Cash Flow Problem Hits Dongbu Group

By Lee Hyo-sik
Staff Reporter

Dongbu Steel, the nation's mid-tier steel producer, has decided to dispose of stakes in its life insurance affiliate and commercial property to secure cash, after being hit hard by rising debt and falling sales amid worsening business conditions.

The cash-strapped steel maker held a board of directors' meeting Dec. 24 and decided to sell its 2.38 million shares in Dongbu Life Insurance to Dongbu Insurance, the group's de facto holding company, for 35.5 billion won, or 14,941 won per share.

The company also plans to sell its stake in the Dongbu Financial Center in southern Seoul, also to Dongbu Insurance for 16 billion won. Through the two transactions, the struggling steel maker will receive a total of 51.5 billion won in cash from its non-life insurance affiliate.

An executive of Dongbu Group, led by Chairman Kim Jun-ki, said it has become inevitable for Dongbu Steel to secure more liquidity to cope with the deteriorating business environment in the wake of the global credit crunch and economic downturn, dismissing a market rumor that the steel producer was suffering from a liquidity squeeze.

``Other major steel manufacturers at home and abroad are also rushing to dispose of assets for cash. It's simply untrue that our steel unit is facing a cash shortage. Additionally, Dongbu Insurance's stake acquisition of Dongbu Life Insurance is the first step toward the group's move toward a financial holding company structure,'' the official said.

Korean steel makers, like their peers abroad, are struggling with deteriorating business conditions as global demand has been falling rapidly as a result of the worldwide economic slowdown. The 2009 outlook is even bleaker as China, India and other major steel consumers will take the full blunt of the global downturn.

Dongbu Steel's move to sell assets for cash came two weeks after its major creditor, the Korea Development Bank (KDB), demanded the steel producer carry out a full-scale self-rescue plan to cut costs and obtain more cash.

The state-run bank has threatened that if the company does not restructure itself for cost reductions and greater efficiency, it may impose a creditor-initiated workout program or dispose of its stake in the firm.

Currently, the KDB has a 10.1 percent stake in Dongbu Steel. If the bank dumps company shares, it would deal a severe blow to the struggling manufacturer.

leehs@koreatimes.co.kr

MURCHISON: Myths of the assembly line

William Murchison
Saturday, December 20, 2008

A famous news photo from the late '30s shows toughs employed by the Ford Motor Co. beating up Richard Frankensteen, a United Auto Workers official, during the so-called Battle of the Overpass at Ford's Rouge River plant in Dearborn.

UAW chief Walter Reuther, walking with Frankensteen, got the same treatment. "Seven times they raised me off the concrete and slammed me down on it," he later wrote. "I was punched and kicked and dragged by my feet to the stairways, thrown down the first flight of steps and kicked down the second flight."

The UAW, whose sit-down strikes had already overwhelmed General Motors' and Chrysler's resistance to unionization, wanted Henry Ford on the dotted line. Three years later they got him. The plight of the car companies wasn't born at the precise moment Walter Reuther fell down the steps, but you could see the mythology shaping up.

Or perhaps not. As the '40s ended, the mythology changed from urban struggle to suburban dream. Organized labor, while hardly forgetting the dirty, bitter going of the '30s, bathed in the transcendent radiance of hope and opportunity. Everything, going forward, was going to be spiffy. Got that - spiffy! In 1948, Reuther wrung from the automakers an "escalator clause" pegging wage increases to the cost of living. In 1955, he won agreement that unemployed auto workers would be paid 65 percent of weekly wages for the first four weeks of unemployment and 60 percent for the next 22 weeks. Subsequently the figure climbed to 95 percent.

Comprehensive health care, tuition refunds, life insurance, profit-sharing, pre-paid legal service, bereavement pay -- off the UAW assembly line it rolled, contract after contract. Who paid? The auto-buying public paid. The automakers' contention that they pay workers $73 an hour takes into account the cost of pensions and health insurance for retirees. Still, no one disputes that Detroit's unionized active workers cost a good $10 an hour more than the nonunionized work forces that build Toyotas, Hondas and BMWs in the largely nonunionized South.

The heart of the auto "bailout" calamity is that the old model driven jointly by the UAW and the companies for years, pedal to the metal, finally collapsed: spark plugs exhausted, drive shaft broken, radiator rusted out. You can't -- apparently -- have domineering unions of the sort Walter Reuther managed during his tenure as UAW chieftain (which ended with his death in 1970). You have to have entities, both managerial and factory-level, deeply responsive to the realities of the marketplace. These realities are that no one today has to buy your car.

Getting to that place is the problem. The postwar, post-sit-down strike mythology of shared prosperity for union and companies still holds the UAW in thrall, and so also the media. The question is phrased: Do we "save Detroit" or don't we? The reality is that it's too late. The cheerful conspiracy between Detroit and the unions -- lay on the benefits and pass the cost to the auto-buying public -- begs for replacement by the more logical strategy of put-it-on-the-market-and-see-who-buys-it.

The bailout allows no latitude for reinvention. It's all about "saving Detroit" for a few more months rather than subjecting union and companies alike to the rigors of the competitive marketplace. You can hate all you want to -- maybe you should -- the thought of Detroit-related companies laying off workers or shutting down entirely, because down that way lies social and economic dislocation. A still more hateful prospect is general acceptance of the lie that all the industry needs is a new government-sponsored transmission overhaul.

The 21st century hasn't been kind to old industries, including my own, the newspaper business, as readers of news and information flee to the Internet. What do we want, we old hack journalists -- a bailout? Likelier a little space for reinvention that - woe and alack! - robs us of mores and memories but renews the survivors to fight another day.

Transportation office no longer insured

Friday, December 12, 2008
By KIMBERLY GLEASON, Times Staff Reporter

Clay Community School Transportation Director Frank Misner had some unhappy news come out of his garage at the Clay Community School Board of Trustees meeting Wednesday.
"Indiana Insurance indicated last spring their concern with the transportation building. At that time, they still insured our building," Supt. Dan Schroeder said. "They came back this year and said they will not insure it liability wise, unless a structural engineer looked it over. The engineer said it had less than a year of useful life. The report was then submitted to Indiana Insurance and their response is they will not insure the contents or the building any longer."

The engineers' report suggested the old creamery building, which houses the transportation office and storage facilities for maintenance supplies, is buckling and is unsafe for future long-term use.

Schroeder recommended the school board declare an emergency for the purpose of using emergency Capital Project Funds so that facilities can be leased and alternate plans can be drawn up as to the current situation, the board voted 7-0 in favor of the emergency action.

The bus hut, where the repairs and maintenance are done on school buses, is insured.

To provide office space for Misner and his workers, the corporation is leasing a trailer.

"There was no plan whatsoever of discussing this," Schroeder said. "But now, because we can't have the building insured and a structural engineer says we shouldn't be inside of it, it is time to bring this discussion back to the forefront. We need room for maintenance and the complex."

As discussion commenced on the relative comparison put together by Tom Neff of Schmidt Associates, which is based off of another design similar in size in Tipton Community Schools to the current transportation building. The Tipton building was bid upon two weeks ago for $2 million.

"It isn't a building design, or anything specific, but taking the building costs and the bid amounts which were dramatically under projection and this is a good comparison," Neff said.

He said the estimate included the removal of other buildings on the location, compaction of soil, preparation of the location, grading and drainage. The location would be at the coal sight, which is next to the current transportation hub. The advantages would be the fueling station, communication lines and the location within the district.

"These are just projected costs, set up as a ball park estimation," Neff said. "The sight has to be set up to meet all the Indiana Department of Environmental standards. The costs may seem high. You are going to ask yourself and other people will ask you if it should be cheaper to do it locally? The problem is that when bond proceeds are used the wage scale waiver comes into play."

"I'm not here to sell you a bus garage, I'm only here to give you a comparison," he added at the end of the proposal

Building and Grounds Director Tom Reberger and Misner spoke to the board.

"These are hard numbers," Reberger said. "They just bid this other project two weeks ago. So they know what they are talking about. The problem with a commercial facility, you can't put up a poll barn, these have to be OSHA approved structures with EPA regulations. We can be shut down if we do not meet these codes."

Misner was honest about the current situation to the board.

"Unfortunately, we are a corporation that doesn't have a lot of money. We could do this cheaper, but to meet regulations, we have to play by the rules," Misner said.

"We have needed a new garage since I started, and we had this planned in the building project and it was taken out. Now we have a building that is functionally obsolete and we don't have a choice anymore."

Board member Forrest Buell asked Misner if driver owned busses would be cheaper for the corporation.

"When dealing with driver owned busses, it isn't cheaper, and to be honest you are dealing with a third party and not the person that lives down the road that you go to church with. The driver's care about the children and a third party person wouldn't care about them the way these drivers do. If a parent has a problem they can call me and we can fix it," Misner replied. "In the Indianapolis, area they are dealing with the problems of a third party and are having a lot of problems."

Board members agreed the bus garage does an awesome job with nothing and something needs to be done.

Misner and Reberger were encouraged to look into the matter and have a list of the essentials that would be needed in a new building.

The board also encouraged Reberger to look into leasing a building with the possibility of buying. Because of building renovation project at the elementary schools the furniture and equipment as well as the equipment housed in the old creamery building no longer has a central location. Currently vacant rooms in the corporation are being used for storage but they will not be assessable once the project starts.

Board members gave approval for a special meeting to be called if Reberger needs to talk to the board.

Reliance Life new biz to cross $1 bn by March

Riding on the back of 100 per cent growth in new business, Reliance Life Insurance expects the first premium income to cross milestone figure of $1 billion mark by the end of the current fiscal.

"We expect 100 per cent growth in the new business premium during the current fiscal," Reliance Life Insurance Chief Executive Officer P Nandagopal told PTI.

Given the growth expectation, the new business premium of the company would be about Rs 5,500 crore (over $1 billion) at the end of March 2009.

The new business premium grew over 200 per cent at Rs 2,751 crore ($625 million) for the fiscal ended March, 2008, he said.

During the first six months of the current fiscal, the insurer has earned first premium income of about Rs 1,470 crore.

Normally, an insurance company acquires major chunk of the new business in the second half of the fiscal, he said, adding, with the expansion plan on the anvil and huge recruitment plan the new business is likely to register a good jump.

To support the growth plan, Reliance Life Insurance is set to hire 2,500 managers and close to one lakh advisers in the next four months.

"We are planning to add close to 2,500 employees and 90,000 advisers by the end of March next year," said Nandagopal.

With the fresh recruitment, the total number of advisers would cross three lakh while total staff strength would be over 28,000, he said.

Humanitarian Helpers Virginia and Michael Spevak

By Joe Holley
Washington Post Staff Writer
Monday, December 1, 2008; Page B06

Virginia Spevak and Dr. Michael Spevak, the husband and wife who were killed in their home in the Chevy Chase area of the District on Nov. 20, left twin legacies of community involvement and concern for others.

Mrs. Spevak, 67, known to friends as Ginny, was a former development office coordinator at Green Acres School in Rockville, where she also taught fifth- and sixth-grade science. She retired in 2001, largely to devote time to caring for a girl in the D.C. government's foster-care program.

"She's one of the people who lived her life in the most ethical way," said Nan Shapiro, a friend and Green Acres teacher. "She really did the things she believed in."

A few years ago, Mrs. Spevak and another friend, Prue Hoppin, began a program called Quilting for Good, in which volunteers sewed quilts and gave them to women who had no insurance for prenatal care. Last year, she traveled to New Orleans with friends from Chevy Chase Presbyterian Church, where she was an elder and a deacon, to rehabilitate houses damaged by Hurricane Katrina. At her church, she also arranged an adult-education forum series on the criminal justice system, with emphasis on restorative justice.

She served as an elected Advisory Neighborhood Commissioner in the 1970s and 1980s and continued to speak out on development issues as a member of the Friendship Neighborhood Coalition.

Dr. Spevak, 68, a psychiatrist in private practice for more than three decades, specialized in dealing with troubled adolescents. He had been the primary psychiatrist for the District's Lorton prison facility and lectured on emotionally disturbed inmates.

He, too, was involved in development issues and was active in fighting suburban sprawl.

Together, the Spevaks transformed their house on Belt Road NW into a model home for solar power. Their solar electricity system was so successful that at times they produced enough electricity to send back to the Pepco power grid. They also were enthusiastic organic gardeners.

"These were people who were very willing to do whatever they could to show that there are better ways to live on this planet than what most of us are doing," said Peter Lowenthal, executive director of the Solar Energy Research and Education Foundation.

Michael Bart Spevak was born in Schenectady, N.Y. He received his undergraduate degree in science from George Washington University in 1961 and his master's degree in plant pathology from Cornell University in 1966. After deciding to change careers, he received his medical degree from Georgetown University in 1970.

Virginia Anne Sager Spevak was born in Oxnard, Calif. She received her undergraduate degree in botany from the University of California at Santa Barbara and was working on a doctorate in botany and plant pathology at Cornell when she met the man she would marry. Their son, Eli Studer-Spevak, recalled that they were the only two students who showed up for a botany field trip, unaware that the trip had been canceled. They walked home together and never parted.

The couple lived in Rochester, N.Y., and Pasadena, Calif., where Dr. Spevak completed his psychiatric residency, before returning to the District in 1972.

Deeply devoted to his work, Dr. Spevak could be a bit eccentric. He occasionally shocked family members and colleagues by showing up in public wearing his Smurf-blue spandex biking outfit. "He taught me not to be self-conscious," his son told a crowd of more than 500 who gathered last week at Chevy Chase Presbyterian Church to remember the Spevaks.

They had their individual interests, their son said. Ginny Spevak was a quilter, a baker, a gardener and a conservationist who had mastered such skills as carpentry. Her husband's enthusiasms -- beyond his professional life -- were slightly less practical. He particularly enjoyed biking and running.

"Where their interests overlapped," Studer-Spevak said, "was in reforming the criminal justice system."

Survivors, in addition to their son, of Portland, Ore., include a daughter, Leah Spevak Kanach of Arlington County; Dr. Spevak's father, Sidney Spevak of Rockville; Mrs. Spevak's mother, Gen Pidduck Sager of Ventura, Calif., as well as Mrs. Spevak's brother and sister; and one grandson.