'None Is Guaranteed Survival'

SK tycoon cites speed, flexibility, capability as ways of escaping the 'economic jungle'

SK Group Chairman Chey Tae-won cautioned that the notion that "big companies never die" does not hold true. "The current situation is said to be a crisis or a recession, but we face a stark reality that could not guarantee even our own survival. In this regard, I will no long utter the word 'crisis.' The important thing is to survive the reality," he said on the in-house broadcasting program, "Talk with Company Employees" televised on Jan. 8.
Chey stressed that the saying "big companies never die" does not hold true, saying, "The current reality is that we are in such an unpredictable situation as U.S. representative financial companies and automakers have undergone difficulties or have gone belly up." "When the Asian financial crisis occurred a decade ago, nearly half of the top 30 Korean conglomerates disappeared. We are in a situation where none can say what the fate of any company is in the next decade," he noted.
The chairman cautioned about the notion that "SK Never Dies," commenting that some say SK has survived worse uncertainties than the current one, but "there is no guarantee for our survival unless we face up to reality and brace ourselves for that." "The thing we have to do in this situation is to escape fast from the jungle we are in after developing escape strategies, methods and a ready attitude. And there will be no guarantee for SK's future if we cannot escape because we did not face up to reality," Chey said.
Citing survival strategies for surviving an extreme situation, Chey projected to the company members footage he himself prepared on the basis of the best-seller "Endurance" and the hit movie "The Day After Tomorrow." "Endurance" is the story of Ernest Shackleton's 1914 Antarctic expedition in which he returned home safely with 27 members after being lost for 634 days, while "The Day After Tomorrow" is an apocalyptic science-fiction film in which a meteorologist saves his son from the earth faced with an ice age in the wake of the effects of climate changes.
Asked about the common threads between the two examples, the participating members of the broadcasting program told Chairman Chey that all survived, they were exposed to an extreme environment and unprecedented dangers and they had to give up something to survive.
Chey said, "The most important thing is to survive if such incidents occur even though we cannot brace for all future events in advance as the footage showed, and we have to face up to reality with speed, flexibility and capability to survive such unpredictable situations." He added, "We have to cherish the greater happiness of tomorrow, not the happiness of today in a situation threatening our survival, and we should take more pain and be willing to reserve the happiness of today in order to look forward to a greater happiness and hope of tomorrow."

SK Eyes Taking Lead as Crude Oil, Minerals Developer

Aims to raise its crude reserves to 1 bln barrels by investing 8.5 tln won by 2015

The SK Business Group has been facing up to reality to meet the challenges, rather than sidestepping or detouring whenever there is a crisis, industrial analysts say.
The business group has come up with fair and bold strategies to solve difficulties they have been facing. As disputes have mounted over governance of the group, SK made a bold decision to shift its governing structure to a holding company system in July 2008. The group also turned to the exploration of overseas resources in order to tide over the hard times as it suffered a setback in the refinery business due to crude oil price hikes.
Announcing its new governance structure as an advanced holding company system and calming the criticism that the group's management is concentrated to a few persons, Chairman Chey declared a third-generation foundation of the group.
Following the move, the group posted a record 82.6 trillion won in sales in 2008, a 17 percent jump from 2006, and is expected to establish a holding company system with sales projected to grow to 90 trillion won in 2009.
The group's efforts to tide over a crisis caused by crude oil price hikes have paid off. SK Energy accounts for more than 30 percent of the group's combined sales, but it suffered a setback as crude oil prices began to soar beyond $50 per barrel on the international markets in 2005 and broke the $100 barrier last year, coinciding with a surge in the won-dollar exchange rate. It saw revenues worsening due to a rise in operating costs, stemming from a cost push in the refinery division: the operating income from sales dropped from 6.1 percent in 2004 to 1.9 percent recently. In an effort to overcome crude oil price hikes, SK Energy turned to securing its own crude oil reserves through the implementation of exploration projects.
As a result, SK Energy has already secured over 510 million barrels of reserves in 32 mining blocks in 32 countries, including the United Kingdom, Brazil, Libya and Peru. The company plans to invest 8.5 trillion won to secure 1 billion barrels of reserves by 2015. The figure translates into the equivalent of 500 days worth of Korea's petroleum needs. Chey set his sights on transforming the group into a crude oil and minerals exploration leader as nations are scrambling to secure energy resources to ensure energy security. nw

SK Group Chairman Chey Tae-won appears on the in-house broadcasting program, "Talk with Company Employees" televised on Jan. 8.