLED panel market, while its crosstown rival, Samsung Display, secured 42.7 percent. China's BOE Technology came third to take a 7.3 percent share in the market.
Jeong is an LG veteran who has served various positions at LG Display, LG Chem and LG Innotek over the past 40 years.
The number of employees at LG Display was 28,380 as of the first half of this year.